Taxes Consolidation Act 1997 section 835H

Elimination of double counting

Section 835H provides for corresponding adjustments to eliminate double counting where a transfer pricing adjustment under section 835C affects a domestic transaction between two parties within the charge to Irish tax.

• Where one party's profits are adjusted upward under section 835C, the other party (the "affected person") may claim a corresponding downward adjustment to their own profits, gains or losses, provided the tax arising on the upward adjustment has been paid.
• A downward adjustment does not affect the closing trading stock valuation for the accounting period, ensuring that transfer pricing adjustments do not create adverse cash flow consequences within a group.
• Where a foreign branch's profits are reduced by a corresponding adjustment, any foreign tax credit available under a double taxation agreement is recalculated by reference to the reduced branch profits.
• Group companies may jointly elect to disapply both section 835C and section 835H in respect of intra-group transfers of development land held as trading stock, preserving the existing treatment under which tax arises only when the land is sold outside the group.