Anti-base erosion profit shifting (BEPS) measures

Anti-hybrid rules

Anti-hybrid rules prevent arrangements that exploit the differences in the tax treatment of an instrument or entity. Differences can arise from the way in which that instrument or entity is characterised under the tax laws of two or more territories. This can generate a tax advantage or a mismatch outcome.

The anti-hybrid rules, contained in Chapters 1 to 10 of Part 35C, apply to all corporate taxpayers. There is no lower limit or threshold below which the rules do not relate. The rules apply to all payments made after 01 January 2020.

The reverse hybrid rule, contained in Chapter 10A of Part 35C, applies to entities that are treated as tax transparent in Ireland. The rule applies to tax periods commencing on, or after, 1 January 2022.

The rules are complex. This is because they apply to cross-border transactions and require consideration of the tax treatment of transactions and entities in other territories.

The Anti-Tax Avoidance Directive 2 (ATAD2) states that:

“Member States should use the applicable explanations and examples in the OECD BEPS report on Action 2 as a source of illustration or interpretation to the extent that they are consistent with the provisions of the Directive and with Union Law”

It is recommended that entities, when considering the application of the anti-hybrid rules, refer to the explanations and examples in both the:

For further information, please refer to Tax and Duty Manual Part 35C-00-01- Guidance on the anti-hybrid rules.


Part 35C of the Taxes Consolidations Act 1997, implements the Anti-Tax-Avoidance Directives (ATAD) by introducing anti-hybrid rules.

Specifically, Council Directive (EU) 2017/952 of 29 May 2017 (ATAD2) amending Directive (EU) 2016/1164 (ATAD).

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