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Taxes Consolidation Act, 1997 (Number 39 of 1997)

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835G Elimination of double counting.

(1) Where—

(a) the profits or gains or losses of a person (in this section referred to as the “first-mentioned person”), that are chargeable to tax under Case I or II of Schedule D, are, by virtue of section 835C, computed as if, instead of the actual consideration payable or receivable under the terms of an arrangement, the arm’s length amount in relation to that arrangement were payable or receivable as the case may be, and

(b) the other party (in this section referred to as the “affected person”) to the arrangement is within the charge to tax under Schedule D in respect of the profits or gains or losses arising from the relevant activities,

then, subject to subsections (2) and (3), on the making of a claim by the affected person, the profits or gains or losses of the affected person arising from the relevant activities that are chargeable to tax under Schedule D shall be computed as if, instead of the actual consideration receivable or payable by the affected person under the terms of the arrangement, the arm’s length amount (determined in accordance with section 835C) in relation to that arrangement were receivable or payable as the case may be.

(2) (a) Subsection (1) shall not affect the credits to be brought into account by the affected person in respect of closing trading stocks, for any chargeable period.

(b) For the purposes of this subsection “trading stock”, in relation to a trade, has the same meaning as it has for the purposes of section 89.

(3) Subsection (1) shall not apply in relation to an arrangement unless and until the tax due and payable by the first-mentioned person for the chargeable period, in respect of which the profits or gains or losses are, by virtue of section 835C, computed as if, instead of the actual consideration payable or receivable under the terms of an arrangement, the arm’s length amount in relation to that arrangement were payable or receivable, as the case may be, has been paid.

(4) Where the profits or gains of an affected person are reduced by virtue of subsection (1) then the amount of foreign tax (if any) for which relief may be given under any double taxation relief arrangements or paragraph 9DA or 9FA of Schedule 24 shall be reduced by the amount of foreign tax which would not be or have become payable if, for the purposes of that tax, instead of the actual consideration payable or receivable under the terms of any arrangement to which subsection (1) applies, the arm’s length amount (determined in accordance with section 835C) in relation to that arrangement were payable or receivable by the affected person as the case may be.

(5) (a) Where, in relation to an arrangement—

(i) the persons, who apart from this paragraph would be the affected person and the first-mentioned person, are members of the same group,

(ii) the arrangement is comprised of activities within the meaning of paragraph (a) of the definition of “excepted operations” in section 21A, and

(iii) the persons referred to in subparagraph (i) jointly elect that this section shall apply,

then section 835C and this section shall not apply in relation to that arrangement.

(b) An election under paragraph (a) shall be made by notice in writing to the inspector on or before the specified return date for the chargeable period (within the meaning of [2]>section 950<[2][2]>section 959A<[2]) for the chargeable period of the person who, apart from paragraph (a), would be the first-mentioned person, and the notice shall set out the facts necessary to show that the persons referred to in paragraph (a)(i) are entitled to make the election.

(6) Any adjustments required to be made by virtue of this section may be made by the making of, or the amendment of, an assessment.

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835G Documentation and enquiries.

(1) In this section—

constituent entity” , “fiscal year” and “MNE group” have the same meanings as in section 891H but, as respects the application of the definition of “MNE Group” in Article 1 of the OECD model legislation (as defined in section 891H) for the purpose of this section, that definition shall apply as if the words and (ii) is not an Excluded MNE Group” were deleted therefrom;

local file” means a report containing the information specified in Annex II to Chapter V of the transfer pricing guidelines;

local file revenue threshold” means €50 million;

master file” means a report containing the information specified in Annex I to Chapter V of the transfer pricing guidelines;

master file revenue threshold” means €250 million;

relevant period” means, in relation to a relevant person who is a constituent entity of an MNE group, the fiscal year of the MNE group that corresponds to the chargeable period of the relevant person and, if

a fiscal year of the MNE group does not exactly correspond with the chargeable period of the relevant person, the fiscal year of the MNE group that substantially coincides with the chargeable period of a relevant person.

