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Budget 2022 Tax Strategy Group Papers


On 16 September 2021, the Department of Finance published the Tax Strategy Group (TSG) papers on the various options for tax policy changes in advance of Budget 2022.  Budget 2022 is due to be published on 12 October 2021.

The Corporation Tax (CT) TSG paper once again confirms that “certainty, transparency and a commitment to open engagement with stakeholders are cornerstones of the CT regime”. The paper also confirms that Ireland will continue to be proactive in taking steps at domestic level to ensure its CT regime remains competitive and continues to contribute to employment and economic growth while also meeting the newly-agreed international tax standards.

Here are some of the main points from the CT TSG paper:

  • Review of progress to date and next steps in the transposition of the EU Anti-Tax Avoidance Directive (ATAD):

    Interest limitation rule (ILR)

    Ireland will introduce the ATAD ILR in Finance Bill 2021. The introduction of the ATAD ILR will be complex.  Because it will impose an overall limit on interest deductibility, it will be relevant to all Irish businesses with borrowings.

    Anti-Reverse-Hybrid Rules

    The Finance Bill 2021 will legislate for the anti-reverse-hybrid rules, with the new rules to take effect from 1 January 2022. A reverse hybrid mismatch arises where an entity, referred to as a reverse hybrid entity, is treated as tax transparent in the territory in which it is established but is treated as a separate taxable person (or opaque) by some, or all, of its investors.  As a consequence, some or all of its income goes untaxed. 

    The application of the reverse-hybrid rule, when triggered, will require the imposition of a tax charge on an entity that was not previously considered a taxable entity in Irish law.

  • Start Up Relief

    The 3-year start up relief for certain companies is due to expire at the end of 2021. The TSG paper considers the potential extension of the relief as well as necessary adaptations of the relief as a result of the impact of Covid-19 and Brexit. 

  • Territorial Regime

    The TSG paper advises that a consultation will be launched in Q4 of 2021 on the possibility of Ireland moving to a territorial regime. This is contingent upon the ongoing OECD discussions. 

Other points of note in the CT TSG paper include:

  • An overview of trends in CT receipts;
  • An update on the commitments to action on CT reform, as set out in the CT roadmap published in September 2018 and the update published in January 2021; and
  • An update on developments in the Apple State aid case.


Both the ILR and the anti-reverse-hybrid rules are to be introduced in Finance Bill 2021.
In particular, the introduction of the ILR will be highly complex with implications for the vast majority of Irish businesses.

Please contact Ted McGrath, Anne Tobin or your usual William Fry contact if you have any queries on the TSG papers or indeed if you wish to discuss the potential impact of the ILR and/or the anti-reverse-hybrid rules on your businesses.

Click here to access the TSG Papers.