Reverse Hybrid Mismatches – New Irish legislation
Read our detailed summary of the new rules and their implications following Ireland’s introduction of new legislation addressing reverse hybrid mismatches.
The reverse hybrid mismatch rules apply to an entity that is treated as transparent for tax purposes by the Member State in which it is incorporated or established, but which is regarded as a taxable person by the jurisdiction(s) in which one or more associated (as defined for reverse hybrid purposes) non-resident entities are located.
Where a mismatch outcome has arisen between the hybrid entity and a non-resident associated entity, the intention of the reverse hybrid rule is to create an income inclusion event in the jurisdiction where the hybrid entity is incorporated or established, such that the income is subject to tax in that jurisdiction.
Finance Act 2021, which was signed into Irish law on 21 December 2021, applies the rule to hybrid entities only where a mismatch outcome has arisen between the hybrid entity and a non-resident associated entity. A “mismatch outcome” includes double deductions, and deductions without inclusion in relation to permanent establishments, hybrid entities and financial instruments.
Read our detailed summary of the new rules and their implications in full here.
To access our webinars and articles related to the revised framework for the establishment of closed-ended funds in Ireland, please see our Irish Private Funds webpage.
