Revenue Note for Guidance
This section sets out what is meant by a reverse hybrid mismatch outcome and when such a mismatch outcome shall not be regarded as arising. The section also sets out how a reverse hybrid mismatch outcome shall be neutralised and provides for certain operational matters in that regard including how the rule interacts with double tax arrangements.
(1) Subject to subsection (2), a reverse hybrid mismatch outcome shall arise where some or all of the profits or gains of a reverse hybrid entity, that are attributable to a relevant participator, are subject to neither domestic nor foreign tax (where the profits or gains attributable to a relevant participator go untaxed).
(2) A reverse hybrid mismatch outcome shall not arise where the relevant participator —
(3) Subject to subsections (7) and (8), a reverse hybrid mismatch outcome shall be neutralised, notwithstanding any other provision of the Tax Acts and the Capital Gains Tax Acts, by the profits and gains referred to in subsection (1) being charged to corporation tax on the reverse hybrid entity concerned as if the business carried on in the State by the reverse hybrid entity was carried on by a company resident in the State.
(4) This subsection provides the meaning of the term ‘unit’ for the purposes of subsection (5). The subsection provides that ‘unit’ has, as the context requires, the meaning assigned to it in section 739B(1) (broadly any investment by a unit holder), that meaning as modified in accordance with section 739J(1)(b) (meaning partnership interest) or, where this section is applied to a relevant partnership, a ‘partnership interest’, within the meaning of section 739J.
(5) Where an amount of tax is payable by the reverse hybrid entity under subsection (3), in respect of profits attributable to a relevant participator, the reverse hybrid entity —
(6) Where a reverse hybrid entity exercises its right under subsection (5)(a)—
(7) Where a relevant participator is resident in a territory with which Ireland has agreed a Double Tax Agreement then any corporation tax being charged on that entity by virtue of subsection (3) shall take account of the provisions of those arrangements. Essentially, the provisions of the Double Tax Arrangement take priority to the provisions of this Chapter.
(8) The subsection sets out that the provisions of the Tax Acts relating to the calculation, assessment and collection of tax shall apply —
Relevant Date: Finance Act 2021