Business Operations in the Republic of Ireland (Portfolio 7170)

Tax Management Portfolio, Business Operations in the Republic of Ireland, No. 7170, addresses in general terms the main legal, tax, and employment aspects of carrying on a business in Ireland. To view this Portfolio, visit Bloomberg Tax for a free trial.

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Description

Tax Management Portfolio, Business Operations in the Republic of Ireland, No. 7170, addresses in general terms the main legal, tax, and employment aspects of carrying on a business in Ireland. Chapter I of the Portfolio provides some general background information on Ireland. Chapter II outlines the general background in which businesses are operated, and the business financing, state aid and grant programs available; it also addresses various legal matters that affect business operations in Ireland, in particular trade and commerce regulations (to include in relation to imports and exports, anti-trust, intellectual property, e-commerce, data protection, communications and broadcasting regulations), labor regulations and real estate, construction, planning and environmental law. Chapter III discusses the various forms of doing business in Ireland (i.e., the different types of corporate or legal entity) and the requirements that apply in relation thereto.

Chapters IV to XVI inclusive provide a comprehensive review of the Irish taxation system and its effect on business operations in Ireland. In particular, the taxation of domestic corporations, foreign corporations, branches, individuals and partnerships is addressed. There are also specific chapters on other taxes, intercompany pricing, the special provisions relating to multinational corporations, Ireland as a location for the operations of multinational corporations, avoidance of double taxation and anti-avoidance.

The Table of Worksheets include links to:

 • The form of Constitution set out in the Irish companies legislation in relation to various types of corporate entity;
  • Many of the most common Irish taxation return, claim, application and other forms, in respect of corporations, individuals and partnerships;
  • Guidance that has been issued by the Revenue Commissioners on certain matters;
  • The tax treaty between the United States and Ireland, the tax treaty between the United Kingdom and Ireland, the protocols thereto and commentaries thereon;
  • A list of the tax treaties that Ireland has entered into and a table of withholding tax rates that apply thereunder; and
  • Other relevant corporate and tax documents.

Note: In this Portfolio, the phrase “tax treaty country” is used to refer to a country with which Ireland has entered into a double taxation agreement. The phrases “tax treaties” and “double taxation agreements” are used interchangeably. The Irish Revenue Commissioners are referred to herein as Revenue or the Revenue.

This Portfolio may be cited as Ryan, O'Shea, and Fahy, 7170 T.M., Business Operations in the Republic of Ireland.


Authors

John Ryan, FCA

John Ryan of Matheson Solicitors is a Fellow of The Institute of Chartered Accountants in Ireland.

Robert O'Shea

Robert O'Shea of Matheson Solicitors is a member of the Law Society of Ireland and an associate member of the American Bar Association.

Aidan Fahy

Aidan Fahy of Matheson Solicitors is a member of the Law Society of Ireland and an associate of the Irish Taxation Institute.

