Relief for Transfer
Pricing Adjustments
Tax authorities worldwide see transfer pricing as a critical
revenue raising tool. Where a transfer pricing adjustment
imposed on one party to a transaction results in higher profits
in that jurisdiction, economic double taxation can arise if the
other party to the transaction does not secure a corresponding
reduction in profits. How can an Irish taxpayer secure that
corresponding adjustment?
Corresponding Adjustments
Information Required
As a result of changes introduced in 2008, Irish taxpayers cannot take
a deduction in their tax return for increased payments to an associated
entity arising from a transfer pricing adjustment for which relief may
be available under a double taxation agreement (“DTA”). Further,
Irish taxpayers cannot amend a tax return so as to seek a refund of
tax arising as a result of a correlative relief claim unless the amount
of the adjustment has been agreed in writing between the relevant
competent authorities. The implications of these domestic provisions
is that an Irish taxpayer’s only recourse to secure a corresponding
adjustment is pursuant to Ireland’s international agreements.
Each of the procedures require a taxpayer to present their case to the
Irish Revenue Commissioners (“Revenue”) as Ireland’s Competent
Authority (“CA”) and provide appropriate supporting information;
• Details of the legal basis for the request;
• An explanation as to the issues involved;
• An analysis as to what the requester considers to be the correct
outcome; and
• Copies of all relevant documentation.
Irish taxpayers can request:
• Correlative relief where the relevant DTA contains an article
equivalent to Article 9 of the OECD Model Convention (“Article 9”);
• Relief under the Mutual Agreement Procedure (“MAP”) Article of
the relevant DTA (all of Ireland’s DTAs contain a MAP Article); or
• Relief under the European Arbitration Convention.
Dublin
London
New York
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www.matheson.com
Relief for Transfer
Pricing Adjustments
Process
How Matheson can help
The resources required in respect of such requests will vary from case
to case, but where there is open communication between the taxpayer
and Revenue, and the process is managed properly, such requests can
proceed relatively efficiently. However, claims for relief under these
procedures can take two or more years to come to finalisation as the
CAs only meet at infrequent intervals. The taxpayer is not entitled to
be a party to the discussions between the Irish CA and the CA of the
other relevant jurisdiction and taxpayers are not guaranteed that the
CAs will agree to a position that results in no double taxation, but this
is the usual outcome.
Matheson advised on the first transfer pricing adjustment completed
under Irish law, the first multi-lateral transfer pricing adjustment
completed under Irish law, and the ground-breaking claim by a
non‑treaty resident company to correlative relief under an Irish tax
treaty and we continue to represent our clients in seeking relief for
transfer pricing adjustments with Revenue. Please contact any of
the persons listed below, or your usual contact in our Tax Group,
to discuss any transfer pricing queries you may have. Full details
of the Tax Group and Transfer Pricing Group can be accessed at
www.matheson.com, together with related updates, briefing notes
and articles.
Bearing the cost of an adjustment
Where an Irish taxpayer is seeking a correlative relief claim it is
important to carefully review all relevant legal agreements and
economic analyses to ensure that the Irish company is the group
company that should properly bear this cost. Ideally this is a matter
that has been considered in advance of any claim and is properly
reflected in the relevant legal agreement.
Contacts
John Ryan
Joe Duffy
TAX PRINCIPAL
NEW YORK
PARTNER
DUBLIN
T +1 212 792 4141
E [email protected]
T +353 1 232 2688
E [email protected]
Catherine Galvin
Catherine O’Meara
CONSULTANT
DUBLIN
ASSOCIATE
DUBLIN
T +353 1 232 2267
E [email protected]
T +353 1 232 2106
E [email protected]
The Information in this document is not intended to provide, and does not constitute, legal or any other advice on any particular matter, and is provided for general information purposes only.
© Matheson
Dublin
London
New York
Palo Alto
www.matheson.com