Tax Disputes Comparative Guide

1 Legal framework

1.1 Which laws govern taxation and tax disputes in your jurisdiction?

The Irish system of taxation is governed principally by a combination of domestic Irish legislation and European Union (EU) law. Tax administration is governed by the provisions of the relevant statute applicable to that tax head. For example, the main legislation governing direct taxes is the Taxes Consolidation Act 1997 (TCA). The process to appeal an assessment issued by the Irish tax authority, being the Office of the Revenue Commissioners (Irish Revenue), in respect of direct taxes is outlined in the TCA. The Irish Revenue Code of Practice for Compliance Interventions (Code of Practice) is a set of guidelines to be applied by Irish Revenue when conducting compliance interventions and must also be followed by taxpayers / tax practitioners when dealing with compliance interventions.

In most cases taxpayers have the right to request Irish Revenue to undertake a review of an Irish Revenue decision and generally taxpayers have a right of appeal to the independent statutory body tasked with hearing appeals: Tax Appeals Commission (TAC).

As a common law jurisdiction, court decisions (other than decisions of the TAC) have precedential value in Ireland and are binding on taxpayers unless overruled by a decision of a superior court (or a subsequent legislative amendment).

1.2 Do any other regional, national or supranational rules or regulations have relevance in this regard?

As a member of the EU, Ireland is subject to EU law, both primary and secondary, including EU treaties, regulations and directives, together with decisions, recommendations and opinions issued by EU institutions. From a tax disputes perspective this includes the EU Arbitration Convention and the EU's Directive on Tax Disputes Resolution Mechanism (EU 2017/1852) (which has been transposed into Irish law by way of the 2019 Regulations (as amended)) (EU TDRM). The EU TDRM sets out a framework for the resolution of tax disputes between Ireland and one or more EU Member States arising from the interpretation or application of bilateral double tax treaties and the EU Arbitration Convention.

Under the provisions of Order 84 of the Rules of the Superior Courts 1986 (as amended), taxpayers can seek leave from the Irish High Court to challenge the decision making process of administrative bodies, including Irish Revenue, and the lower courts. Essentially, when judicially reviewing a matter, the High Court is tasked with scrutinising how a public body (e.g. Irish Revenue) carries out its duties and exercises the powers granted to it by statute.

More generally, the provisions of bilateral double tax treaties may be relevant to tax disputes in cross-border scenarios. For example, double tax treaties generally include provisions for the resolution of disputes through the mutual agreement procedure (MAP), a matter which is discussed in further detail below.

Ireland's membership of the Organisation for Economic Co-operation and Development (OECD) and its commitment to participate in the implementation of OECD tax initiatives such as the "Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy" has also shaped the development of Irish tax rules and will likely, over time, impact on international tax dispute resolution as it relates to those areas.

1.3 Which authorities are responsible for enforcing the tax laws? What is their general approach to enforcement?

Irish Revenue is the authority responsible for enforcing tax laws, collecting taxes / duties and implementing customs controls. Irish Revenue is divided into regions each of which are responsible for taxpayer affairs within their respective geographical region with the exception of larger corporates and high net worth taxpayers whose affairs are generally dealt with by a central division (Large Corporates Division).

The tax system in Ireland generally functions on a self-assessment basis which means that it is the responsibility of the taxpayer to promptly file returns and pay the correct amount of tax. To the extent that errors are made by taxpayers in connection with their tax affairs, facilities exist to enable taxpayers to voluntarily address those errors and discharge any liabilities with reduced penalty exposure.

The Code of Practice outlines the compliance interventions employed by Irish Revenue to ensure compliance and address non-compliance by taxpayers. These are discussed in more detail at 2.1 below. In general, taxpayers are selected by Irish Revenue for a compliance intervention based on the presence of various risk indicators.

1.4 To what extent do the tax authorities cooperate with (a) other national authorities and (b) their international counterparts in enforcing the tax laws? Does this vary depending on the applicable tax?

There are a number of ways in which Irish Revenue cooperates with other national authorities in terms of information exchange and enforcement of tax laws.

Exchange of Information

Exchange of taxpayer information between Irish Revenue and other tax administrations is provided for in various legal instruments. The extent of the information exchanged and the taxes covered depends on the scope of the relevant instrument.

Country-by-Country Reporting

Country-by-country reporting (CbC) has been implemented into Irish law and requires multinational groups with annual consolidated revenue of €750 million or more to file certain information with tax authorities providing a global view of their operations and tax paid in the jurisdictions in which they operate. Irish Revenue exchanges CbC reports filed with it with the competent authorities of relevant jurisdictions in which the multinational group operates on a quarterly basis.

Mutual Agreement Procedures (MAP) / Advanced Pricing Agreements (APA)

Irish Revenue – via the Irish Competent Authority – actively and frequently engages with the tax administrations of other jurisdictions in connection with MAP and APA processes. Publicly disclosed statistics show a steady increase in the number of MAP and APA cases submitted to the Irish Competent Authority, demonstrating the Irish Competent Authority's role in these cross-border co-operative processes.

2 Tax investigations

2.1 How do the tax authorities monitor compliance with the tax laws? Does this vary depending on the individual taxpayer or the applicable tax?

Other than a relatively small number of randomly selected cases, taxpayers are typically selected by Irish Revenue for a compliance intervention based on the presence of various risk indicators. Irish Revenue will typically raise enquiries in respect of:

• tax returns that appear high risk, for example if the return discloses an expression of doubt or significantly different figures from previous returns and / or improbable figures (when evaluated against available information);
• tax returns that relate to taxpayers in certain sectors or certain types of taxpayers, if, for example, tax compliance in a particular business sector, trade or profession is under examination; or
• a random sample of tax returns.