(2) A relevant person in relation to an arrangement to which section 835C(1) applies, and who is chargeable to tax in respect of the profits or gains or losses arising from the relevant activities, shall have available and, upon a request made in writing by a Revenue officer, shall provide such records as may reasonably be required for the purposes of determining whether, in relation to the arrangement, the profits or gains or losses of the person that are chargeable to tax have been computed in accordance with this Part.

(3) The records referred to in subsection (2) shall include—

(a) a master file where the relevant person is a constituent entity of an MNE group and the total revenue of the MNE group in the relevant period is at, or above, the master file revenue threshold,

(b) a local file where the relevant person is a constituent entity of an MNE group and the total revenue of the MNE group in the relevant period is at, or above, the local file revenue threshold.

(4)Subsection (2) shall not apply in the case of an arrangement all the terms of which were agreed before 1 July 2010, and which have not changed on or after that date, where, in relation to the arrangement, the supplier and the acquirer are qualifying relevant persons.

(5) (a) The records referred to in subsections (2) and (3) shall be prepared no later than the date on which a return for the chargeable period concerned is required to be delivered.

(b) Where a Revenue officer makes a request in writing under subsection (2), the relevant person shall provide the records referred to in subsections (2) and (3) to the Revenue Commissioners within 30 days from the date of the request.

(6) (a) Where a relevant person fails to comply with a requirement to furnish information to a Revenue officer in accordance with subsection (5)(b), the person shall be liable to a penalty of €4,000, but this is subject to paragraph (b).

(b) Where the relevant person is a person who falls within subsection (3)(b), the penalty specified in paragraph (a) shall be €25,000 and, if the failure referred to in that paragraph, on the part of that person, continues, that person shall be liable to a further penalty of €100 for each day on which the failure continues.

(7) (a) In this subsection—

return” and “specified return date for the chargeable period” have the same meanings as in section 959A;

transfer pricing adjustment” means any increase in the profits or

gains included in a return delivered by a relevant person on or before the specified return date for the chargeable period because, by virtue of section 835C, the profits or gains or losses of a relevant person that are chargeable to tax are computed as if, instead of the actual consideration payable or receivable under an arrangement, the arm’s length amount were payable or receivable, as the case may be.

(b) Where the conditions set out in paragraph (c) are met, a transfer pricing adjustment shall not be taken into account in determining whether a penalty referred to in section 1077E(5) applies to the relevant person for a chargeable period or in computing the amount of any such penalty.

(c) The conditions referred to in paragraph (b) are—

(i) the relevant person has, for the chargeable period, prepared the records referred to in subsection (2), and where applicable subsection (3), within the time specified in subsection (5)(a),

(ii) the relevant person provides the records referred to in subparagraph (i) to a Revenue officer within the time specified in subsection (5)(b), and

(iii) the records referred to in subparagraph (i) are complete and accurate and demonstrate that, notwithstanding the transfer pricing adjustment, the relevant person has made reasonable efforts to comply with this Part in determining the amount of the actual consideration payable or the actual consideration receivable, as the case may be, under the arrangement.

(8)Subsection (3) of section 886 shall apply to the records referred to in subsections (2) and (3) as it applies to records required by that section.

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Inserted by FA10 s42(1). This section applies for chargeable periods beginning on or after 1 January 2011 in relation to any arrangement (within the meaning of s835A(1)) other than any such arrangement the terms of which are agreed before 1 July 2010.

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Substituted by FA12 sched4(part2)(g).

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Substituted by FA19 s27(1). Applies for chargeable periods commencing on or after 1 January 2020. Shall not apply as respects an allowance (other than a balancing allowance) to be made to a person in a chargeable period commencing on or after 1 January 2020 in respect of capital expenditure incurred on an asset before 1 January 2020.