On 6 September 2021, the Revenue updated its guidance to assist some qualifying companies in accordance with Section 110 regarding the application of transfer pricing (TP) rules and other issues. Under Section 110, a company be a qualifying one if it must be resident in Ireland, acquire and hold qualifying assets, and carry on the business of managing those assets within Ireland, among other requirements.
Regarding transfer pricing, the guidance provides in general that a company cannot be a qualifying company unless all transactions and arrangements (except certain transactions under section 110(4)) are entered into at arm’s length. According to updated guidance, for chargeable periods commencing on or after 1 January 2020, transfer pricing rules will apply to these transactions if they are between associated persons. The guidance adds that the arm’s length test must be applied to any transaction or arrangement that a section 110 company engages in.
It also includes amendments regarding profit participating notes to address the meaning of control and the main purpose test. Additionally, the amendments update the appendix on subject-to-tax decisions to reflect anti-hybrid rules.
