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March 23, 2021

Irish Department of Finance releases public consultation on application of the Authorised OECD Approach in Ireland

Executive summary

On 16 March 2021, Ireland’s Department of Finance released a public consultation on the application of the Authorised OECD1 Approach (AOA) to the attribution of profits to branches of nonresident companies.2 The proposed legislation, which follows a series of other transfer pricing (TP) updates and reforms, is planned to apply to tax years beginning on or after 1 January 2022.

Stakeholders are requested to provide comments on a series of proposed questions before noon local time on 16 April 2021.

Detailed discussion

Ongoing consultation on Irish TP Rules

On 2 September 2019, Ireland’s Department of Finance published a Feedback Statement regarding proposed updates to Ireland’s TP rules. The Feedback Statement summarized proposed updated TP legislation, and the majority of the proposed changes have now been incorporated in the Irish statute, applicable for accounting periods commencing on or after 1 January 2020. At the time of release of the Feedback Statement, the Department of Finance had indicated that further consultation was required with respect to the extension of Irish TP rules to branches and the use of the AOA.

The current consultation document now proactively seeks feedback on the application of the AOA.

Current application of TP rules to branches

Nonresident companies trading in Ireland through a branch or agency are chargeable to corporation tax in accordance with section 25 Taxes Consolidated Act (TCA) 1997. It is proposed that the existing domestic legislation governing the computation of branch profits be amended to bring it into line with the international best practice in this area. It is proposed to do this by incorporating a provision similar to Article 7(2) of the OECD Model Tax Convention, which contains the AOA Rule, into domestic legislation and by adopting the AOA Guidance, as appropriate, in applying this provision.

The Authorised OECD Approach

The AOA seeks to attribute to a permanent establishment or branch the profits that it would have earned at arm’s length if it were a legally distinct and separate enterprise performing the same or similar functions under the same or similar conditions. Therefore, it incorporates separate entity and arm’s-length principles. The aim of the AOA is to apply to intra-company ”dealings,” i.e., dealings among separate parts of a single enterprise, transfer pricing principles that apply to inter-company transactions, i.e., transactions between different, albeit associated, enterprises.

Consultation period

The consultation period will run from 16 March to noon local time on 16 April 2021. Stakeholders are invited to provide comments on the examples of draft legislation and specific questions set out in the consultation document. In particular, the areas being addressed include:

  • Whether all aspects of the AOA Guidance should be applied in connection with the computation of relevant branch income in Ireland.
  • The possible approach in relation to documentation requirements, and what particular issues might arise were documentation requirements to apply.
  • Whether consideration should be given to enterprises of a certain size and/or operating in a certain sector.
  • Whether there are considerations around the potential interaction of the AOA Guidance with other provisions of Irish tax legislation.

Furthermore, when providing comments, interested stakeholders are invited to:

  • Provide numerical examples where possible to illustrate any comments provided.
  • Provide details of alternative approaches that could be applied.
  • Provide details of relevant issues not covered in the consultation document.

Responses should be sent to The policy issues arising from this public consultation will form part of the Minister for Finance’s considerations in the updating of the rules for the taxation of branches/agencies of nonresident companies. It is expected that the AOA will apply to tax years beginning on or after 1 January 2022.


For additional information with respect to this Alert, please contact the following:

Ernst & Young (Ireland), Dublin

Ernst & Young LLP (United States), Irish Tax Desk, New York

Ernst & Young LLP (United States), Irish Tax Desk, San Jose



  1. Organisation for Economic Co-operation and Development.

  2. - Ireland’s corporation tax rules: Public consultation on the application of the Authorised OECD Approach to the attribution of profits to branches of non-resident companies (