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Consultation on Finance (Tax Appeals and Fiscal Responsibility) Bill
The Heads of Bill for the Finance (Tax Appeals and Fiscal Responsibility) Bill were published earlier this month. One of the key changes under the Bill will be to remove a taxpayer’s automatic right to have their tax appeal heard in private. Under the proposal, taxpayers wishing to have their appeal heard in private must make an application to the Tax Appeals Commission (“TAC”) explaining why the case should be heard privately and the TAC will have discretion to accept or reject the request. The Irish Attorney General advised that such a change was required following the Supreme Court decision where a blanket prohibition on public hearings of the Workplace Relations Committee was declared unconstitutional.
A number of other changes will be proposed under the Bill, including:
- a provision that determinations are only redacted in special and limited circumstances;
- a provision to allow for cross-examination of witnesses; and
- provisions to allow for the appointment of non-temporary Commissioners with different tiers of responsibility.
As part of the pre-legislative scrutiny process the Joint Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation has announced a consultation on the Heads of Bill. Submissions must be made by 5pm on 13 December 2025. Following the consultation, a draft of the Bill is expected to be published in February 2026.
If you would like to discuss the consultation in further detail, please speak to your usual Matheson Tax contact.
Irish Finance Bill: Changes made at Committee and Report Stages
The Finance Bill 2025 continues to make its way through the Houses of the Oireachtas. A number of important changes have been made to the text during the legislative process, including:
- An adjustment to the rules on the calculation of the qualifying domestic top-up tax (“QDTT”) so that a group can continue to use local GAAP for Irish QDTT calculations in cases where the accounting periods of all qualifying entities in the group are not the same because of a new entity being created, an entity being liquidated, dissolved, merged or acquired during the year. This change applies for accounting periods beginning on or after 31 December 2023. Further details (along with upcoming Pillar Two filing deadlines) are included in our Matheson Insight here.
- An extension to the carve-out from the reverse hybrid rules in section 835AVB of the Taxes Consolidation Act (“TCA”) for collective investment schemes so that the carve-out is available to investment limited partnerships that hold assets through a subsidiary.
- Further adjustments to how section 400 TCA (transfer of capital allowances on transfer of a trade) applies in cases where IP is transferred as part of the transfer of a trade. If the transferor has claimed capital allowances on the acquisition of IP and only part of that IP is transferred under a transfer that qualifies for section 400 TCA, the excess capital allowances that are transferred under section 400 TCA and made available to the transferee are calculated on a just and reasonable basis. The provision also expressly confirms that the section 400 TCA change applies only to transfers made on or after 1 January 2026.
- The change in the Finance Bill that reduced the VAT rate on newly built apartments to 9% has been extended to development services in respect of those apartments. That change applies from 26 November 2025.
The Bill will be debated by Seanad Éireann, the upper house of the Oireachtas, over the coming weeks. Seanad Éireann cannot amend the Finance Bill and can only advise Dáil Éireann to make changes. It is widely expected that the version of the Bill passed by Dáil Éireann on 26 November 2025 will be signed into law before the end of the year.
Irish Pillar Two Update: Upcoming Deadlines
While the application of Pillar Two rules to US-headquartered companies remains under negotiation, Irish taxpayers in-scope of Pillar Two (including members of US headquartered groups) continue to have Pillar Two filing obligations in Ireland. Some of those obligations must be satisfied before the end of 2025.
Further details on the upcoming deadlines are included in our Matheson Insight here.
OECD Update to Model Tax Convention
On 19 November 2025, the OECD issued an update to the OECD Model Tax Convention on Income and Capital (“OECD Model”) and the related 2017 OECD Commentary. The update includes:
- Changes to the Commentary to Article 5 (Permanent Establishment) to reflect home office working arrangements;
- Changes to the Commentary to Article 9 (Associated Enterprises) to confirm how transfer pricing rules interact with domestic law restricting deductions; and
- Updates to Article 25 (Mutual Agreement Procedure) and the related commentary to confirm the role of competent authorities in determining whether a matter falls within the scope of a tax treaty for purposes of the dispute resolution mechanisms provided under the General Agreement on Trade in Services.
Changes have also been made to the provisions that deal with natural resources and there are updates to more accurately reflect country positions on the OECD Model and the Commentary.
The changes to the Commentary to Article 5 provide guidance on whether activities carried out at a home office or other place constitute a fixed place of business permanent establishment.
The Commentary provides that the activities carried on at home need to be (i) on a continuous basis; (ii) during an extended period of time; and (iii) related to the business of an enterprise, in order to be considered a ‘place of business of the enterprise’. Under the guidance, if an individual works from a home (or other relevant place) for less than 50% of their total working time in any twelve-month period that home or other place will generally not be treated as a ‘place of business of the enterprise’. If the 50% threshold is exceeded, it would then be necessary to consider the specific facts and circumstances to determine whether the enterprise has a place of business.
An important consideration is whether there is a commercial reason for the activities to be undertaken by that individual in the country where the home or other relevant place is located. It is noted that a “commercial reason requires a link between the individual’s presence at a home or other relevant place in that State and the carrying on of the business of the enterprise. This would not be the case where an enterprise enables an individual to work from home or another relevant place solely to obtain or retain the services of that individual.”
This guidance provides much-needed clarity for managing cross-border remote working arrangements.
On 26 November 2025, the OECD also issued a short consultation paper on global mobility of individuals. Through the consultation, the OECD are trying to understand what issues are arising in practice as a result of employees working in a different jurisdiction to their employer. The closing date for the consultation is 22 December 2025.
Feedback Statement for Phase One of Reform of Irelands Taxation Regime for Interest
As noted in the Budget 2026 announcements, the Department of Finance has published a consultation on the taxation of interest. It includes a strawman proposal which would provide the framework for revised legislation to be included in next year’s Finance Bill.
One of the main proposals is that the deductibility test for interest (which can vary depending on the Case and Schedule) would be replaced with a ‘profit motive’ test which would permit interest to be deducted when the taxpayer borrows with the purpose of realising profits or gains. Further, interest under Schedule D, Case III and IV would be taxed on a net basis.
The rules on interest as a charge (sections 247 and 249 TCA) would remain but taxpayers would be permitted to elect in or out of those rules on a loan-by-loan basis.
Amendments will be proposed to the interest limitation rule such that:
- the €3 million de minimis will continue to apply on an entity basis with a €6 million group-wide de minimis also applying;
- the 30% restriction only to borrowing costs exceeding the €3 million threshold; and
- the timeline for making the group election.
Responses to the consultation are requested by 16 January 2026. If you would like to discuss any aspect of the consultation, please speak to your usual Matheson Tax contact.
Irish VAT Groups - Territorial Application
On 19 November 2025, Irish Revenue published new and updated guidance on VAT groups including a new tax and duty manual which sets out guidance on the territorial scope of VAT groups in Ireland. The key points to note from this guidance are as follows:
- Irish Revenue are changing their interpretation of the scope of an Irish VAT group to restrict it to Irish establishments only of entities in accordance with the Skandia / Danske Bank CJEU decisions.
- This contrasts with the historic position that all establishments (foreign or Irish) were treated as within an Irish VAT group.
- There are also Irish VAT implications for Irish establishments of entities which are members of VAT groups in any other EU Member States.
- Irish Revenue have confirmed this change in interpretation for:
- Existing Irish VAT groups will apply from 1 January 2027 (ie, there is a transitional period up to 31 December 2026).
- For new Irish VAT groups will apply with immediate effect (from 19 November 2025).
Irish VAT groups in particular will need to carefully consider whether and to what extent these changes will impact them. In the first instance it should be confirmed if the Irish VAT group currently applies to any cross border supplies to or from establishments of members outside Ireland. In addition, attention should be paid to whether any Irish establishments receive supplies from or make supplies to EU establishments in the same entity which are members of an EU VAT group.
If you would like to discuss the potential impacts of this change, please contact your usual Matheson Tax contact or our Indirect Tax Team.
Tax Controversy and Dispute Resolution Updates
In a recent TAC determination, the TAC considered two interesting points:
(i) whether a taxpayer was carrying on a trade of land development and entitled to claim loss relief; and
(ii) whether the taxpayer could object to Irish Revenue issuing its notice of assessment outside the statutory time limit when that objection had not been included in the taxpayer’s Notice of Appeal. Further details on this determination and the key takeaways are included in our Matheson Insight (here).
OECD Statistics on MAPs and APAs Involving Ireland
As mentioned in last month’s update, the OECD published its 2024 statistics on Mutual Agreement Procedures (“MAPs”) and Advance Pricing Agreements (“APAs”) as part of the OECD’s Tax Certainty Day. The OECD also handed out awards to Competent Authority teams that achieve strong results in resolving cases. These statistics and awards provide key insights on trends in MAPs and APAs involving Ireland. Further details are included in our Matheson Insight (here).
