Ireland: President signs the Finance Bill 2022 into Law

30 December, 2022

On 15 December 2022, Michael D. Higgins, the President of Ireland signed the Finance Bill 2022 into Law. The Finance Act contains new tax measures including changes in corporate income tax and transfer pricing related measures. The main tax measures included in the Finance Bill are as follows:

Transfer Pricing

The Finance Act updates the definition of transfer pricing guidelines to reference the OECD’s most recent guidelines published in January 2022. These guidelines replace the 2017 guidelines previously legislated, and shall apply for chargeable periods commencing on or after 1 January 2023.

Technical amendment to ATAD Interest Limitation Rule

The Finance Act updates the definition of consolidating entity, interest equivalent, large scale asset, group EBITDA, group exceeding borrowing costs.

It is also clarified that where a debt, consisting in part of legacy debt and in part of debt which is not legacy debt, is repaid in part, the part so repaid shall be treated for the purposes of this Part as being a repayment of that part of the debt which is legacy debt in priority to that part of the debt which is not legacy debt.

Amendment to non-cooperative jurisdictions for tax purposes

The Act amends the EU list of non-cooperative countries.

in relation to an accounting period beginning on or after 1 January 2021 but before 1 January 2022, a territory included in Annex 1 of the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes, as replaced by the EU list of noncooperative jurisdictions for tax purposes Report by the Code of Conduct Group (business taxation) suggesting amendments to the Annexes to the Council conclusions of 18 February 2020;
in relation to an accounting period beginning on or after 1 January 2022 but before 1 January 2023, a territory included in Annex 1 of the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes; and
in relation to an accounting period beginning on or after 1 January 2023, a territory included in Annex 1 of the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes.

Double Taxation Agreements

The Act amends arrangements made by the Government with the government of any territory outside the State in relation to affording relief from double taxation and exchanging information in relation to tax. The Finance Act updates the list of Ireland’s double tax treaties with newly signed protocols to the Double Tax Agreements between Ireland and Isle and Man and Guernsey

Extending tax transparency rules to digital platforms

The Finance Act 2022 replaces the provision of the seventh EU Directive on Administrative Cooperation (DAC7) introduced in Finance Act 2021. DAC7 extends the automatic exchange of information (AEOI) to apply to digital platforms. DAC7 will come into effect on 1 January 2023 in Ireland.

A new section has also been inserted to provide for the transposition of the OECD Model Rules for reporting by digital platform operators. The Model Rules are similar to the reporting obligations introduced in the EU in DAC7, but are applicable to operators outside of the EU and this transposition will ensure that digital platforms both within and external to the EU will have standardized reporting obligations.