Introduction
Section 1009A of the Irish Taxes Consolidation Act 1997,1 inserted by the Irish Finance Act 2025,2 represents a significant development in Irish tax law: the first statutory codification of the principle that a foreign body corporate can be treated as fiscally transparent where it is “substantially similar” to an Irish partnership. While the provision does not fundamentally depart from Ireland’s long-standing resemblance-based approach to entity classification — an approach that traces its origins to cases such as the U.K. case of Memec PLC v. Inland Revenue Commissioners — it provides a statutory grounding for practitioners and businesses who have historically relied on a patchwork of case law, Irish Revenue guidance, and analogy to determine how foreign entities should be characterized.3
Whether a foreign entity — such as a Delaware limited partnership, a Delaware statutory trust, a U.K. limited liability partnership, or a U.S. limited liability company — is treated as transparent or opaque for Irish tax purposes can be critically important and determine key tax issues, such as access to double tax treaty benefits, the application of anti-hybrid rules and pillar 2; and influence the structuring of cross-border investment funds and corporate groups. For entities held by Irish resident entities in international structures, the question is not merely academic; it goes to the heart of when and how income is taxed and whether double taxation can be relieved.
The new provision must be understood in light of the U.K. Supreme Court decision in Anson v. HMRC.4 It emphasized members’ entitlement to profits “as they arise” — a test that, if applied rigorously, could expand the category of entities treated as transparent. Irish Revenue has expressly declined to endorse the Anson approach in full,5 yet the new statutory language may implicitly give it greater purchase in Irish law than Revenue’s published guidance suggests.
This article examines section 1009A, how it fits into the existing legal framework, and its practical implications for common structures involving foreign partnerships, LLPs, and LLCs. It also offers some observations on the uncertainties that remain and the guidance practitioners will need from Revenue as section 1009A is applied in practice.
Tax Transparency: Importance in Fund Structures
The question as to whether certain foreign legal entities should be considered “tax transparent” or “look through” for Irish tax purposes has become increasingly important in recent years. This is frequently seen in practice with complex cross-border investment funds and multinational structures involving Irish entities combined, in particular, with U.S. and Cayman Islands limited partnerships, companies, and LLCs, where the question as to whether that foreign entity is “transparent” or “opaque” for Irish tax purposes is critical to the structure.
In a typical Irish fund structure, U.S. and non-U.S. investors would invest through foreign entities (feeder funds) into an Irish corporation that holds interests in foreign entities (asset- holding entities) that hold financial assets, such as credit, royalties, or insurance. Investing through foreign entities may be necessary, for regulatory reasons, to segregate assets or liabilities or because it’s more familiar to counterparties or simplifies fund operations.
If the assets originate in the United States, the Irish corporation may be entitled to the benefits of the Ireland-U.S. double tax treaty regarding U.S.- source income if it meets the conditions under the limitation-on-benefits article.6 The 1999 protocol7 to the treaty provides that income derived by fiscally transparent persons will be regarded as that of the Irish corporation to the extent it is treated as such under Irish law. Hence, the importance of determining whether the foreign entity is “transparent” for Irish tax purposes.
Transparency: What Does It Mean?
“Tax transparency” is not a term of art. It is shorthand for arrangements where an entity — typically a partnership or trust — is not itself the taxpayer.8 Instead, its members or beneficiaries are taxed on both distributed and undistributed income and gains, as though they owned the entity’s underlying assets directly. Under Irish tax law, the Irish partnership is the paradigm “transparent” entity.9 Profits and gains arising to an Irish partnership are not taxed on the partnership itself. Instead, the profits and gains are allocated (per the partnership agreement) and taxed directly to the members. Some trusts are also transparent (but they are not further discussed in this article). By contrast, a company is the paradigm “opaque” entity because it is a separate legal entity that is chargeable in its own right.
The approach to “transparency” differs between jurisdictions. In the United States, it is largely a matter of taxpayer choice, which means it’s simple and certain.10 Elsewhere, it’s typically a legal test, such as whether an entity resembles a partnership (Ireland), whether members are entitled to profits as they arise (U.K.),11 or whether the entity meets specific statutory criteria (the Netherlands).12 These tests are more complex to apply and therefore less certain.
Transparency: The Irish Framework
In Ireland, the classification of foreign entities for tax purposes has followed a two-stage approach derived from Memec,13 which was adopted in the Irish case of Quigley v. Harris.14 First, one must determine the entity’s characteristics under its governing law. Second, one must assess whether, for the specific Irish tax provision, those characteristics are more akin to an Irish company (opaque) or an Irish partnership (transparent). Irish Revenue’s Tax and Duty Manual15 (TDM) lists the indicia to be considered, but none is determinative on its own. Foreign entities do not fit neatly into the concept of an Irish company or an Irish partnership: The indicia are often inconclusive or point both ways. A brief look at the leading U.K. cases of Memec and Anson illustrates the challenges of the resemblance approach.
