Tax avoidance

The consequences of engaging in tax avoidance

Revenue will investigate and challenge tax avoidance transactions, and will litigate cases up to the appropriate court, if necessary.

If you enter into a tax avoidance transaction, you are exposing yourself to significant costs, often greater than the potential tax advantage. You should also be aware of the disruption caused by Revenue enquiries, potential litigation and prolonged uncertainty about the outcome.

Revenue will examine any transaction to determine whether or not it complies with the applicable tax legislation under first principles. This is outside of the General Anti-Avoidance Rule (GAAR). 

If your transaction fails under first principles, the tax return you submitted will be incorrect. As a result, you may be liable to interest and a tax geared penalty ranging from 3% to 100%.

Where a transaction is challenged under the GAAR or a Specific Anti-Avoidance Rule (SAAR), you may be liable for:

  • interest and a penalty
  • or
  • up to a 30% tax avoidance surcharge.

There is no time limit on Revenue's powers to challenge a tax avoidance transaction under the GAAR.

Along with the penalty or surcharge, you may also have:

  • to pay legal fees in court
  • your case heard in public
  • and
  • your name published on the list of tax defaulters.

It is likely that you will have already paid fees to the advisor to put the transaction in place.

For further details on penalties and surcharges, please see Revenue Code of Practice.

Payment notice

If Revenue successfully challenges certain transactions before the Appeal Commissioners, we may issue you with a payment notice. This notice will require the immediate payment of any outstanding tax. A payment notice will only be issued to you if the transaction was:

  • successfully challenged on the grounds that it was a tax avoidance transaction under the GAAR
  • successfully challenged under a specific anti-avoidance rule (SAAR) listed in Schedule 33, Taxes Consolidation Act 1997
  • or
  • should have been allocated a Transaction Number under the Mandatory Disclosure regime.

Revenue may issue payment notices to other taxpayers that have taken part in the same transactions or  similar transactions.

Next: Mandatory Disclosure Regime