In addition to tax return review Irish Revenue has access to vast quantities of data relating to taxpayer affairs. While certain of that data is directly provided by taxpayers, Irish Revenue also derives increased amounts of data from third-party sources such as foreign tax administrations (via CbC, see further at 1.4 above) and financial institutions. Irish Revenue routinely deploys sophisticated analytics software (Risk Evaluation, Analysis and Profiling System (REAP)) to risk profile taxpayers and tax risks on the basis of this available data with a view to instigating appropriate compliance interventions in line with the Code of Practice.

Large taxpayers may join Irish Revenue's Co-operative Compliance Framework (CCF) which is a formal process that seeks to enable Irish Revenue and large businesses to work together to achieve tax compliance. The bilateral relationship is based on trust and co-operation and ensures the highest level of voluntary tax compliance and certainty.

2.2 What typically triggers a tax investigation in your jurisdiction?

The Code of Practice reflects the graduated response to risk and non-compliance that is applied in practice by Irish Revenue. With an increased onus placed on taxpayers to self-review on a proactive basis and voluntarily disclose errors, typically an Irish Revenue intervention will be triggered based on the information and data to hand (outlined at 2.1 above) and the level of perceived risk from a taxpayer or sectoral perspective.

2.3 What is the limitation period for commencing a tax investigation in your jurisdiction?

The limitation period for commencing a tax investigation depends on the particular statutory provisions of the relevant tax.

As regards corporation tax, for example, if an Irish Revenue Inspector is not satisfied with the taxpayer's return, or if the taxpayer fails to deliver a return, the Inspector can assess the taxpayer for tax that the Inspector determines to have been underpaid. That assessment must, in general, be made within four years from the end of the accounting period in which the relevant tax return is delivered, except in the case of fraud or neglect (in which case there is no time limit on the making of assessments). The four year time limit does not apply where the return submitted by the taxpayer for the period does not contain a full and true disclosure of all material facts necessary for the making of an assessment for that period.

2.4 How does a tax investigation typically unfold in your jurisdiction?

Civil tax enquiries generally start with a notice of compliance intervention. The compliance intervention may be:

• Level 1: Level 1 interventions are designed to support compliance by reminding taxpayers of their obligations and providing them with the opportunity to correct errors without initiating a more in-depth intervention.
• Level 2: Level 2 interventions are designed to confront compliance risks based on the circumstances and behaviour of the taxpayers and range from a so-called 'Risk Review' to a formal 'Audit'.
• Level 3: Level 3 interventions are designed to confront what Irish Revenue perceive as high-risk practices and cases displaying risks of suspected fraud and tax evasion. Interventions within this level are termed 'Investigations'.

Under each of the intervention levels there is a fact-finding / evidence-gathering stage during which Irish Revenue will make enquiries and request information either by way of written correspondence / document review or on-site enquiries (using statutory information-gathering powers if necessary).

The manner in which a compliance intervention is concluded depends on the particular type of intervention. For Level 2 audit cases, a final meeting will be held with the taxpayer to set out the findings of the intervention. It may also be necessary for a final meeting to be held following conclusion of a Level 2 risk review where carried out on-site. Where a final meeting is not required, Irish Revenue will write to the taxpayer to set out the position. Where Irish Revenue is satisfied that the relevant returns are correct and no amendments are required a letter will be issued confirming that the intervention is closed.

Where Irish Revenue conclude that a liability to tax arises, the taxpayer will be advised of the findings and Irish Revenue will seek to agree these with the taxpayer. If agreement is ultimately not reached, Irish Revenue will inform the taxpayer in writing of the basis of any assessment, amended assessment or estimate and will issue the relevant notices to the taxpayer. Assessments or other notifications of liability may be appealed to the TAC.

2.5 What is the typical timeframe for the investigation?

The timeframe for a tax compliance intervention can vary greatly from a number of months to years depending on the issue and perceived risk and therefore it is difficult to determine a typical timeframe. That said, it is in the interests of both Irish Revenue and the taxpayer that any compliance intervention is conducted as quickly and efficiently as possible. In this regard, Irish Revenue Customer Service Standards set out the standards of service that taxpayers can expect to encounter in their engagements with Irish Revenue.

2.6 What powers do the tax authorities have in conducting their investigation, in relation to (a) the taxpayer itself, (b) its employees and (c) third parties?

Irish Revenue have relatively broad information gathering powers in conducting their enquiries. Irish Revenue officials have the power to enter premises / places where it is believed a trade or profession chargeable to tax is being carried out or associated business records are retained. Officials can require persons at the premises to produce business records and those officials can also search the premises. Officials are entitled to remove the records and retain them for further examination. The records within scope of production include written material and those records stored on electronic devices. A search warrant is generally required in order for Irish Revenue officials to enter a private residence.

Irish Revenue may also request information from third parties by serving notice in writing to that third party and informing the taxpayer that such a notice has issued. Irish Revenue also has extensive powers to request information from financial institutions.

2.7 On what grounds, if any, can taxpayers refuse to disclose commercial information during the investigation?

In addition to materials which are subject to legal professional privilege or of a confidential medical nature, Irish Revenue's power to request documents does not require the disclosure of professional advice of a confidential nature given to a client (other than advice given as part of a dishonest, fraudulent or criminal purpose).

The scope of the records which Irish Revenue can request is limited to those records that are relevant to a tax liability of the person or records which the taxpayer is obliged to retain for Irish tax purposes

2.8 Can the taxpayer object to or challenge the tax investigation? Are any other avenues available for resolving the matter?

A taxpayer cannot object to or challenge the fact of the investigation or enquiry. Ultimately the enquiry may result in an assessment / amended assessment being issued which would be a decision appealable by the taxpayer to the TAC.