Context: The U.K. Cases
In Memec, a U.K. public limited company entered into a German “silent partnership” with a German GmbH, which held shares in trading subsidiaries.16 The PLC paid the GmbH an amount in return for 87 percent of its net profits. The question presented was whether the PLC was entitled to a foreign tax credit on the basis that dividends paid by the subsidiaries were paid to the PLC?17 The Court of Appeal compared the characteristics of an ordinary English or Scottish partnership with the German silent partnership and concluded that there was a significant mismatch. The GmbH held the shares, ran the business, and was responsible for its debts/ liabilities. The PLC did not carry on any business in common with the GmbH and risked nothing but its capital contribution. Nor did it have a proprietary right, legal or equitable, in the shares or dividends — only a right to a share of net profits under its agreement with the GmbH.18 Accordingly, the silent partnership was not like an English partnership, and therefore not transparent, so dividends were paid to the GmbH, not the PLC. Despite the emphasis on a proprietary right, the court nevertheless considered a Scottish partnership to be transparent, even though its partners had no legal or equitable right to the assets of the partnership.19
The question in Anson was whether, for the purposes of the U.K.-U.S. treaty,20 a member of a U.S. LLC was subject to tax in the U.K. on the “same income” on which he had paid U.S. tax.21 Applying Memec, the First Tier Tribunal (Tax Chamber) (FTT) held that he was. The FTT made a finding of fact based on expert evidence that Mr. Anson was entitled, by virtue of the LLC Act22 and the LLC’s constitutive documents, to a share of the profits of the LLC as they arose because profits and losses were allocated to his capital account periodically. The timing of cash distributions and whether they were discretionary were not considered relevant. In the High Court and the Court of Appeal, the judges held that the absence of a proprietary interest in the LLC’s assets and income was fatal to Mr. Anson’s case, but the U.K. Supreme Court rejected this. Giving the only judgment, Lord Reed stated that if Mr. Anson was entitled to profits as they arose, as the FTT found, then it followed that he was taxed by reference to the same income.23 Lord Reed did not expressly state that the LLC was transparent, as this was not strictly necessary to decide the case.
In both cases, the legal question (whether a dividend was paid to a member of a partnership (Memec) or whether a member was taxed on the income of the LLC (Anson)) was key, demonstrating that questions of “transparency” arise in specific legal contexts. Moreover, the facts and expert evidence are crucial and can vary widely from one entity to another depending on the law of formation, the contractual/ constitutional matrix, and the underlying economics. The bright line of “company or partnership” often encounters shades of grey.
Footnotes
1 Taxes Consolidation Act, 1997, section 1009A.
2 Finance Act 2025, section 36 (Dec. 23, 2025).
3 Memec PLC v. Inland Revenue Commissioners, [1998] STC 754.
4 Anson v. HMRC, [2015] UKSC 44.
5 Irish Revenue, “Tax and Duty Manual,” Part 35C-00-02, para. 3.3 (last updated Apr. 2025) (stating that Anson is limited to its particular facts and treaty context).
6 Convention Between the Government of the United States of America and the Government of Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income and Capital Gains, at art. 23 (July 28, 1997).
7 Convention Amending the Convention Between the Government of Ireland and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income and Capital Gains Signed at Dublin on 28 July, 1997 (Sept. 24, 1999).
8 Tax and Duty Manual, supra note 5, at Introduction.
9 Id. at para. 1.2.2.
10 Section 301.7701-1 to 301.7701-3 (the “check-the-box” regulations, which permit eligible entities to elect their classification for U.S. federal tax purposes).
11 Anson, UKSC 44.
12 Decree of the State Secretary of Finance of 11 December 2009, CPP2009/519M BNB 2010/58. For a summary of the Dutch position, see also Michael McGowan, Classifying Entities and the Meaning of ‘Tax Transparency’: The UK Perspective, section 7.3 (2023).
13 Memec, STC 754, at 764-766.
14 Quigley v. Harris, [2008] ITR 153.
15 Tax and Duty Manual, supra note 5, at para. 4.2.
16 Memec, STC 754, at 755.
17 Memec, STC 754, at 763.
18 Memec, STC 754, at 765.
19 McGowan, supra note 12, at section 2.9.6 (2023) (pointing out two Scotland-specific reasons for treating Scottish partnerships as transparent: the definition of “firm” (Partnership Act 1890, section 4(2)), and the judicial desire to apply U.K.-wide tax legislation uniformly across the United Kingdom).
20 Convention Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income and on Capital Gains (July 24, 2001).
21 Anson, UKSC 44, at para. 29.
22 Limited Liability Company Act, 6 Del. C. sections 18-101 et seq.
23 Anson, UKSC 44, at para. 121.
To view the full article click here
Originally published by Tax Notes International, 13 April 2026, p. 149
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.
[View Source]
