Legal privilege is an important protection for taxpayers in tax controversy matters and is a right which should be carefully protected once an audit has been initiated by tax authorities. Important nuances between the privilege regimes in Ireland and other jurisdictions have led to different practices being adopted and privilege can easily be lost in Ireland if the right measures and procedures are not followed.
Legal privilege in Ireland
An established feature of the Irish legal system and common law legal systems more generally is the ability of taxpayers to communicate openly and honestly with their lawyers when seeking legal advice and preparing for litigation. This concept is protected by the doctrine of legal professional privilege, which allows clients to disclose confidential information to legal professionals engaged to provide legal advice and requires that the legal advice provided to the client may not be shared outside of the lawyer-client relationship. Legal privilege under Irish law can be divided into two distinct subcategories: (1) legal advice privilege (“AP“); and (2) litigation privilege (“LP“).
Legal advice privilege
For most in-house tax teams and their external advisers, AP is the category of legal privilege that will be most immediately relevant. It applies where communications between a lawyer and a client are made for the dominant purpose of giving or receiving legal advice.
Litigation privilege
LP protects information related to existing or reasonably anticipated litigation, provided that preparation for that litigation was the dominant underlying purpose behind the creation of the documentation. Litigation must have been reasonably anticipated at the time the material was created (ie, a remote possibility of litigation is not sufficient) and preparation for litigation must have been the dominant purpose. Unlike AP which typically applies indefinitely, a temporal restriction applies to LP and it can only be asserted throughout the period litigation is contemplated and / or is ongoing.
The scope of privileged communications in Ireland
In Ireland, only communications between a lawyer and their client will be protected by legal privilege. An understanding of the scope of persons included within the meaning of a “lawyer” and a “client” is pivotal to protecting the right to privilege.
What is a “lawyer”?
The definition of “lawyer” for the purposes of legal privilege is not defined in Irish statutes, but case law has confirmed that it includes solicitors, barristers, salaried in-house legal advisers[1], foreign lawyers and the Attorney General[2]. In a tax context, case law is clear that communications with accountants or tax advisers do not attract legal privilege notwithstanding the fact that they may purport to provide legal advice related to tax matters[3]. For example, the Irish High Court, as recently as 2024, held that legal privilege “is not a benefit which is available to other professions such as accountants, actuaries, engineers etc.”[4]. Privilege regimes in other jurisdictions can be wider in scope and can include advice provided by tax advisers in certain circumstances[5]. This distinction is important to bear in mind, particularly in the context of cross border matters.
The only exception where materials prepared by a tax adviser or accountant would attract the protection of Irish legal privilege is in the context of litigation. If the dominant purpose of the engagement with tax advisers or accountants is to assist in the preparation of litigation, the documents and communications flowing under this engagement may attract the protection of LP. However, best practice in these circumstances is for the client’s lawyer to engage the tax adviser or accountant to provide the relevant advice. Otherwise, there is a real risk that privilege could be treated as being waived.
The meaning of a “client”
From a corporate perspective, the “client” for Irish privilege purposes is not the client organisation as a whole, but rather those individuals within it who have been specifically tasked with seeking and receiving legal advice. Generally, this group is confined to senior management, board members and in-house tax and legal teams provided they have been expressly authorised by management to obtain legal advice. Other members of the client organisation who have not been expressly authorised to seek and obtain legal advice are unlikely to fall within the meaning of a “client” for privilege purposes. Where communications or materials are shared outside of this “client team” and their lawyers, the protection of privilege is likely to be treated as waived[6].
The Privilege Protection Playbook
Given the nuances between different legal privilege systems, there are a number of best practices which should be implemented to preserve Irish privilege in cross border matters:
- Control the “client team”: Prior to commencing any project involving legal advice, the “client team” who are authorised to obtain that advice should be carefully defined. Once this client instructing team is established, it is important to ensure that only that group are included in communications with lawyers[7]. Where any other employees are to be included within the “client team”, this should be communicated to them in writing.
- Do not assume that Irish privilege extends to tax advisers: The Irish position is clear that privilege does not apply to tax advisers except in some limited scenarios. In order to avoid waiving privilege, it is essential that professionals operating on multinational deals with an Irish nexus understand the scope of the Irish position and do not assume that their local rules apply. For example, in an Irish-US context, section 7525 privilege[8], which we understand extends the protection of legal privilege to federally authorised tax advisers, does not apply in Ireland. Similarly, a “Kovel arrangement”, which we understand allows a US lawyer to engage an accountant or expert to assist them in providing legal advice (not in contemplation of litigation) while maintaining privilege, does not apply to AP in Ireland. Where there is an intention to maintain privilege on Irish tax advice, the default assumption should be that Irish privilege is confined strictly to communications between qualified lawyers and the client.
- Apply discipline with email chains and attachments: Clients should ensure that email chains and other channels of communications between clients and their lawyers are confined strictly to their lawyers (and the lawyers’ agents) and the identified “client team”. Including an external tax adviser, accountant or an employee who is not a member of the identified “client team” within the lawyer-client communication chain in an Irish context can result in privilege being waived in respect of that advice or information. This is particularly dangerous where lawyers and non-lawyer advisers (eg, accountants) are advising the same client and communications are shared with both parties or more broadly in the client organisation. If legal advice must be shared with a taxpayer’s auditors, it is important to ensure that they receive only the extract or conclusion they require and not the full version of the legal advice.
- Ensure a lawyer acts as an intermediary for LP purposes: If assistance from non-lawyers is required in a litigation context, it is important to ensure that a lawyer instructs and engages the third party expert to ensure that LP applies to protect those documents. The risk of waiving privilege can be mitigated where lawyers engage third parties pursuant to engagement terms which assert that LP applies.
- Be wary of the temporal nature of LP: LP can only be asserted during the period litigation is in contemplation and ongoing. Documents produced before litigation was in contemplation will likely not be retrospectively protected simply because they later become relevant to a claim. In a tax context, this can mean that while communications with tax advisers for the purposes of preparing for litigation may attract privilege, this protection will only apply for the duration that litigation was contemplated or ongoing.
- Exercise caution using public AI platforms: The ever-evolving utility of AI systems leads to an understandable temptation to leverage these systems in a number of different areas, including in tax and law. However, where confidential information is shared with public AI systems, this information could fall outside of the lawyer-client relationship and the ability to assert privilege over this information could be lost. We are aware of recent examples from other jurisdictions where the right to privilege was deemed to be waived where information was shared with a public AI platform. While it remains to be seen whether Irish courts would follow this approach, there is a significant risk that they would[9]. To the extent that AI platforms are used to process confidential information, it is important to ensure that these platforms are closed, internal systems. Care should also be exercised when using AI tools to provide transcripts of calls on live matters. Throwaway remarks and observations which are subsequently refuted may still find their way into these records. In cases which are likely to become contentious, we would recommend persevering with human note takers who can provide a summary of a call and not include every comment and observation made.
Conclusion
The similarities between the Irish legal system and other common law jurisdictions can lead to the assumption that privilege applies in the same manner across jurisdictions. However, especially with respect to tax matters there are a number of important differences that must be borne in mind. In order to maintain the confidentiality of Irish legal advice, it is important to understand these nuances and implement the best practices outlined in this article.
Contact us
For more information, please contact any member of our Tax team or your usual Matheson contact.
[1] Although legal privilege for the purposes of Irish law extends to in-house legal counsel, privilege for the purposes of EU law is limited to independent, external legal counsel only – see Akzo Nobel Chemicals v Commission [2010] ECR I-8301.
[2] McMahon v Irish Aviation Authority [2016] IEHC 221; Smurfit Paribas Bank Limited v AAB Export Finance Limited [1990] 1 I.R. 469.
[3] Prudential v Special Commissioner of Income Tax [2013] UKSC 1.
[4] Wachman and Others v Barne Estate Ltd and Others [2024] IEHC 627.
[5] See for example, section 7525 of the US Internal Revenue Code (26 U.S. Code § 7525 – Confidentiality privileges relating to taxpayer communications).
[6] Three Rivers District Council v Bank of England (No 5) [2003] EWCA Civ 474.
[7] Ryanair Ltd v Channel 4 Television Corporation [2017] IEHC 651.
[8] 26 U.S. Code § 7525 – Confidentiality privileges relating to taxpayer communications.
[9] Oral Order, United States v. Bradley Heppner, Case No. 1:25-cr-00503-JSR (S.D.N.Y. Feb. 10, 2026).