2.9 What actions can the tax authorities take if the taxpayer does not cooperate in the investigation?

Irish Revenue has statutory powers to compel taxpayers and certain third parties to provide information and documents including the power to apply to the District Court / High Court for an order in relation to same. The tax code sets out various financial penalties for failure to comply with such requests and the continued obstruction of an audit can also amount to a criminal offence. Financial penalties or potential imprisonment can also apply where a party fails to comply with a court order.

2.10 Can the tax authorities exercise discretion in their treatment of the taxpayer in exceptional circumstances (eg, insolvency)?

As a general rule, taxpayers are required to pay their tax liabilities in full on time. However, Irish Revenue have procedures in place enabling it to grant concession to a taxpayer to enter into phased payment arrangement to pay the liability in instalments over time. These arrangements will only be entered into by Irish Revenue where it believes that it is the best method of collecting outstanding tax liabilities and a refusal to do so would result in failure to collect any money.

Where a taxpayer claims an inability to pay a tax or duty default, it is the taxpayer's responsibility to satisfactorily demonstrate that inability to Irish Revenue along with documentary evidence.

2.11 Do tax authorities have any leeway to settle in the course of tax investigations?

During the course of an audit or enquiry, Irish Revenue can enter into a binding settlement with the taxpayer to resolve the enquiry without litigation. The Code of Practice outlines the application of interest and penalties applying in settlement scenarios with taxpayer co-operation and behaviour taken into account in determining potential penalty amounts.

2.12 If the investigation concludes that taxes are overdue, what powers do the tax authorities have to collect them? Does this vary depending on the applicable tax?

As a general matter on the conclusion of an intervention where it is determined that additional taxes are due Irish Revenue will issue an assessment to the taxpayer for the overdue tax and interest.

As regards collection of any unpaid tax, the Irish Revenue Collector General has relatively extensive powers to enforce collection of overdue taxes where a taxpayer is unwilling to settle the outstanding liabilities. In practice, Irish Revenue may agree to a phased payment arrangement where a taxpayer is having difficulty in paying the unpaid tax debts (as outlined at 2.10 above). The Collector General Dedicated Enforcement Unit has a range of enforcement measures at its disposal to pursue and enforce collection in cases of serious non-compliance where standard enforcement measures have proven unsuccessful. These measures include reference to an Irish Revenue Sheriff in the first instance, attachment to the taxpayer's bank account and / or securing of a court judgment against the taxpayer with follow up enforcement measures if necessary. These follow up measures may include, inter alia, judgment mortgage, forced sale and bankruptcy.

2.13 On what grounds are penalties imposed and how are these calculated?

Irish tax legislation contains many civil and criminal penalties that can be imposed depending on the nature of the tax default. Fixed penalties generally apply to breaches of the tax legislation focussed on procedural administration. Tax-geared penalties generally apply in situations where the tax default gives rise to a tax liability with the penalty amount being a percentage of the amount of tax underpaid (up to 100%). The amount of penalty imposed will depend on a number of factors including:

• whether the error was careless or deliberate and with / without significant tax consequences;
• whether the taxpayer made an unprompted or prompted qualifying disclosure of the error; and
• how co-operative the taxpayer is once the error has been disclosed or identified.

Where Irish Revenue forms the opinion that a taxpayer is liable to a penalty then the amount of the penalty is generally computed by Irish Revenue and sought to be agreed with the taxpayer (and paid). Where a taxpayer does not agree to the penalty liability or does not pay a penalty which they have agreed to, a Notice of Opinion will issue from Irish Revenue to the taxpayer outlining the amount of the penalty Irish Revenue asserts to be due. Where the amount of the penalty is not agreed (or the taxpayer does not respond) within 30 days, Irish Revenue may make an application to a relevant court for that court to determine whether the penalty is due. The relevant court is determined by reference to the jurisdictional limits for civil matters:

• District Court: penalty amount of up to €15,000.
• Circuit Court: penalty amount of up to €75,000.
• High Court: penalty amount in excess of €75,000.

The court will determine, based on the evidence before it, whether the taxpayer has breached the legislation giving rise to the liability to a penalty. Where a court makes a determination that the taxpayer is liable to a penalty and makes an order for the recovery of that penalty, Irish Revenue will seek to recover the penalty as if it were tax.

2.14 On what grounds is interest levied and how is this calculated?

Statutory interest is charged on the amount of tax due from the relevant due date. Interest in respect of VAT liabilities is charged at a rate of 0.0274% per day (c. 10% per annum) and in respect of direct taxes (corporation tax, capital gains tax, etc.) is charged at a rate of 0.0219% per day (c. 8% per annum).

2.15 What defences are typically available to the taxpayer?

Interest: as both the requirement for interest and the applicable rate are provided for by statute there is generally no defence available.

Penalties: the level of tax-geared penalty depends, amongst others, on whether the default is in the category of deliberate or careless behaviour and with / without significant tax consequences. A key aspect to this determination is the extent to which the taxpayer is viewed as taking reasonable care with the appropriate test in that regard being whether a taxpayer of ordinary skill and knowledge, properly advised, would have foreseen as a reasonable probability or likelihood, the prospect that an act (or omission) would cause a tax underpayment having regard to all the circumstances. Full cooperation with Irish Revenue in the course of the audit or investigation also typically leads to lower penalties for the taxpayer.

2.16 Can the results of the tax investigation have criminal implications for the taxpayer? Does this vary depending on the individual taxpayer?

