EU mandatory disclosure: Irish guidance notes at a glance
International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

EU mandatory disclosure: Irish guidance notes at a glance

Sponsored by

IRAS has published an e-guide to provide guidance on the tax framework.

Michelle Daly of Matheson looks at the key features included in Ireland’s guidance notes concerning the practical application of DAC6

Like tax authorities in many other countries, the Irish tax authorities recently confirmed that the first filing deadline date under DAC6 will be extended for six months. Notwithstanding this extension, advisers in Ireland are continuing to focus on the practical application of DAC6 and the Irish tax authorities have recently published their guidance notes (the Guidance). Some interesting points have arisen from this Guidance, a few of which this article focuses on.

Main benefit test – is tax just the ‘icing on the cake’?

The Guidance specifically refers to the idea of a tax advantage only being one of a number of benefits. The Guidance notes that if the advantage is simply ‘the icing on the cake’, it would not satisfy the main benefit test. 

Substantially standardised documentation

The Guidance confirms that this hallmark is targeted at ‘mass-marketed’ or ‘off the shelf’ schemes. This is certainly a helpful acknowledgement as a significant number of genuine commercial transactions could be reportable if this hallmark were interpreted broadly (e.g. where market standard precedent documentation is updated for use in a particular transaction). 

The Guidance confirms that this hallmark is targeted at documentation which is substantially pre-prepared and requires little, if any, modification to suit a particular client. Irish Revenue note that there must be a link between the use of substantially standardised documentation and the tax advantage or benefit which is intended to be obtained. The Guidance also clarifies that documentation which is standardised for legal or regulatory reasons in routine financial transactions would not necessarily be reportable. 

Contrived steps to acquire a loss-making company

The Guidance expressly notes that steps will be contrived where they are “pre-planned and artificial” and whether or not a transaction falls within this hallmark should be “evident from the facts of the case”. Therefore, the current expectation in Ireland is that this hallmark will only be relevant in limited circumstances where it is clear that deliberate steps were taken to acquire a loss-making company specifically to reduce a tax liability. 

Converting income into capital or something that is taxed at a lower rate or exempt from tax

The Guidance expressly notes that commercial transactions are unlikely to fall within this hallmark. However, the hallmark could be interpreted broadly and the Guidance suggests that some commercial transactions will need to be reviewed very carefully, including a fund that is a ‘wrapper’ for investment in underlying assets, stock lending and repo transactions, a finance lease and the disposal of a right to an income stream. It is difficult to see how a finance lease could fall within this hallmark. 

The Guidance notes that it would be necessary to quantify, and then compare, the tax which would have been payable had the conversion of income not taken place.

Circular transactions involving the round-tripping of funds

The Guidance states that it will be clear if the round-tripping serves no commercial purpose and is done solely to create a tax advantage. Irish Revenue have given the example of arrangements involving routing domestic funds through offshore entities in order to access preferential tax treatment that is only available to investors from other jurisdictions as something which would be reportable. In Ireland, these types of transactions are rarely seen. 


Interestingly, the Guidance states that the hallmarks in category C are targeted at hybrid arrangements. Whilst Irish Revenue have not yet provided any detailed commentary or examples on category C hallmarks, this general observation is expected to help identify what may or may not be within the scope of this hallmark. 

Unilateral safe harbour from transfer pricing

The Guidance clarifies that this hallmark contemplates arrangements which involve a safe harbour from the transfer pricing rules only. It does not apply where a particular category of taxpayer or transaction falls outside of the scope of our domestic transfer pricing rules in the first instance. For example, small to medium enterprises are excluded from Ireland’s transfer pricing rules so would similarly fall outside the scope of this hallmark. 

What’s next?

Industry hopes for further clarification of Irish Revenue’s interpretation of hallmarks C. 

Michelle Daly

T: +353 1 232 2154

more across site & bottom lb ros

More from across our site

Canada risks inflaming US trade relations in a presidential election year and increasing costs for consumers, according to local experts
Dudbridge, ForrestBrown director and head of its advisory practice, FB Consulting, tells ITR about the joys of tax advisory work, what he finds most exciting about the role and what makes tax cool
A UK court rejected Tills Plus’s claim for R&D tax credits due to a lack of technological advancement
View the Social Impact EMEA Awards 2024 shortlist and join us on September 12 at The Waldorf Hotel in London
The announcement is due to be made during the country’s Union Budget statement next week, according to reports
Around 30 roles are to be cut as the firm’s tax controversy and disputes practice will be incorporated into its tax division
The Labour Party has made ambitious commitments to close the UK’s ‘tax gap’, but how can they do it, and what will it mean for business?
The refreshed leadership team does not include Paddy Carney, who previously made headlines for her dual role on PwC Australia’s and PwC International’s boards
Nusetti, global tax head at pharmaceutical company Lupin, tells ITR about being a tax magician, military aspirations and what makes tax cool
The UK tax agency unsuccessfully argued that a software company was not entitled to R&D tax relief
Gift this article