Bloomberg Tax – Ireland Country Guide 2025

1. Overview

1.1. Government and Tax System

The Irish tax rules are found in a group of statutes that have been enacted by the Irish Parliament (the Oireachtas).

The principal statutes are the:

• Taxes Consolidation Act 1997 as amended (TCA); which consolidated the law relating to income tax, capital gains tax (CGT) and corporation tax;
• Capital Acquisitions Tax Consolidation Act 2003 as amended (CATCA 2003), which deals with tax on gifts and inheritances;
• Value-Added Tax Consolidation Act 2010 as amended (VAT Act), which provides for VAT (a sales tax) in respect of goods and services;
• Stamp Duties Consolidation Act 1999 as amended (Stamp Act), which provides for the imposition of stamp (transfer) duty on certain instruments and transactions; and
• Social Welfare (Consolidation) Act 2005 as amended (Social Welfare Act), which provides for Pay-Related Social Insurance (PRSI) charges.

These Acts are revised and updated annually to reflect Finance Act legislative amendments. In addition, as Ireland is a common law jurisdiction, case law precedent has a significant impact on the Irish tax code.

The European Union (EU) also represents an important source of tax law in Ireland. In recent times, Court of First Instance (CFI) and European Court of Justice (ECJ) decisions have become increasingly influential. EU law is also significant in the area of VAT. While the precise application of VAT is decided by national tax authorities, the overall VAT system is based on EU directives.

In addition, certain elements of the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) project have been or are in the process of being implemented through supranational measures, including through the OECD's Multilateral Convention, the EU's Anti-Tax Avoidance Directive (ATAD 1 and 2) and the EU's directive on minimum tax intended to implement the OECD Pillar Two rules, each of which will have an impact on Irish tax law.

The Office of the Revenue Commissioners (Irish Revenue) is responsible for the assessment, collection, and management of taxes and duties; and the implementation of import and export controls. The Department of Finance is responsible for determining taxation policy. However, Irish Revenue can provide policy advice on taxation issues to the Department of Finance.

1.2. Currency

In Ireland, the currency is the euro.

1.3. Membership of International Organizations

Ireland is a member of the EU, the OECD and the World Trade Organization (WTO).

1.4. Official Websites

In Ireland, the following are the relevant tax and finance authority websites:

• Tax Authority — https://www.revenue.ie/en/Home.aspx.
• Department of Finance — http://www.finance.gov.ie.

1.5. Automatic Exchange of Information

Ireland has ratified the Convention on Mutual Administrative Assistance in Tax Matters and is a signatory to the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information. Ireland has also implemented the OECD Common Reporting Standard (CRS) (the agreed global standard for AEOI) through DAC.

Ireland is a signatory to the Addendum to the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information ("Addendum to the CRS-MCAA").

The Directive on Administrative Cooperation 2011/16/EU (DAC) (as amended by other DAC directives) on mandatory automatic exchange of tax information within the EU broadly directs all EU Member States to share certain information for taxable periods starting on or after January 1, 2014.

The EU, including Ireland, has signed agreements to apply DAC as amended by Directive 2014/107/EU (DAC2) with the following countries:

• Andorra;
• Switzerland;
• Liechtenstein;
• San Marino; and
• Monaco

Ireland has enacted legislation to implement a Foreign Account Tax Compliance Act (FATCA) Model 1 IGA with the United States. Ireland is also a signatory to the Multilateral Competent Authority Agreement on the Automatic Exchange of Country-by-Country (CbC) Reporting, with CbC reporting requirements applying in Ireland for fiscal years beginning on or after January 1, 2016.

Ireland is a signatory to the Multilateral Competent Authority Agreement on Automatic Exchange of Information on Income derived through Digital Platforms ("the DPI-MCAA").

Ireland is a signatory to the Multilateral Competent Authority Agreement on Automatic Exchange of Information Pursuant to the Crypto-Asset Reporting Framework ("CARF-MCAA").

Ireland is a signatory to the Multilateral Competent Authority Agreement on the Exchange of GloBE Information ("GIR-MCAA"). Ireland is a member of the Inclusive Framework on BEPS, a group of countries that is developing standards on BEPS-related issues, and is reviewing and monitoring implementation of the OECD/G20 BEPS Action Plan.

2. Corporate Tax Computation and Administration

2.1. Residence, Taxable Status, Entity Characterization

2.1.1 Residence

A company incorporated in Ireland is automatically regarded as tax-resident in Ireland. In all other cases, residence is based on where the company is centrally managed and controlled. The term "central management and control" is, in broad terms, directed at the highest level of control of the business rather than the day-to-day operations. It looks to the strategic control of the company, including the formulation of company policy, how the company deals with financing and capital structure, etc.

If a company incorporated in Ireland is managed and controlled in a jurisdiction with which Ireland has signed a double tax treaty ("treaty"), it may be regarded as resident in that other state under the "tie-breaker" clause of the treaty with that state. As a result of the implementation of the OECD's Multilateral Instrument (MLI) in 2019, it may be necessary to secure the agreement of the relevant competent authority under a treaty in relation to the residence status of an entity

2.1.2 Taxable Status

Companies are subject to corporation tax on their taxable profits.

2.1.3 Legal Classification of Nonresident Entities

Irish legislation does not specifically address how foreign entities should be legally classified for Irish tax purposes, i.e., as opaque or transparent.

In May 2023, Irish Revenue issued Tax and Duty Manual Part 35C-00-02, "Foreign Entity Classification for Irish Tax Purposes", to provide clarity on the approach taken when classifying a foreign entity as an opaque or a tax transparent entity for the purposes of Irish tax law.

The Irish Revenue guidance considers that the relevant Irish case law1 and UK case law2 (which is of persuasive value) require a two-stage approach. The first stage is to determine the characteristics, rights and obligations of the foreign entity by reference to the laws of the territory in which it is established. The second stage is to determine whether, applying Irish law, the characteristics, rights and obligations of the entity match the characteristics, rights and obligations of an Irish company or Irish partnership or are more aligned to one versus the other.

Case law has established a number of indicia of an opaque entity. These are summarized in the Irish Revenue guidance and include:

• the entity having separate legal personality;
• the entity issuing share capital or an equivalent;
• the entity carrying on business by itself (rather than jointly through its partners);
• those with an interest in the entity not being entitled to share in its profits as they arise;
• the entity being responsible for debts incurred as a result of carrying on the business;
• the assets used in the business being beneficially owned by the entity; and
• the entity being capable of perpetual succession unaffected by the incapacity or death of its members.

Some of these factors may have more significance than others.

Irish Revenue does not publish a list or table setting out its general view of whether particular types of foreign entity (such as a U.S. LLC) are opaque or transparent. Its approach can vary depending on the facts in each case. For example, Irish Revenue has previously confirmed that a U.S. LLC may be regarded as a "body corporate" for the purposes of associated companies relief from stamp duty, even though the members hold "interests" rather than "shares" in the LLC. Conversely, Irish Revenue argued in a recent case that a U.S. LLC did not constitute a body corporate, but then chose not to appeal a finding to the contrary by the Tax Appeals Commission.

2.2. Corporate Tax Base

2.2.1 Resident Corporations

A company that is resident in Ireland under the rules described above will be liable to Irish corporation tax on its worldwide profits. Profits brought into the charge to Irish corporation tax are the sum of the company's income plus chargeable gains before allowable deductions. The profits on which corporation tax is ultimately borne are the total amount of profits after making all deductions and taking all relevant reliefs.

2.2.2 Nonresident Corporations

A company that is not resident in Ireland is only subject to corporation tax if it carries on a trade in Ireland through a branch or agency. If it does carry on a trade in Ireland, then it is subject to Irish corporation tax on any:

• trading income arising from the branch or agency;
• other Irish source income;
• income from property or rights used by, or held by, or for, the branch or agency; and
• chargeable gains arising from assets which are situated in Ireland, and which are used in or for the purposes of the trade carried on through the branch or agency.

A nonresident company that does not have a branch or agency in Ireland will only be subject to Irish tax on income derived from sources in Ireland. All nonresident companies are subject to CGT on any disposal of specified Irish assets.

2.2.3 Noncorporate Business Entities

2.2.3.1 Recognition

A number of noncorporate business entities are recognized in Ireland, including partnerships and certain investment fund structures such as unit trusts, common contractual funds and investment limited partnerships (ILP).

2.2.3.2 Tax Status

Partnerships

Under general legal principles, a partnership is not a "person" distinct from its members (unlike a company which is a separate person to its shareholders). For Irish tax purposes, an Irish partnership is treated as transparent for tax purposes and is not subject to tax in its own right. Instead, it is the members of the partnership who are subject to Irish tax. However, the partnership taxable profits, capital allowances and charges are determined for the partnership as a whole and once these amounts have been calculated, they are apportioned amongst the partners.

Investment funds

Investment funds in Ireland can be established in a number of different legal forms, including noncorporate forms such as unit trusts, common contractual funds (CCFs) and ILPs.

Unit trusts are taxed as investment undertakings for the purposes of Section 739B, TCA and are subject to the "gross roll-up regime." This regime also applies to investment undertakings constituted as investment companies and Irish Collective Asset-Management Vehicles (ICAVs). Under the gross roll-up regime, investment undertakings are, broadly, not subject to tax in Ireland on any income or gains they realize from their investments and there are no Irish withholding taxes in respect of distributions, redemptions or transfers of units by or to non-Irish investors if certain conditions are met. In particular, non-Irish resident investors and certain exempt Irish investors must provide the appropriate Irish Revenue-approved declaration to the fund.

There are specific rules forming part of the gross roll-up tax regime which apply to investment undertakings holding Irish real estate assets (termed Irish real estate funds or "IREFs"). These rules can give rise to additional withholding tax arising out of certain events including distributions to investors, but this does not affect the tax treatment discussed above where the investment undertaking does not hold Irish real estate assets. For the purposes of these specific tax rules, an IREF is (i) an investment undertaking or a subfund of an investment undertaking in which 25 percent or more of the value of the assets is derived from Irish real estate (or related assets), or (ii) an investment undertaking or subfund of an investment undertaking the main purpose of which, or one of the main purposes of which, is to acquire such assets. In addition, IREFs can be exposed to direct tax in certain circumstances, including where the investment undertaking's leverage exceeds 50 percent of the cost of its assets (subject to relief where the debt incurred is qualifying third party debt).

A CCF is a contractual arrangement enabling investors to pool assets in a regulated fund vehicle which is effectively treated as transparent for Irish tax purposes under Section 739I, TCA.

An ILP is a regulated partnership structured under the Investment Limited Partnerships Act 1994 (which has been amended and extended by the Irish Investment Limited Partnership (Amendment) Act 2020) which is, effectively, treated as transparent for Irish tax purposes under Section 739J, TCA.

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Originally published by Bloomberg Industry Group, Inc

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