The Irish Revenue has released eBrief No. 303/24, providing updated guidance on anti-hybrid rules on 10 December 2024.
The purpose of anti-hybrid rules is to prevent arrangements that exploit the differences in the tax treatment of an instrument or entity arising from the way in which that instrument or entity is characterised under the tax laws of two or more territories to generate a tax advantage or a mismatch outcome.
Guidance on Anti-Hybrid Rules
Tax and Duty Manual Part 35C-00-01 Part 35C-00-01 has been updated as follows:
- Section 1: Introduction to hybrid mismatches, to clarify that OECD guidance on hybrid mismatches cannot be relied upon to disapply the hybrid mismatch rules in ATAD2, as transposed into Part 35C.
- Section 2: Mismatch outcomes, updated to introduce the concept of primary and defensive anti-hybrid rules.
- Section 3: Interpretation (Section 853Z), updated to include definitions of ‘deduction’ and ‘structured arrangement’.
- Section 4.2.1 Section 835Z(1)(a), updated to include an example of a territory that applies tax to some, but not all, entities.
- Section 5.1 Worldwide system of taxation, updated to include guidance on how to deal with loss making branches with trapped losses
- Section 7.1.1 Associated enterprises, updated to clarify scenarios where a 50 per cent Associated Enterprise Test Applies instead of a 25% test.