Yes, an Irish Revenue tax investigation may result in criminal implications for a taxpayer. Irish Revenue's programmes of criminal investigation generally aim to combat serious tax evasion or other serious offences such as fraud, smuggling, etc. The State Director of Public Prosecutions makes decisions as to whether or not a case should be prosecuted and those convicted of tax offences may be liable to a fine or imprisonment or both. The Code of Practice outlines certain types of offences that are most likely to lead to criminal prosecution:

• Deliberation omissions from tax returns
• False claims for repayment
• Use of forged or falsified documents
• Facilitating fraudulent evasion of tax
• Use of offshore bank accounts to evade tax
• Tax evasion schemes
• Failure to remit fiduciary taxes
• Failure to produce business records when required

The Code of Practice also refers to Irish Revenue pursuing a vigorous prosecution policy for:

• Failure to file returns
• Failure to produce books, records when requested to do so
• Failure to submit a Statement of Affairs when asked to do so
• Providing false or misleading information to Irish Revenue
• Destroying or failing to keep records
• Smuggling of goods
• Misuse of marked mineral oil
• Trading without a current excise license
• Use of sales suppression software
• Knowingly aiding, abetting, assisting, inciting or inducing the provision of incorrect returns, statements or accounts in connection with any tax.

2.17 If the tax investigation has criminal implications for the taxpayer, are the answers to any of the above questions different?

Yes. Level 3 investigations which are the form of intervention deployed by Irish Revenue to tackle high-risk cases / practices where Irish Revenue believes that serious tax or duty evasion may have occurred, do not permit qualifying disclosures to be made and carry a minimum civil penalty level of 75% assuming full taxpayer cooperation (100% without cooperation). Where ultimately the investigation leads to a criminal prosecution those convicted may be liable to a fine or imprisonment or both.

3 Voluntary disclosure and amnesties

3.1 Are any voluntary disclosure or amnesty programmes applicable in your jurisdiction? Does this vary depending on the applicable tax?

The Code of Practice reflects Irish Revenue's graduated response to risk and non-compliance and provides various mechanisms for taxpayers to regularise any underpayments of tax across all tax heads (except customs interventions which are provided for by the Union Customs Code and EU legislation rather than national legislation). In doing so the Code of Practice places an increased onus on taxpayers to proactively self-review their tax filings and voluntarily disclose errors to Irish Revenue. The process for making a voluntary disclosure is set out in legislation and in the Code of Practice. A disclosure may be prompted or unprompted. The status of the voluntary disclosure – i.e. whether unprompted or prompted – depends on the compliance intervention level invoked by Irish Revenue, with the availability of an unprompted disclosure being lost when moving to a Level 2 risk review or audit. The benefit of making a qualifying disclosure is a reduction in penalties (and, in some cases, the ability to avoid publication of the taxpayer's name on a list of tax defaulters). An unprompted disclosure attracts lower penalties than a prompted disclosure.

4 Forum for tax disputes

4.1 In what forum(s) are tax disputes heard in your jurisdiction? Is there any choice of forum available?

Taxpayers who are dissatisfied with a decision or assessment of Irish Revenue have a right to appeal to the TAC, which is the statutory body that has the power to set aside, vary or uphold a decision of Irish Revenue. Taxpayers may also seek judicial review of the relevant Irish Revenue decision directly to the High Court. As such, the TAC is the first instance independent tribunal for tax disputes in Ireland with a right of further appeal on a point of law (only) to the High Court and thereafter to the Court of Appeal and Supreme Court in very limited circumstances (if the case raises a point of law of exceptional importance).

4.2 Who is the fact finder in a tax dispute? Does this change based on venue?

The TAC is the fact-finding body. On appeal the High Court (or any further appellate court) will have regard only to the evidence produced as part of the TAC process and additional facts or evidence cannot generally be produced for the purposes of an appeal by way of case stated. The High Court will therefore not generally interfere with a finding of fact by the TAC except in limited circumstances. Taxpayers should therefore be aware that full facts and evidence must be given at a TAC hearing to support the taxpayer's case at the hearing and any subsequent appeal to the High Court (or beyond).

5 Filing a tax dispute

5.1 What is the limitation period for filing a tax dispute in your jurisdiction?

Once in receipt of a notice of assessment / amended assessment from Irish Revenue, a taxpayer has scope to accept or challenge the assessment.

If the taxpayer has grounds to believe that Irish Revenue's decision-making or administrative process was flawed the taxpayer may consider seeking leave from the High Court to judicially review the decision. Leave from the High Court must be sought within three months of the decision giving rise to the potential right of review, i.e. the notice of assessment / amended assessment issued by Irish Revenue to the taxpayer.

More frequently, taxpayers will challenge the merits of the decision made by Irish Revenue rather than the decision-making or administrative process. This is done by filing an appeal in the TAC. The first stage in the appeal process to TAC is the completion and issuing of the Notice of Appeal with the TAC and this is generally to be filed within 30 days of the raising of the assessment by Irish Revenue. Only in exceptional circumstances will this time limit be extended by the TAC beyond 30 days.

5.2 What are the formal requirements for filing a tax dispute?

As noted at 5.1, the first stage in the appeal process to TAC is the completion and issuing of the Notice of Appeal. The Notice of Appeal is a standard format document available on the TAC website. The Notice of Appeal is issued to TAC who will in turn issue a copy to Irish Revenue who can either consent or object to the appeal proceeding. If Irish Revenue object to admission of an appeal, they must do so in writing stating their reason for the objection no later than 30 days after the date on which the copy of the Notice of Appeal has been sent to them. The grounds of that objection are then furnished to the taxpayer who is invited to respond in writing to Irish Revenue's grounds of objection.

If Irish Revenue has no objection to the consideration of the appeal, the TAC will nonetheless consider whether:

• the appeal has been properly brought;
• the appeal is frivolous;
• the appeal is a late appeal and, if so, whether there are grounds for a late appeal.

A decision not to accept an appeal will be notified in writing to the taxpayer and to Irish Revenue and any such notification must specify the reason(s) why the appeal has not been accepted.

As noted at 5.1, applications for judicial review are required to be made within three months of the decision giving rise to the potential right of review. A Notice of Motion is generally issued seeking leave to apply for Orders by way of judicial review, an Order quashing the assessment with declarations as regards the effectiveness of the assessment in light of the grounds for judicial review, accompanied by appropriate Affidavits of Verification and Service. A Statement of Grounds to ground the application for judicial review is served and this sets out in some detail the salient facts and legal basis for the application sought.

5.3 What are the procedural and substantive requirements for filing a tax dispute?

See 5.2 above. The Notice of Appeal should be drafted carefully to ensure that all grounds of appeal are included to avoid losing the ability to run certain arguments at the hearing of the appeal that will ultimately follow and a similar approach should be taken to the Statement of Grounds filed as part of judicial review proceedings.

5.4 Is there any possibility for collective proceedings (eg, involving several taxpayers or multiple tax assessments)?

All taxpayers affected by an appealable decision must file their own individual Notice of Appeal with the TAC. However, once the appeal is filed, the TAC has discretion to essentially consolidate together two or more appeals raising common or related issues. This means that the TAC will proceed to handle the appeal process with all of the joined parties at the same time. The TAC will hold a single appeal hearing in relation to the consolidated appeals and their single determination will apply to the appeals of all the parties to the consolidated appeal. A direction to consolidate an appeal with another appeal will be issued in writing by the TAC to all the parties. A taxpayer can appeal against the joining of parties to its appeal or against the joining of its appeal to an appeal of other parties. A written submission is to be made to the TAC no later than 14 days after the date of the direction to consolidate an appeal with another appeal.

Separately, a taxpayer may make a request to the TAC to become a party to another appeal in certain limited circumstances. In response, the TAC may issue a direction joining an additional party to an appeal to adjoin the appeals. Where this occurs the taxpayers whose appeals are joined will be bound in that appeal by the determinations of the TAC.

5.5 Must the sum in contention be paid into court before a tax dispute is filed?

There is generally no requirement to pay the amount of additional tax due as per the assessment in advance of an appeal hearing.

5.6 Has the filing of a tax dispute any effect on the payment of tax or the collection possibilities for the authorities?

See 5.5 above. As there is generally no requirement for a taxpayer to pay the amount of additional tax due as per the assessment pending an appeal there should be no effect on the ultimate payment of the tax or collection possibilities of Irish Revenue where the appeal is decided in Irish Revenue's favour.

5.7 If the tax dispute is decided in favour of the authorities, is late interest due if the tax has not been settled? If the tax dispute is decided in favour of the taxpayer and the tax had already been settled, is interest due by the state?

Interest is due on underpaid tax due to Irish Revenue following culmination of the case. See 2.14 above, regarding the rate of interest on underpaid tax due to Irish Revenue. Interest can be payable on tax refunds due from Irish Revenue in certain circumstances.

6 Disclosure and privilege

6.1 What rules apply to disclosure in your jurisdiction? Do any exceptions apply?

There is no formal document discovery process before the TAC. Generally, the TAC will issue a direction requiring the parties to seek to agree and submit to TAC a Book of Agreed Documents (including a Book of Core Documents) prior to hearing. Therefore, as a matter of ordinary course, the parties will exchange the documentary evidence on which they intend to rely at hearing.

6.2 What rules on third-party disclosure apply in your jurisdiction?

See 2.6 above. Irish Revenue may request information from third parties by serving notice in writing to that third party and informing the taxpayer that such a notice has issued. Irish Revenue also have extensive powers to request information from financial institutions. Separately, the TAC may summon any person to appear before it to be examined where it considers such a person to be in a position to give evidence relating to a matter under appeal (see further at 7.1 below).

6.3 What rules on privilege apply in your jurisdiction?

Documents covered by legal professional privilege can be withheld by taxpayers or third parties. Legal advice privilege protects communications between lawyers and clients that are made for the sole or dominant purpose of giving or receiving legal advice. Litigation privilege protects communications between lawyers or their clients and any third party for the purpose of obtaining advice or information in connection with existing or reasonably contemplated litigation. Legal advice privilege does not apply to communications between clients and tax advisors that are not qualified lawyers, regardless of whether the purpose of the communication was the giving or receiving of advice on tax law.

7 Evidence

7.1 What types of evidence are permissible in tax disputes in your jurisdiction? Is expert evidence accepted?

The TAC has broad powers to admit, require, limit or exclude evidence. The process at hearing is generally a combination of written and oral submissions. There are two types of witnesses in a TAC case: witnesses of fact and expert witnesses.

A witness of fact is a person who is called upon to give direct evidence in respect of the facts within their own means of knowledge. Although there can be value in parties preparing witness statements to ensure that they can assess the strength of their evidence and to facilitate without prejudice negotiations, witnesses are generally required to give evidence orally at hearing with the opportunity for each party to cross-examine the other party's witnesses. Unlike expert witnesses, discussed below, witnesses of fact can only give evidence of facts and not opinion.

Tax disputes can arise in a range of different scenarios and involve a multitude commercial arrangements. It may therefore be necessary to engage an expert witness at hearing to assist the TAC in the consideration of an appellant's argument on, for example, economic analysis, the nature of a payment, agreement, arrangement or foreign law interpretation in the given scenario. While experts will typically be required to give evidence orally, it is advisable to prepare an expert report in advance of the hearing. Sometimes those reports will be the subject of a directed exchange and furnished to the TAC. An expert witness must have expertise and qualifications in the relevant field and be in a position to give an independent opinion on the matters at issue. Importantly, the primary duty of the expert is to the TAC such that the person is obliged to deliver evidence in an impartial manner and the appointment of an expert should serve to assist the TAC Commissioner in its statutory duty to make a determination.

The TAC has powers to summon any person before it for examination where the TAC considers such a person to be in a position to give evidence relating to a matter under appeal. That summons should be sent to that person not less than 21 days before the date of a hearing (unless the person consents to a shorter period). The witness summons will also highlight the entitlement of a witness to apply for the summons to be varied or set aside and the consequences of failure to comply with the summons (which broadly involve the application of a financial penalty).

7.2 What is the applicable standard of proof?

The standard of proof is the 'balance of probabilities'.

7.3 On whom does the burden of proof rest?

The burden of proof generally is on the taxpayer to demonstrate to the satisfaction of the TAC that the decision made / assessment raised by Irish Revenue is incorrect.

8 Proceedings

8.1 Are tax proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?

While TAC proceedings are by default held in public, taxpayers can elect for the hearing at TAC to be held in private and frequently this is the approach adopted. The TAC is obliged to publish a determination within 90 days of notifying the parties of the determination. Where the TAC hearing was held in private, the eventual published determination will be redacted (usually with input from the taxpayer and Irish Revenue) to exclude particularly sensitive commercial information.

8.2 How do the proceedings unfold in your jurisdiction?

On receipt of the Notice of Appeal and acceptance of the appeal by TAC the taxpayer is generally required to complete a Statement of Case (usually within a period of 28 days from the date of the TAC direction requiring same). The Statement of Case contains details of the facts relevant to the appeal. Its purpose is to provide the TAC with sufficient understanding of the relevant facts and the main evidence related to these facts, together with the broader context of case law and legal arguments expected to be made in relation to the appeal. Within the Statement of Case the taxpayer is required to clarify whether in its view the matter is a 'Simple Case' or 'Complex Case'.

If considered a 'Simple Case' the taxpayer is required to include within the Statement of Case the legal arguments the taxpayer wishes to make in support of the appeal together with the related case law references. The TAC will use the information within the Notice of Appeal and Statement of Case to determine whether it rightly considers the case to be simple or complex.

If classified as a 'Simple Case', it is possible to avail of the simplified procedure whereby, in addition to the Statement of Case, the main follow-on directions will generally be:

• Either or both parties to the appeal to set out their legal arguments (if any) to be presented at the hearing;
• The taxpayer and Irish Revenue agree they have provided to TAC all relevant facts and evidence to be presented;
• The details of witnesses (fact and expert) to be called upon at hearing;
• To schedule a time and date of the hearing.

If classified as a 'Complex Case', in addition to the Statement of Case, the main follow-on directions will generally be:

• The parties to submit detailed Outline of Legal Arguments which they wish to make in relation to the appeal;
• The parties to provide details of all facts and evidence to be presented at the hearing with a Book of Evidence;
• The parties to provide a Statement of Agreed Facts so that the hearing can focus on the disputed facts;
• The details of witnesses (fact and expert) the parties will call upon at the hearing with copies of expert reports and witness statements. As regards expert evidence the areas of agreement and disagreement between the experts for the taxpayer and Irish Revenue;
• The parties to provide a Book of Authorities;
• To schedule the date and length of the hearing.

A case management conference may be convened between the parties to agree on further directions and deal with any other issues during the proceedings requiring face-to-face engagement.

8.3 What is the typical timeframe for proceedings?

There is currently a waiting list of cases before the TAC and frequently the time for an appeal to be set down and heard is more than one year from the filing of the Notice of Appeal to the date of the TAC hearing (with the timeframe largely depending on the complexity of the case and TAC / taxpayer availability). Further appeals to the High Court and Court of Appeal can take a number of years and it is difficult to determine a typical timeframe for those proceedings.

8.4 Are settlements possible between the taxpayer and the tax authorities once judicial proceedings have been opened?

Yes, in principle it is possible to reach a settlement on the relevant matter.

8.5 Do the courts in your jurisdiction have full power to review facts and legal questions?

The TAC's jurisdiction is determined based on the express wording of the Finance (Tax Appeals) Act 2015 and Part 40A Taxes Consolidation Act 1997. The TAC does not have an unlimited jurisdiction to review facts and legal questions but is tasked with hearing tax appeals, to the extent that a statutory provision provides a right of appeal against a particular Irish Revenue decision, with a view to establishing the correct liability to tax. The TAC does not have jurisdiction to decide questions of public law – for example if a taxpayer has grounds to believe that the Irish Revenue's decision-making or administrative process was flawed – with such challenges brought by way of judicial review proceedings before the High Court.

9 Remedies

9.1 What remedies are available in tax disputes in your jurisdiction?

If the TAC is satisfied that the taxpayer has discharged the burden of proof it will permit the appeal against the Irish Revenue assessment / notice of amended assessment. The TAC does not have jurisdiction to award other remedies such as damages, injunctions, orders for specific performance or other equitable remedies.

9.2 What factors will the court consider in deciding on the appropriate remedies?

The TAC will, on the basis of the evidence before it, make findings of fact and, in light of the relevant legal principles, make a determination on the substance of the issues on appeal.

10 Appeals

10.1 Can the decision of the court be appealed? If so, on what grounds and what is the process?

Yes, parties in receipt of a TAC determination have a right of further appeal to the High Court on a point of law. An appeal on a point of law means the party is requesting the High Court to clarify the law on a particular issue of relevance to the TAC determination. A party cannot appeal a TAC determination on the basis they do not 'like' the determination given, but rather they must have issue with the application or interpretation of a point of law as applied or interpreted by the TAC. While a party cannot appeal a TAC determination on a question of fact it is a question of law as to whether there was sufficient evidence before the TAC on which the findings of fact may have been based.

Once an appeal has been determined by the TAC, either the taxpayer or the Irish Revenue Inspector may, by notice in writing, require the Appeals Commissioner to state and sign a case for the opinion of the High Court on the determination of the appeal. The appealing party must, within 42 days after notification of the determination, formally issue this notice to the Appeals Commissioners.

