budget 2018 Transfer Pricing

Perspectives

Transfer Pricing

Budget 2021

Whilst this year’s Budget did not contain any specific transfer pricing related measures, it has been a year of change for many Irish taxpayers as they consider and adapt to the new transfer pricing rules introduced for 2020.

The rewrite of Ireland’s transfer pricing legislation represented a substantial change not only in terms of aligning Ireland’s legislation with the latest OECD principles but also broadening of the regime. Key features of the new regime are:

  • Irish transfer pricing rules are to be construed, in accordance with the 2017 OECD Transfer Pricing Guidelines;
  • Extension of the rules to non-trading and capital transactions (where the value is over €25m);
  • Removal of the current exemption (SME exemption) for certain small and medium sized enterprises (with the timing of this measure subject to ministerial order);
  • Repealing pre 1 July 2010 grandfathered arrangements and bringing them within the scope of transfer pricing; and
  • Documentation requirements (masterfile & local file concepts are introduced into Ireland's transfer pricing regime for the first time) are updated to align with Chapter V of the 2017 OECD TP Guidelines, along with specific penalties for failure to prepare documentation.

In addition, Irish Revenue are in the process of drafting additional guidance in the form of a Tax and Duty manual addressing the Finance Act 2019 changes to the Irish transfer pricing regime. It’s expected that the new guidance will provide greater clarity on a number of key areas including the domestic exemption for non-trading arrangements, transfer pricing documentation requirements and the treatment of existing group loan financing arrangements.

As many groups are affected for the first time and/or have transactions that were not previously subject to the rules, transfer pricing continues to be a key focus area for Irish taxpayers to ensure compliance with the new rules and the new documentation requirements.

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