Irish Revenue updates guidance on foreign entity classification under revised Tax and Duty Manual 35C-00-02, introducing enhanced case law tests and new rules on foreign body corporates.
Irish Revenue has published Revenue eBrief No. 082/26 on 20 April 2026, addressing foreign entity classification for Irish tax purposes.
Tax and Duty Manual (TDM) 35C-00-02: Foreign Entity Classification for Irish Tax Purposes has been updated to:
- remove material now covered in TDM 43-00-03 (Taxation of Partnerships),
- include additional guidance on the application of case law tests, and
- incorporate new material on section 1009A – Taxation of certain foreign body corporates.
The Manual sets out the framework for determining whether foreign entities are treated as tax opaque or tax transparent for Irish tax purposes. It distinguishes between companies, which are separate legal entities taxed on their own profits, and partnerships, where tax liabilities flow through to the individual members.
To address classification issues arising in complex international structures, the guidance applies a two-stage test derived from case law, including Memec plc v CIR and Quigley v Harris. The first stage involves examining the legal characteristics of the entity under its foreign law. The second stage compares those characteristics with domestic Irish tax concepts.
Key factors considered in this assessment include:
- whether the entity has separate legal personality,
- the nature of profit entitlement, and
- liability for debts.
The guidance confirms that foreign bodies corporate may, in certain cases, be treated as partnerships for Irish tax purposes where they are substantially similar to Irish tax transparent entities.
