International transfer pricing developments: Ireland

On 4 February 2010 the Irish Finance Bill introduced transfer pricing legislation which has now become law. The new rules bring the Irish tax regime into line with its main trading partners and to some extent codifies and clarifies certain arm’s-length provisions that were already in the tax code.

Context to the introduction of Irish rules

In an Irish Revenue commentary released following the Finance Bill stated that the motivation for the introduction of the rules was threefold:

• protect the tax base;
• remove uncertainty regarding the application of internationally accepted transfer pricing standards in Ireland; and
• position Ireland better in intervening on behalf of companies where other jurisdictions adopt transfer pricing positions that do not accord with the arm’s-length principle.

Set against a background where almost all EU countries have some formal transfer pricing rules it is not surprising that Ireland is following...