ATAD Implementation Controlled Foreign Company (CFC) Rules – Feedback Statement

Following the publication of the BEPS reports in October 2015, a decision was taken at EU level to introduce the Anti-Tax Avoidance Directive (ATAD) as part of a package of measures aimed at ensuring a common and co-ordinated approach across EU Member States to the introduction of BEPS anti-avoidance measures.

The first ATAD, presented in January 2016 and agreed by all EU Member States in July 2016, provided for five separate anti-avoidance measures to be transposed on an agreed schedule between 2018 and 2023. This Feedback Statement relates to one of those measures, Controlled Foreign Company (CFC) rules, which are due to be implemented by 1 January 2019.

The Department of Finance held a public consultation on the Coffey Review and the implementation of the ATADs from 10th October 2017 to 30th January 2018. The consultation paper included a question on considerations relevant to the transposition of CFC rules and the majority of the 22 submissions received to the consultation addressed these issues.

Many of these submissions noted the complexity of CFC rules and the significant investment of time that will be required by corporate groups, once the detail of the CFC rules becomes known, to review all subsidiary companies to determine if they are within the scope of CFC rules.

It was therefore a common request that the Department consult with stakeholders to the greatest extent possible in the development of CFC legislation, and provide sufficient advance notice on technical details of the CFC rules to enable companies to comply with the new requirements when implemented.

The Department is therefore publishing this paper to respond to the views expressed in responses to the public consultation and to set out possible approaches to some of the technical aspects of CFC rules.

The views of stakeholders will be important in ensuring that Ireland’s CFC rules, when introduced, meet the standards required under ATAD while also being clear and operable in practice and remaining consistent with Ireland’s long-standing focus on the taxation of activities with substance in Ireland.

The issues addressed in this document will continue to be considered by the Department until Friday 28 September 2018. However stakeholders are encouraged to contact the Department at the earliest opportunity in the event of any queries or comments, in order to ensure the timely preparation of legislation for publication in Finance Bill 2018.

Any queries on the material enclosed can be directed to the Department via the original consultation email address: ctreview@finance.gov.ie

Alternatively, responses may be directed by post to:

ATAD Implementation – CFC Feedback Statement

Business Tax Team

Department of Finance

Government Buildings

Upper Merrion Street

Dublin 2

D02 R583

Submissions to Controlled Foreign Company Feedback Statement