Revenue Note for Guidance

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Revenue Note for Guidance

38. Determination that open market value applies

Summary

This section provides that Revenue may make a determination that the value on which tax is chargeable on supplies between connected persons is the open market value in certain circumstances. The open market value is determined in terms of what a person would reasonably expect to pay for the good or service. Where there is no comparable supply, the open market value is the least cost price to the supplier. (The supplier of the goods can appeal the determination – see section 119)

Details

(1)(a) Revenue may make open market value determinations where the actual consideration falls into one of the following categories —

  • (1)(a)(i) — lower than the open market value where the recipient is not entitled to any deduction under Chapter 1 of Part 8, or is not entitled to full deductibility on that supply, or is a flat-rate farmer,
  • lower than the open market value, being an exempted activity, where the supplier engages in non-deductible supplies or activities (defined in section 61(1)), or is a flat-rate farmer,
  • (1)(a)(iii) — higher than the open market value where the supplier engages in non-deductible supplies or activities (defined in section 61(1)), or is a flat-rate farmer,

and where

  • (1)(b)(i) —the supplier and the recipient are connected persons, or
  • (1)(b)(ii) —one exercises control over the other.

(2) Values determined under this section apply for all purposes of the Act.

(3) There is provision for the making of regulations where necessary for the purposes of the section.

(4) Determinations may be made by a Revenue officer authorised for that purpose.

Relevant Date: Finance Act 2019