If a trade is transferred from one company to another as a result of reorganization, any agreement entered into by the transferring enterprise and subsequently transferred as part of the reorganization will be considered to have been entered into by the acquiring company at the time the agreement was originally made.
Small and medium sized enterprises (SME) in Ireland are not required to comply with these transfer pricing rules. SME are enterprises that have less than 250 employees, annual revenue less than EUR 50 million, or assets of less than EUR 43 million.
In addition, the following transactions and agreements do not fall under Ireland's transfer pricing rules including:
- Leases or royalty payments that are not part of a trade
- Interest free loans
- Capital transactions
As part of Ireland’s efforts to increase transfer pricing compliance, the Transfer Pricing Compliance Review (TPCR) program was implemented.
Under the program, enterprises are selected to perform self-assessment and report on their transfer pricing procedures for periods specified by the request. Upon receipt of request, an enterprise must complete the self-assessment and submit it to the Irish tax authorities within three months.
The items which must be included in the self-assessment report include the general documentation covered in Sec. 13.4.3.
After submission of the self-assessment report, the tax authorities will review the report and issue a review letter indicating either that compliance requirements have been met, or request additional information.
The TPCR program is not an audit and voluntary disclosures are allowed at any time during the process. Note, however, that failure to conduct the self-assessment when requested, or cases where the results indicate an enterprises transfer pricing is not in accordance with the arm's length principle, a formal audit may be initiated.
Irish Revenue has stated the outcome of a TPCR will be a letter from Irish Revenue, which indicates:
- No further enquiries; or
- Issues that need to be further addressed within the TPCR process.
However, it reserves the right to escalate a case to a formal audit, for instances where a company refuses to complete a self-review. In such a case, the company will be issued with a separate audit notification communique.
In general, management fees are deductible as long as they are incurred in production of assessable income and in compliance with the arm's length principle. Management fees are not subject to withholding tax.
Transfer Pricing Adjustment Penalties
There are no specific penalties for a transfer pricing offense set under Ireland law. Penalties imposed are in accordance with Ireland's general penalty provisions for underpaid tax and negligence covered in Sec. 14.5.
There are currently no disclosure requirements when filing tax returns in Ireland, but transfer pricing documentation should be prepared and kept for as long as transfer pricing issues may arise.