Taxes Consolidation Act 1997 section 25A

Attribution of profits to a branch

Section 25A sets out how profits of a non-resident company operating through a branch or agency in Ireland are to be attributed to that branch, using the OECD's 'Authorised OECD Approach', and applies for accounting periods commencing on or after 1 January 2022.

• A branch's income must be calculated as if it were an independent, separate entity, applying OECD transfer pricing principles to dealings between the branch and other parts of the company.
• Non-resident companies trading through an Irish branch must maintain and, on request, provide detailed records supporting the profit attribution, including functional analyses, transfer pricing methods used, and comparable transaction data.
• Small enterprises are fully exempt from the record-keeping requirements, and medium enterprises are exempt where branch income is below €250,000; penalties of up to €25,000 plus €100 per day apply for failure to produce records when requested.
• A company that understates branch profits due to a misapplication of the rules may be protected from tax-geared penalties if it has prepared complete records on time and can demonstrate reasonable efforts to comply.