As covered previously in our updates, Finance Act 2024 introduced Ireland’s first Participation Exemption in respect of dividends or other distributions received as income from EU/EEA/treaty resident companies from 1 January 2025 onwards.

On 6 May 2025, Irish Revenue released its guidance manual on the new legislation to provide further clarity on the operation of the regime. Please find the Irish Revenue eBrief here.

PwC continues to engage with the Department of Finance in respect of broadening the geographic scope of the regime and addressing other issues like the extension of the regime to foreign branches. While the insurance industry continues to champion the introduction of a branch exemption, such an exemption is unlikely to be introduced until next year at the earliest.

On 3 April 2025 the Advocate General (AG) issued his opinion on the VAT treatment of TP adjustments in the Arcomet Towercrane (C-726/23) case. The AG found that the transfer pricing adjustments made to services rendered by a headquartered company in Belgium to its subsidiary in Romania are subject to VAT.

Should the ruling from the CJEU follow the AG’s opinion, this would have significant implications for taxpayers using transfer pricing mechanisms. Current mechanisms would need to be reviewed from a VAT perspective to ensure VAT is being accounted for correctly and that sufficient evidence is held in addition to an invoice to prove the basis for a VAT deduction for the recipient. Additionally, the VAT implications of any proposed transfer pricing mechanism should be reviewed simultaneously with the direct tax implications. The AG does state that whether a transfer price adjustment is subject to VAT should be reviewed on a case-by-case basis and the AG points to the existence of a supply, remuneration, an identifiable service and a direct link between the service and the consideration received, as factors that should be considered in each case.