Regardless of which party requests the case stated, it is imperative that both parties are content that the matters at issue are fully and accurately set out within the statement of case. The Appeals Commissioner is responsible for drafting the case stated and Irish Revenue and the taxpayer have input into the draft of the case stated before it is finalised by the Appeals Commissioner. The case stated should include (1) TAC's material findings of fact; (2) Outline of Arguments of both parties; (3) case law / statute relied upon; (4) TAC's determination and its reasoning; and (5) the point(s) of law on which the opinion of the High Court is sought.

11 Costs, fees and funding

11.1 What costs and fees are incurred in tax disputes in your jurisdiction? Can the winning party recover its costs?

Parties are not required to pay a fee to proceed with an appeal to the TAC but generally the parties will incur litigation costs such as Counsel fees, solicitor and / or tax advisor fees, expert witness fees.

The general rule as regards litigation costs in a TAC proceeding is that each party covers its own litigation costs. Each party prepares its case for hearing before the TAC and is not 'on risk' for the costs incurred by the other party.

The position as regards litigation costs at the High Court and thereafter on further appeal is different. The relevant tax legislation provides that the High Court shall hear and determine any question of law arising in a case stated and, amongst other determinations, make such order as to costs as it thinks fit. The general rule in Superior Court proceedings is that costs follow the event albeit with the courts having discretion to award, depending on the circumstances of each case and the conduct of the parties.

11.2 Are contingency fees and similar arrangements permitted in your jurisdiction?

As a general matter, contingency fees and similar arrangements are not permitted in Ireland.

11.3 Is third-party funding permitted in your jurisdiction?

As a general matter, third-party funding is not permitted in Ireland.

12 International tax disputes

12.1 What is your jurisdiction's position on the resolution of international tax disputes (eg, advance pricing agreements, mutual agreement procedures, arbitrations)?

As an alternative to domestic remedies, taxpayers are increasingly seeking assistance in resolving tax disputes with an international dimension (in particular in respect of transfer pricing matters) through the mutual agreement procedure (or 'MAP') or obtaining certainty through the use of advanced pricing agreements (or 'APAs'). Irish Revenue have over the course of the last 5 – 7 years allocated an increasing level of resources to the Irish Competent Authority function as a result of the increased case load (with the OECD annual statistics showing a steady increase in the number of MAP cases submitted to the Irish Competent Authority year on year) and with a view to defending the Irish tax base.

MAP

Article 25 of the OECD Model Tax Convention on Income and on Capital (OECD MTC) provides a mechanism for tax authorities to resolve disputes where an action of a contracting state results in taxation not in accordance with the treaty. When Ireland enters into a tax treaty with another jurisdiction it therefore has a legal obligation to provide a competent authority function to resolve disputes that arise under that particular treaty. Disputes in this context can include transfer pricing matters or other actions resulting in double taxation, including, for example:

• Classification of payments such as interest, royalties or dividends.
• Presence of a permanent establishment and resultant recognition / attribution of profits to it.
• Interpretation and application of the beneficial ownership requirements of a treaty.

Taxpayers may also present a MAP request pursuant to the following (although these avenues are limited to intra-EU disputes only):

• Article 6 of the EU Arbitration Convention in relation to transfer pricing related adjustments or matters pertaining to allocation of profit to permanent establishments.
• EU TDRM where a dispute arises from the interpretation / application of a double tax treaty or the EU Arbitration Convention.

A MAP based on a double tax treaty is therefore the only alternative in cases that involve Ireland and a country that is not a member of the EU, and only if Ireland has a double tax treaty in force with that country. Where more than one avenue is available the taxpayer may choose the best alternative. There are a number of factors that may feed into that decision like, for example, applicable time limits and availability of mandatory binding arbitration (see further below).

A MAP request must be made in writing within the relevant time limit and to the appropriate Competent Authorities. For a MAP application made pursuant to a double tax treaty the time limit for submitting the request is set out in the relevant treaty. Treaties that follow Article 25 OECD MTC provide for a time limit of 3 years from the date of first notification of the action resulting in taxation not in accordance with the treaty. Given the time limit can vary depending on the treaty it is important to have regard to its specific terms. Requests pursuant to the Arbitration Convention or the EU TDRM are to be made within 3 years from the date of first notification of the action resulting or likely to result in double taxation.

APA

While not explicitly called out in Ireland's double tax treaties, the APA process is essentially a co-operative agreement between the tax administrations in two or more countries defining how future transactions between related taxpayers established in their respective jurisdictions will be taxed with an overarching purpose of negating disputes arising from double taxation.

Prior to the introduction of a formal APA programme on 1 July 2016, Ireland operated an ad-hoc process accepting requests for bilateral assistance where a treaty partner agreed to enter into such negotiations. The process for application and ongoing maintenance of those APAs was led by the treaty partner's rules and associated guidelines. For APA applications made to the Irish Competent Authority after 1 July 2016, the guidelines outlined in the relevant Irish Revenue guidance are applicable. Those guidelines cite a number of non-exhaustive factors to be considered in determining an APA application which, broadly, require the transaction to which the APA relates to be complex or involve a high risk of double taxation arising. Routine transactions or transactions which constitute a small proportion of the Irish enterprise's cross-border transactions will generally not be considered.

