Revenue introduces guidelines on the operation of Ireland’s bilateral advance pricing agreement programme

Effective from 1 July 2016, Revenue is introducing a formal bilateral Advance Pricing Agreement (APA) programme.

A bilateral APA is a binding agreement between two tax administrations and the taxpayers concerned, under the relevant Double Taxation Treaty, which governs the tax treatment of future transactions between connected taxpayers in the two countries, typically addressing the transfer pricing of those transactions. Essentially, the APA makes the tax treatment of relevant transactions clear for all concerned – the tax administrations and the taxpayers – for a fixed period of 3 to 5 years.

In October 2015, the OECD issued its final reports on a package of 15 measures or ‘actions’, which were designed to address Base Erosion and Profit Shifting (‘BEPS’) caused by international tax planning. One of the recommendations was that countries’ tax administrations should implement bilateral APA programmes to provide greater certainty in relation to the taxation of cross-border transactions. Acting on this OECD recommendation, Revenue has now introduced a formal bilateral APA programme.

The introduction and publication by Revenue of this formal programme provides clarity to taxpayers, not only with respect to the process involved in applying for a bilateral APA, but also the ongoing reporting and administrative requirements, once an APA has been agreed.

Revenue eBrief No. 60/2016

[Ends: 23/06/16]