Earlier this evening as previously announced, the Minister for Finance, at an event in Paris together with representatives from over 60 other countries, signed the ‘Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS)’.
The Organisation for Economic for Economic Co-operation and Development (OECD) BEPS project made a series of recommendations for international tax changes to combat aggressive tax planning, including specific recommendations for changes that should be incorporated into bilateral tax treaties.
The Multilateral Convention provides a mechanism for countries to transpose these BEPS recommendations into their existing bilateral tax treaties. Some recommendations are considered to be “minimum standards” which countries have committed to, while others are recommended best practices that countries can choose to adopt. The Multilateral Convention therefore provides optionality for countries not to select all of the possible changes. Ireland has 72 tax treaties in effect and the multilateral convention will enable Ireland to update the majority of these treaties to ensure they are BEPS compliant without the need for separate bilateral negotiations. In signing up to the Multilateral Convention, countries, including Ireland, will indicate their provisional approach to the options provided for in the Multilateral Convention. The OECD will publish these lists on their website following the signing ceremony.
Ireland’s proposed approach is set out here. This approach will become binding on Ireland on foot of the ratification of the multilateral convention in Irish law. Ireland’s tax treaties will be amended where both Ireland and the relevant treaty partner have fully ratified the convention in their domestic law.