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Ireland transfer guidance addresses claims for unilateral tax relief

07 May 2020

Warren Novis, Director & Head of Transfer Pricing at BDO Ireland recently wrote an article for MNE Tax following recent Revenue guidance on correlative adjustments.

Ireland’s revenue commissioners on April 24 published enhanced tax guidance notes (Part 35-02-09) describing the basis and procedure for an Irish taxpayer to claim a transfer pricing correlative adjustment.

This unilateral tax relief is made available to an Irish taxpayer to reduce double taxation that results from reassessments of an affiliate of the Irish taxpayer by a foreign tax authority.

An Irish taxpayer may only seek this relief if its affiliate accepts the reassessment and suffers the additional foreign tax.

Prior tax guidance notes broadly covered tax treaty mutual agreement procedures (Part 35-02-08) but contained fewer comments regarding correlative adjustments.

The new guidance note expands the information required to set out the legal basis for an Irish taxpayer to access partial or full relief from double taxation from the Irish competent authority.

While relief from double taxation is available, no relief will be granted for interest, penalties, or secondary adjustments levied by the foreign tax authority.

An affected taxpayer is obliged to complete and submit form CA1- Claim for Correlative Adjustment, including all relevant information and documents necessary to allow for adequate review of the facts and the relief claimed (a prescribed list of ten matters).
Importantly, the guidance notes state that Irish tax law prohibits an Irish taxpayer from claiming unilateral relief for eligible cases by claiming a deduction in its corporation tax return.

This restriction in law requires taxpayers to seek relief through double tax agreement measures and under the jurisdiction of the Irish competent authority.

The procedures will apply to all future [and ongoing] claims for a correlative adjustment.


Content adapted from MNE Tax; available at: https://mnetax.com/new-ireland-transfer-guidance-addresses-claims-for-unilateral-tax-relief-38473