ATAD Anti-Hybrid Rules Update

A Feedback Statement on the implementation of the EU Anti-Tax Avoidance Directive (ATAD) Anti-Hybrid Rules has been released by the Department of Finance in Ireland. Anti-hybrid provisions are aimed at preventing double deductions (where an expense is deductible for tax purposes twice) or deduction without inclusion (where a payment is deductible for the payer but not taxable for the payee). The statement follows on from a recent public consultation on the implementation of the interest limitation and anti-hybrid rules under ATAD in Ireland and sets out possible approaches to some of the technical aspects of the anti-hybrid rules in advance of the publication of draft legislation in Finance Bill 2019. With the rules requiring the introduction of a number of new terms and technical concepts into Irish tax law, the publication of the statement and invitation for further consultation is welcome as taxpayers and advisors seek to assess the potential impact of the new rules which will operate from 1 January 2020.


The statement notes that the issues will continue to be considered by the Department until 6 September 2019.

The Feedback Statement does not address the interest limitation rule. While the Department of Finance recently indicated that it remains of the view that the extended deadline of 1 January 2024 should apply for the introduction of an interest limitation ratio in Ireland, work has commenced to bring forward the transposition process. A timeline for transposition of the rule is expected to be determined by end-July 2019.


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