Comparative Guides
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Results: 4 Answers
Corporate Tax
4.
Cross-border treatment
4.1
On what basis are non-resident corporate entities subject to tax in your jurisdiction?
 
Ireland
Non-Irish tax resident companies are not subject to corporation tax unless they are carrying on a trade through an Irish branch or agency, in which case they will be subject to Irish tax on the following items:

  • the trading income arising directly or indirectly through or from the branch;
  • income from property or rights used by or held by or for the branch; and
  • such gains as, but for the Corporation Tax Acts, would be chargeable to capital gains tax in the case of a company not resident in Ireland (see next paragraph).

Non-Irish tax resident companies are liable for gains arising on the disposal of assets situated in Ireland that are used, held or acquired for business carried on in Ireland through a branch or agency and on certain ‘specified assets’, including:

  • land and buildings in Ireland;
  • minerals and mining rights in Ireland; and
  • unquoted shares or securities deriving their value or the greater part of their value directly or indirectly from the above assets.
For more information about this answer please contact: Andrew Quinn from Maples Group
4.2
What withholding or excise taxes apply to payments by corporate taxpayers to non-residents?
 
Ireland
Dividends: Dividend withholding tax (DWT) at the standard income tax rate of 20% applies to dividends and distributions made by Irish tax resident companies.

However, there are a wide range of exemptions from DWT where the dividend or distribution is paid by the tax resident company to certain persons (provided in most cases that certain declarations are completed), including:

  • another Irish tax resident company;
  • a company resident in an EU state or a jurisdiction with which Ireland has concluded a double tax agreement and which is not controlled by Irish residents;
  • a company that is under the control, directly or indirectly, of a person or persons which are resident in an EU state or a jurisdiction with which Ireland has concluded a double tax agreement and are not controlled by persons not so resident;
  • a company whose shares are substantially and regularly traded on a recognised stock exchange in an EU state or a jurisdiction with which Ireland has concluded a double tax agreement, or a company which is a 75% subsidiary of such a company or is wholly owned by two or more such companies; and
  • a company resident in another EU member state with at least a 5% holding in the Irish paying company (under the EU Parent Subsidiary Directive (90/435/EEC).

Relief under a double tax treaty with Ireland may also be available.

Interest: Payments of ‘yearly’ interest by an Irish corporation to a non-resident are normally subject to withholding tax at 20%. There are wide exemptions from this requirement, the most notable of which include payments:

  • between ‘associated companies’ under the EU Interest and Royalties Directive;
  • by a company in the ordinary course of its trade or business to a company resident in an EU state or a jurisdiction with which Ireland has concluded a double tax agreement (provided that the payments do not relate to an Irish branch or agency of the lender), where that state imposes a tax that generally applies to interest receivable in that state by companies from sources outside that state;
  • on quoted Eurobonds; or
  • by an Irish ‘Section 110 company’ to a person resident in an EU state or a jurisdiction with which Ireland has concluded a double tax agreement, other than where it relates to an Irish branch or agency.

Royalties: Royalties are not generally subject to withholding tax, unless paid in respect of an Irish patent.

For more information about this answer please contact: Andrew Quinn from Maples Group
4.3
Do double or multilateral tax treaties override domestic tax treatments?
 
Ireland
Yes, double or multilateral tax treaties alter the tax treatment provided for by the respective laws of Ireland and the other country concerned, insofar as they affect persons that are to be relieved from double taxation. This essentially means that tax treaties override domestic tax treatment.

For more information about this answer please contact: Andrew Quinn from Maples Group
4.4
In the absence of treaties, is there unilateral relief or credits for foreign taxes?
 
Ireland
Yes, Irish tax legislation provides for unilateral credit relief where a parent company which is resident in the state receives a dividend from its subsidiary in respect of which tax has been paid in a country with which Ireland does not have a tax treaty.

There is also unilateral credit relief for interest withholding tax suffered in countries with which Ireland does not have a tax treaty; this credit falls to be taken into account in computing the trading income of the recipient company.

In addition, Ireland operates unilateral credit relief in respect of foreign tax suffered by a branch of an Irish resident company in a jurisdiction with which Ireland does not have a double tax treaty.

As regards capital gains tax, Ireland allows a unilateral credit for tax paid on foreign capital gains in a country with which Ireland has a tax treaty, where that treaty does not cover taxes on capital gains because it was agreed before the introduction of capital gains tax in Ireland.

Ireland also offers unilateral credit relief for foreign withholding tax on royalty income and leasing income.

For more information about this answer please contact: Andrew Quinn from Maples Group
4.5
Do inbound corporate entities obtain a step-up in asset basis for tax purposes?
 
Ireland
The concept of an inbound corporate entity does not really exist under Irish law. Instead, there are two ways in which a non-Irish incorporated company may seek to become subject to taxation in Ireland.

The first option is for the non-Irish incorporated entity to establish itself as Irish tax resident. To do this, the entity will be required to move its central management and control to Ireland. A number of factors will be considered in determining whether a business is centrally managed and controlled, and this determination does not follow a ‘bright-line’ test. However, a key factor is the location of the meetings of the board of directors and the make-up of such board. If a company becomes subject to Irish tax by virtue of having moved its tax residence to Ireland, it will not obtain a step-up in asset basis for tax purposes. The legal ownership of the assets will not have changed and the Irish tax authorities will look to the asset basis at acquisition in calculating any tax liability.

Alternatively, a non-Irish incorporated entity may incorporate a new company in Ireland and transfer its assets to this newly incorporated entity. Such an Irish incorporated company will be automatically regarded as tax resident in Ireland, provided that certain conditions are satisfied. In this instance, the legal title to the assets is being transferred from the non-Irish incorporated entity to the Irish incorporated company and this may result in a step-up in asset basis, depending on the structure of the acquisition and in particular whether certain Irish tax reliefs have been availed of in effecting the transfer.

For more information about this answer please contact: Andrew Quinn from Maples Group
4.6
Are there exit taxes (for disposed-of assets or companies changing residence)?
 
Ireland
Ireland is required to comply with rules contained in the EU Anti-Tax Avoidance Directive. In compliance with the directive, Ireland has introduced a new exit tax regime which came into effect from 10 October 2018. This regime applies exit tax at a rate of 12.5% on any unrealised gains arising where a company migrates or transfers assets such that it leaves the scope of Irish taxation. Some exemptions are provided for in the legislation, including where a migrating company continues to carry on a trade in Ireland.

For more information about this answer please contact: Andrew Quinn from Maples Group