Ireland: Matheson Tax Update: Ireland Publishes Finance Bill 2013

The Irish Finance Bill was published yesterday afternoon (13 February 2013).  Although it contains a number of technical changes that would potentially have an impact upon our international companies and financial institutions clients doing business in and through Ireland, the changes are not terribly drastic and in most cases are positive.  A quick overview of the most relevant changes is as follows:-

FINANCIAL INSTITUTIONS

FATCA

As has been previously announced, Ireland was one of the first countries in the world to conclude an Inter-Governmental Agreement with the United States in relation to FATCA.  The Finance Bill provides for the ratification of this Agreement and also includes provisions to enable the Revenue Commissioners to make regulations providing for the collection of necessary information from financial institutions and for the exchange of such information with the United States.  These regulations are expected to be published over the coming months.

Real Estate Investment Trusts

As has also been previously announced, Ireland is introducing a tax regime for Real Estate Investment Trust (REIT) companies.  It is hoped that the introduction of REITs will attract foreign investment into the Irish real estate market and establish Ireland as a hub for the management of international real estate.  The Finance Bill sets out the tax legislation that will underpin the REIT companies.

Subject to certain criteria, including a requirement to distribute 85% of its property income by way of dividend, the REIT will be exempt from tax in respect of the income and chargeable gains of a property rental business.  The REIT must derive 75% of its aggregate income from this property rental business.  It may carry on other “residual” business, but the tax exemption applies only to the income and chargeable gains of the property rental business.  Dividends paid by the REIT will be subject to dividend withholding tax (unless exempted under one of Ireland’s 68 tax treaties), and will be taxable in the hands of the shareholders.

Investment Limited Partnerships

Irish Investment Limited Partnerships (ILPs) are a form of regulated Irish fund.  Historically, ILPs have been rarely used, partly because they have not been treated as tax-transparent, as normal partnerships would be.  The Finance Bill amends the tax treatment of ILPs to ensure that they are tax-transparent.  This change is expected to allow the Irish regulated funds sector to compete globally to attract new business lines to Ireland following the implementation of the Alternative Investment Fund Managers Directive (AIFMD) in 2013. 

Structured Finance

The legislation relating to the issuance of Islamic finance and other structured instruments is being enhanced and the stamp duty treatment applying to the redemption of debt securities by Irish SPVs has been clarified and improved. 

INTERNATIONAL COMPANIES

Double Tax Agreements & Information Exchange Agreements

The Finance Bill completes the ratification process for three new double tax agreements (with Egypt, Qatar and Uzbekistan); for a protocol to the agreement with Switzerland; and a Tax Information Exchange Agreement (TIEA) with San Marino. It also amends provisions relating to the Joint Council of Europe / OECD Convention on Mutual Assistance in Tax Matters.

Intangible Asset Regime

The existing Irish Intangible Asset regime provides for capital allowances in respect of expenditure on the acquisition of certain forms of intellectual property assets but contains a clawback of capital allowances if the assets are disposed of or cease to be used in a trade within 10 years of acquisition. The clawback period is reduced to within 5 years of acquisition under the Finance Bill. 

Aviation Services – Capital Allowances

The Finance Bill applies industrial building allowances to hangars, tear down pads, parking and ancillary facilities and also provides for an accelerated capital allowance scheme over seven years in relation to construction or refurbishment of certain buildings or structures used in connection with the maintenance, repair or overhaul of commercial aircraft.

Foreign Tax Credit

In a welcome development, the Finance Bill introduces an additional credit for tax on certain foreign dividends received from subsidiaries resident in EU/EEA countries.  This provision is a reaction to the ruling of the Court of Justice of the European Union in the “Test Claimants in the FII Group Litigation case”.  In this case, the Court held that UK rules differentiating between nationally-sourced and foreign-sourced dividends could result in foreign-source dividends being subject to taxation at a higher level than UK-source dividends and were, therefore, in breach of European Union law.

Similar to the old UK rules considered in the FII Group Litigation case, Ireland's existing rules provide credit only for the foreign tax actually paid on the profits underlying the distributed dividends (ie, the effective foreign tax rate rather than the nominal foreign rate).  The new "additional credit" allows for increased double taxation relief when the credit calculated under Ireland's existing rules is less than the amount of credit that would be computed by reference to the nominal rate of tax in the country from which the dividend is paid.

The total credit under the new regime (ie, including the additional credit) cannot exceed the Irish corporation tax attributable to the dividend and there are limitations on pooling and carry forward by reference to the additional credit.  The amendment is stated to apply to all dividends paid on or after 1 January 2013.

Employee incentives

The proportion of time that key employees must spend solely on R&D activities in order to qualify for the Research & Development tax credit surrender regime is being reduced from 75% to 50%. The Foreign Earnings Deduction scheme, which provides for a tax deduction, subject to certain conditions, for individuals who carry out the duties of their office or employment in BRICS countries is being extended to include Algeria, the Democratic Republic of the Congo, Egypt, Ghana, Kenya, Nigeria, Senegal and Tanzania.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions