The tax accounting period normally coincides with a company’s financial accounting period, except where the latter period exceeds 12 months.
Corporation tax returns must be submitted within nine months (and no later than the 23rd day of the ninth month) after the end of the tax accounting period in order to avoid a surcharge (maximum of EUR 63,485) or a restriction of 50% of losses claimed (maximum of EUR 158,715).
Payment of tax
Corporation tax payment dates are different for ‘large’ and ‘small’ companies. A small company is one whose corporation tax liability in the preceding period was less than EUR 200,000. Interest on late payments or underpayments is applied at approximately 8% per year.
For large companies, the first instalment of preliminary tax totalling 45% of the expected final tax liability, or 50% of the prior period liability, is due six months from the start of the tax accounting period (but no later than the 23rd day of the month).
The second instalment of preliminary tax is due 31 days before the end of the tax accounting period (but no later than the 23rd day of the month). This payment must bring the total paid up to 90% of the estimated liability for the period.
The balance of tax is due when the corporation tax return for the period is filed (that is, within nine months of the end of the tax accounting period, but no later than the 23rd day of the month in which that period of nine months ends).
Small companies are only required to pay one instalment of preliminary tax. This is due 31 days before the end of the tax accounting period (but no later than the 23rd day of the month).
The company can choose to pay an amount of preliminary tax equal to 100% of the corporation tax liability for its immediately preceding period or 90% of the estimated liability for the current period. As is the case for large companies, the final instalment is due when the corporation tax return is filed.
Tax audit process
A system of self-assessment and Irish Revenue audits is in operation in Ireland.
Statute of limitations
Irish Revenue may undertake an audit of a company’s tax return within a period of four years from the end of the accounting period in which the return is submitted.
Topics of focus for tax authorities
Confronting non-compliance is one of Irish Revenue’s key strategic priorities. Irish Revenue has taken a number of steps to ensure that it is better enabled to identify and challenge perceived high risk taxpayers.
Central to this is the Irish Revenue’s operating structure, which has five national operational divisions segmented by taxpayer type. Three of those Divisions deal with corporates (Large Corporates Division, Medium Enterprises Division, and Business Division) and two are responsible for the tax affairs of individuals (High Wealth Individuals Division and Personal Division).
Both Large Corporates and Medium Enterprises Division comprise numerous sectoral branches. This structure ensures that Irish Revenue teams are building deep insights into particular industries, particularly on the tax risk footprint of taxpayers. Where Irish Revenue identifies a specific risk in one taxpayer, it is not uncommon for them to initiate a targeted intervention programme on that risk across the sector.
Irish Revenue’s sophisticated approach to risk profiling also continues to be the driver behind its compliance activity. Irish Revenue has long been adopting a risk-based approach to select cases for intervention to ensure that its resources are targeting those cases that will give rise to a yield on an audit. Central to Irish Revenue’s risk assessment is its extensive use of data, and it has invested significantly in its analytics capabilities to maximise the use of this information.
Another of Irish Revenue’s key aims is to make it easier and less costly for voluntary compliance through further use of digital channels and a range of initiatives to lessen the administrative burden for taxpayers.
Internationally, Irish Revenue has committed to further tax transparency and the exchange of information between authorities. Irish Revenue also emphasises a continued focus on transfer pricing issues both at an EU and global level.
Finance (No.2) Act 2023 incorporated Article 12a of DAC 7 into Irish law, necessitating Irish Revenue to facilitate joint audits with other EU Member States for periods commencing on or after January 1, 2024. These provisions provide a legal framework for joint audits for the first time in Ireland.
A joint audit involves an administrative enquiry jointly conducted by the Irish Revenue and the tax authority of another Member State(s), focusing on persons of common or complementary interest to the two tax authorities.
When requested to participate in a joint audit by another tax authority in an EU Member State, Irish Revenue must respond within 60 days, with the option to reject the request based on justified grounds.
The legislation allows Irish Revenue to authorise a foreign tax official as a 'nominated officer' specifically for joint audits. The nominated officer can accompany Irish Revenue officers during the joint audit, interview individuals and review records. Irish Revenue will appoint an ‘authorised officer’ to supervise and coordinate the joint audit.
While the Irish and foreign tax authorities will endeavour to agree on the facts and issues arising from a joint audit and set this out in a final report, they are not obligated to agree on the issues raised during a joint audit. Further, there is no obligation for the tax authorities to include in the final joint audit report the points on which the tax authorities did not agree.
General Anti-Avoidance Legislation
The general anti-avoidance provisions are designed to counteract transactions that lack commercial reality and are put in place with a view to reducing or avoiding a charge to taxation.
The impact of the general anti-avoidance rule is that where a person enters into a transaction and it would be reasonable to consider that the transaction is a ‘tax avoidance transaction’, Irish Revenue may, at any time, deny or withdraw the tax advantage. In order to deny or withdraw that tax advantage, Irish Revenue may:
- make or amend an assessment
- allow or disallow in whole or in part any credit, deduction, or other amount that is relevant in computing tax payable
- allocate or deny in whole or in part any credit, deduction, loss, abatement, relief, allowance, exemption, income, or other amount, or
- recharacterise, for tax purposes, the nature of any payment or other amount.
The assessment made by Irish Revenue will stand unless the taxpayer successfully appeals it to the Appeals Commissioners/Courts.
In a move to promote transparency between taxpayers, practitioners, and tax authorities, provisions relating to the disclosure of tax schemes are applicable. These require promoters of such schemes to provide information to the tax authorities within a specified time of having made the scheme available. A transaction that comes within the new law and must therefore be reported to Irish Revenue is not necessarily a tax avoidance transaction for the purposes of existing legislation. The rules are wide reaching and essentially cover all tax heads, including corporation tax, income tax, capital gains tax, stamp duty, VAT, customs duties, and excise duties.
Compliance intervention framework
Irish Revenue introduced a new compliance intervention framework with effect from 1 May 2022. The framework reflects Revenue's graduated response to risk and non-compliance, while providing taxpayers with a mechanism and incentive to voluntarily regularise any tax underpayments. The framework comprises three graduated ‘Levels': Level 1, Level 2, and Level 3.
Level 1 interventions are designed to support compliance by reminding taxpayers of their obligations and providing them with the opportunity to correct errors without the need for a more in-depth intervention. These include self-reviews, profile interviews, and engagements that fall under the Co-operative Compliance Framework (CCF) (see below). Taxpayers still have the option to make an unprompted qualifying disclosure in respect of tax underpayments when notified of a Level 1 intervention.
Level 2 interventions are used by Revenue to confront compliance risks based on the circumstances and behaviour of the taxpayers concerned. They could range from an examination of a single issue within a return to comprehensive tax audits. There are two types of Level 2 interventions: risk review and audits.
Taxpayers no longer have the option to make an unprompted qualifying disclosure when notified of a Level 2 intervention. They can, however, make a prompted qualifying disclosure up until the commencement of the intervention.
Level 3 interventions take the form of investigations. These occur in cases where Revenue has reason to believe that there has been serious tax/duty evasion or fraud on the part of a taxpayer. A taxpayer is not entitled to make a qualifying disclosure once notified of an investigation.
Co-operative Compliance Framework (CCF)
Irish Revenue has invited large businesses to partake in the CCF, which is seen as best practice internationally. The aim of the CCF regime is to continue to strengthen Ireland’s position as one of the top countries in the world for ease of doing business by promoting useful collaborative relationships between taxpayers and the Irish tax authority.
The main benefits of participating in the CCF include access to a dedicated case-worker in the Large Corporates Division, a streamlined process for the release of tax refunds, and audits in only exceptional circumstances. Interventions and enquiries within the CCF are typically ‘Level 1’ interventions, leaving it open for the taxpayer to make an unprompted qualifying disclosure. .
CCF participants are required to have the broad principles of a Tax Control Framework in place and to undertake periodic reviews of key tax risks. Irish Revenue meet with participants annually to ensure that they are meeting their obligations and commitments under the CCF and to further develop relationships.
Irish Revenue, in 2022, concluded a review of CCF, which involved surveying participating taxpayers. The findings of the review were broadly positive and concluded that CCF was operating effectively.