Irish Revenue has updated its guidance on “main purpose” tests in tax law. The eBrief clarifies how objective tests apply and introduces the ‘reasonable to consider’ test for identifying transactions primarily designed to secure a tax advantage.
Irish Revenue has updated its guidance on main purpose tests, issuing eBrief No. 023/26 on 28 January 2026 to clarify the application of objective tests and introduce new guidance on a ‘reasonable to consider’ test.
The revisions, effective January 2026, appear in Tax and Duty Manual Part 33-01-01.
The update emphasises that objective tests focus on what a reasonable observer would conclude, rather than the taxpayer’s subjective intentions. In applying these tests, artificial structuring designed to obscure relevant activities from the taxpayer is not permitted. Examples include the mandatory disclosure regime, where an informed observer may determine whether a transaction’s main outcome is the creation of a tax loss, and Section 811C, which assesses whether a transaction gives rise to a tax advantage based on objective factors.
A new section, 2.1.1, introduces guidance on applying a ‘reasonable to consider’ test, aligned with the anti-hybrid rules in TDM 35C-00-01. The test asks whether a reasonable taxpayer would contemplate the tax outcomes of a transaction, emphasising thoughtful assessment rather than the taxpayer’s personal circumstances.
Revenue clarified that the test relies on the common law ‘reasonable man’ principle, treating reasonableness as an objective standard. Taxpayers’ failure to understand or make reasonable enquiries does not provide a defence under these main purpose tests.
The guidance aims to strengthen the clarity and consistency of anti-avoidance rules, ensuring that both objective assessments and the new ‘reasonable to consider’ standard are applied uniformly in evaluating tax arrangements.
