Irish Revenue on September 6 updated its guidance on qualifying companies under section 110 to address uncertainty regarding the application of transfer pricing rules and other issues.
Section 110 creates a tax neutral regime for securitization transactions for qualifying companies and was enacted to promote such transactions for the financial sector operating in Ireland. To be a qualifying company under section 110, a company must be resident in Ireland, acquire and hold qualifying assets, and carry on the business of managing those assets within Ireland, among other requirements.
Regarding transfer pricing, the guidance provides in general that a company cannot be a qualifying company unless all transactions and arrangements (except certain transactions under section 110(4)) are entered into at arm’s length.
The updated guidance states that for chargeable periods beginning on or after January 1, 2020, transfer pricing rules will apply to such transactions if between associated persons. The guidance adds that the arm’s length test must be applied to any transaction or arrangement that a section 110 company engages in.
The latest version of the section 110 guidance also includes amendments regarding profit participating notes to address the meaning of control and the main purpose test. In addition, the amendments update the appendix on subject-to-tax decisions to reflect anti-hybrid rules.
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