The Irish Government published the Finance Bill 2026 on 30 October 2026, introducing primary legislation to implement the OECD Pillar Two Global Anti-Base Erosion (GloBE) rules into Irish law, effective for fiscal years beginning on or after 31 December 2026. The Bill also proposes significant modifications to interest deduction limitations under Section 247 TCA 1997, aligning with the EU Anti-Tax Avoidance Directive (ATAD) and introducing a fixed ratio rule (EBITDA-based) alongside a group ratio escape clause. These changes will affect multinational groups with Irish operations, requiring updated transfer pricing documentation and tax provisioning models.
Key Takeaways
- Pillar Two Transposition: The Bill enacts the Qualified Domestic Minimum Top-up Tax (QDMTT) and Income Inclusion Rule (IIR), requiring Irish constituent entities to compute a Top-up Tax where the effective tax rate falls below 15%.
- Interest Limitation Overhaul: The new fixed ratio rule limits net interest deductions to 30% of tax-EBITDA, with a de minimis threshold of €3 million per annum, replacing the previous arm’s length test for most corporate borrowers.
- Group Ratio Relief: Groups can elect to apply a group ratio rule based on the worldwide group’s net interest expense to EBITDA ratio, subject to certification by the group’s auditor and notification to Revenue.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement