Irish Revenue updates guidance on anti-hybrid rules, clarifying partnership treatment and associated enterprises tests.
The Irish Revenue has issued eBrief No. 223/25, on 27 November 2025, on the country’s anti-hybrid rules, reflecting changes to the application of the associated enterprises test for partnerships.
Tax and Duty Manual Part 35C-00-01 has been revised to confirm that partners in a partnership are always considered to be “acting together” regarding the voting rights of shares held through the partnership. The updates affect:
- Section 3.3.2 – Having regard to other matters
- Section 7.3 – Application of the “associated enterprises” test to Irish partnerships
The manual provides an overview of the anti-hybrid rules and the reverse hybrid rule under Part 35C of the TCA 1997. Key updates include:
Anti-hybrid rules:
- Definitions of mismatch outcomes, including double deduction and deduction without inclusion scenarios, and the situations that give rise to hybrid mismatch outcomes.
- Clarification of key terms used under the anti-hybrid rules.
- Guidance on the inclusion test and the concept of a “corresponding amount” in various scenarios.
- Interaction of the rules with Ireland’s worldwide taxation system and effective worldwide systems, such as the US check-the-box system.
- Provisions regarded as having a similar effect to the anti-hybrid rules, with a non-exhaustive list provided.
- Definition of “associated enterprises” and testing procedures for determining associations.
- Guidance on identifying payees, testing for inclusion when multiple payees exist, and establishing payee territories.
- Imported mismatch outcomes, including tracing payments and identifying payees.
- Taxpayer knowledge considerations, including what is “reasonable to consider” or “reasonably expected to be aware.”
- Interaction of anti-hybrid rules in tax consolidation scenarios.
Reverse hybrid rules:
- Introduction to reverse hybrid mismatches and the scope of the rule for Irish entities.
- Explanation of “collective investment schemes” exempt under ATAD.
- Overview of rule operation, including registration and collection of relevant tax.
The guidance aims to provide clarity for taxpayers and advisors on the application of anti-hybrid and reverse hybrid rules in partnership structures.