Arbitration

Mandatory Binding Arbitration may apply in connection with MAP depending on the avenue pursued:

• Double tax treaty request: certain Irish treaties contain mandatory binding arbitration clauses committing the contracting states to a process of arbitration in the event of no agreement being reached via MAP. Ireland has opted into the mandatory binding arbitration clause in the OECD multilateral instrument such that mandatory binding arbitration will apply to Irish double tax treaties where the treaty partner has also implemented the relevant provisions of the multilateral instrument. Regard must therefore be had to the particular double tax treaty partner's status vis-à-vis the multilateral instrument.
• EU Arbitration Convention request: if resolution is not achieved within 24 months then an advisory committee is set up to decide the case and deliver a decision within 6 months (unless both Competent Authorities by mutual agreement and with the agreement of the taxpayer concerned waive the 24 month time limit). The Competent Authorities must then act within 6 months in accordance with that decision unless they reach an alternative agreement to eliminate double taxation.
• EU TDRM request: if resolution is not achieved within 24 months (36 months where extended) the taxpayer can request an advisory committee to be set up to decide the case and deliver a decision within 6 months (or by extension 9 months). The Competent Authorities must then act within the period unless they reach an alternative agreement to eliminate double taxation.

We would note that one of the downsides of MAP generally is that, absent mandatory binding arbitration, Competent Authorities are not obliged to reach agreement. Taxpayers can therefore allocate significant time and resources pursuing MAP relief but, depending on the negotiations, may not have a result / certainty at the conclusion of that process. Mandatory binding arbitration addresses this deficiency and ultimately encourages Competent Authorities to seek to work harder to reach agreement within the target 24-month timeframe.

12.2 Has your jurisdiction implemented the Organisation for Economic Co-operation and Development (OECD) minimum standards with respect to international tax dispute resolution or is it a party to other agreements in this respect?

Yes, Ireland has committed to implementing the minimum standards – and as per the OECD Stage 2 Peer Review Report meets the minimum standards – in respect of the following:

• prevention of disputes;
• availability and access to MAP;
• resolution of MAP cases; and
• implementation of MAP agreements.

12.3 Does your jurisdiction's position differ significantly from Article 25 of the OECD Model Tax Convention (including commentary)? If so, in what respects?

Ireland generally seeks to follow the OECD MTC in its bilateral double tax treaties, including Article 25(2) on arbitration. Therefore, as a general matter, Ireland's position does not differ significantly from Article 25 OECD MTC but the specifics will depend on the particular double tax treaty in question.

12.4 How do domestic and international tax dispute resolution mechanisms interplay in your jurisdiction?

A taxpayer may request MAP assistance irrespective of the remedies provided by Ireland's domestic law. Therefore, a taxpayer may request MAP assistance from the Irish Competent Authority in situations where a decision has been rendered by an Irish court or TAC; however, the Irish Competent Authority cannot derogate in the MAP from a decision of TAC or the highest court in which the matter is heard. In such circumstances relief would likely be limited to correlative adjustment in the counterparty jurisdiction if the decision of TAC or the Irish court has concluded on the quantum of the Irish tax due.

If a taxpayer has commenced judicial proceedings in relation to the same point on which MAP assistance is sought, the Irish Competent Authority will generally request the taxpayer to agree to the suspension of its judicial or administrative remedies pending the outcome of the MAP. Where a taxpayer does not agree to suspend the administrative or judicial remedies, the Irish Competent Authority will generally delay the MAP process pending the outcome of the administrative or judicial remedies.

13 Trends and predictions

13.1 How would you describe the current tax dispute landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The Irish Revenue 2023 Annual Report noted strong levels of timely voluntary compliance with 99% timely compliance for large cases, 98% for medium cases and 91% for all other cases. During 2023 Irish Revenue completed 291,756 compliance interventions with a yield of €787 million (which includes €138.5 million in interest and penalties) and 85 tax avoidance cases with a yield of €16.6 million. There were 21 serious evasion and fraud convictions with 190 summary convictions. In relation to audit enforcement there is a continued stated use of a range of risk identification, assessment and evaluation programmes together with processes that are supported by real-time data analytics (e.g. REAP software mentioned at 2.1 above) and the interrogation of both taxpayer and third-party information. We are seeing increased audit activity, particularly in the area of transfer pricing, with increased levels of enquiry and assessments and our expectations is that this trend will continue along with the previously more frequent appeals on net direct tax issues and VAT issues.

TAC's 2023 Annual Report noted 1,521 appeals were closed during 2023 with a value at €1.386 billion with 175 determinations issued valued at €409 million. Overall, there was a decrease of 24% in the number of appeals on hand (with a total of 1,139 appeals on-hand at year-end) with a 60% reduction in the quantum of those appeals from €1.3 billion in 2022 to €519 million in 2023.

14 Tips and traps

14.1 What would be your recommendations to parties facing a tax dispute in your jurisdiction and what potential pitfalls would you highlight?

A combination of strong witness evidence with appropriately supportive documentary evidence is always important to put a taxpayer in the best possible position at a hearing with hearings frequently turning on the strength of a taxpayer's documentary evidence (in particular in cases involving very historical periods). As such, taxpayers should endeavour to hold appropriate business records and related documentation on file to be called upon in the event of a dispute arising, and this should include appropriately documenting business decisions with a tax implication.

In the event of an Irish Revenue intervention arising, taxpayers should carefully consider the scope of the enquiries made together with the extent and content of the responses and documentation provided. This includes Level 1 compliance interventions which, while targeted at supporting compliance, should be treated with appropriate regard. Care should be taken to seek to allay Irish Revenue concerns with a view to concluding the intervention and ensuring it does not progress further to a Level 2 intervention.

As regards advisors on a tax controversy matter, as advice on tax law matters provided by a professional advisor who is not a practicing lawyer cannot attract privilege, taxpayers should consider whether it is appropriate to engage a lawyer at the early stages of a potential tax dispute or more generally as regards sensitive tax matters. From a privilege perspective, we would also note the importance of appropriate protocols around protected materials so as to ensure privilege is not inadvertently waived.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.