Table of Contents

Detailed Analysis
I. Ireland — Constitutional, Political, and General Background
Introductory Material
A. The Constitution
B. The Legislature (The Oireachtas)
C. The Judiciary
D. Political Background
E. The Economy
F. Ireland as a Member of the European Union
1. General
2. The European Union and Taxation
3. European Financing and Foreign Direct Investment in Ireland
4. Brexit
G. Grants and Other Fiscal Incentives
II. Operating a Business in Ireland
A. Foreign Direct Investment
1. Opportunities
2. Incentives
B. Business Financing
C. State Aid Programs and Grants for Industry
1. Introduction
2. General Aid Programs
a. Industrial Development Agency of Ireland
b. Enterprise Ireland
(1) Start-Up Idea
(2) Start-Up Funding — High Potential Start-Ups
(3) Established SME Funding
(4) Large Company Funding
(5) Research and Development
c. Shannon Group plc
d. Údarás na Gaeltachta (The Gaeltacht Authority)
e. Forfás
f. Solas
3. European Union Aid
a. European Union's Research Framework Program
b. National Development Plan
c. Agriculture, Fisheries and Tourism Aid Programs
(1) Agriculture and Fisheries
(a) Teagasc — Agricultural and Food Development Authority
(b) Bord Iascaigh Mhara — Irish Sea Fisheries Board
(2) Tourism
d. Taxation Incentives
D. Currency and Exchange Controls
1. Currency
2. Imports and Exports
a. Customs Duties and Other Taxes
b. Documentation
E. Trade and Commerce Regulations
1. General Regulation of Business
a. Competition Legislation
b. Competition Law Enforcement
c. Merger Control
(1) Media Mergers
(2) Special Merger Regime — IBRC
(3) Mergers Below the Financial Thresholds
(4) Review by the CCPC
d. Groceries Regulations
2. Patents
a. Scope of Protection
b. Patenting of Software and Business Methods
c. Patent Applications
d. Exclusive Rights
e. Limitation of Rights
f. International Aspects
3. Trade Marks
a. Filing Options
b. Registrable Trade Marks
c. Effects of Registration
d. Protection of Unregistered Marks
4. Copyright
5. Protection of Databases
6. Industrial Designs
7. Topographies of Semiconductor Products
8. Confidential Information and Trade Secrets
9. E-Commerce
10. Data Protection
a. Registration
b. Security
c. Sanctions
11. Communications and Broadcasting Regulations
a. Communications
b. Broadcasting
F. Labor Relations
1. Employment Legislation
2. Pay-Related Social Insurance (PRSI)
3. Social Welfare Benefits
4. Redundancy
a. Statutory
b. Voluntary Redundancy Payments
G. Immigration
1. Employment Permits
2. Alternative Routes to Entry
a. The Immigrant Investor Programme
b. The Start-up Entrepreneur Programme
H. Real Estate, Construction, Planning and Environmental Law
1. Introduction
2. Purchase of Commercial Real Estate
3. Leasing of Commercial Real Estate
4. Property Taxation Issues
a. Stamp Duty
b. Value Added Tax
c. Rates
d. Local Property Tax
5. Planning Permission
6. Environmental Consents and Permits
7. Construction and Engineering
8. Consultant Team Engagement
9. Construction Contractor/Construction Contract Form
III. Forms of Doing Business in the Republic of Ireland
A. Principal Business Entities
1. Sole Trader
2. Companies
3. Partnership
4. Branch of a Foreign Corporation
5. Other Entities
B. Private Limited Companies
1. Formation
a. Objects Clause
b. Corporate Name
c. Incorporators
d. Constitutional Documents
e. Share Capital
f. Incorporation Procedure
g. Costs of Incorporation
2. Operation
a. License
b. Amendment of Constitution
c. Increases and Reductions of Share Capital
d. Acquisition of Own Shares
e. Corporate Officers
(1) Directors
(2) Secretaries
(3) Registered Persons
(4) Auditors
f. Shareholders' Meetings
g. Directors' Meetings
h. Books and Records
i. Financial Statements
(1) In General
(2) Annual Return Filing
j. Dividends and Other Distributions of Profits
k. Reserves
3. Statutory Merger
4. Dissolution
5. Liquidation
a. Court Winding Up
b. Members' Voluntary Winding Up
c. Creditors' Voluntary Winding Up
6. Reorganization
a. Schemes of Arrangement
b. Compulsory Acquisition of Minority Shares
c. Divisions
d. Variation of Share Capital
C. Other Corporate Entities
1. Unlimited Company
2. Public Limited Company (PLC)
3. Guarantee Company
4. Investment Companies
D. Partnership
1. Formation
2. Administration
3. Dissolution
E. Branch of a Foreign Corporation
1. Registration
2. Liability
3. Books and Records
F. Other Business Entities
G. Classification of Foreign Entities
IV. Introduction to Irish Taxation and Principal Taxes
A. Sources of Law
B. Direct and Indirect Taxation
C. Legislative Process
D. The Revenue Commissioners
E. Self-Assessment Process
F. Pay As You Earn System
G. Year of Assessment or Tax Year
H. Audit Process
1. Introduction
2. Revenue Non-Audit Compliance Interventions
3. Revenue Audits
4. Revenue Investigation
5. Penalties
I. Revenue Assessments, Appeals and Statute of Limitations for Assessment and Collection of Taxes
1. Introduction and Statute of Limitations for Assessment and Collection of Taxes
2. The Appeal Commissioners
3. The High Court
4. The Court of Appeal/Supreme Court
V. Taxation of Domestic Companies or Corporations
A. Introduction
B. What Is a Domestic Company or Corporation? The Tests for Tax Residence
C. Corporation Tax and Capital Gains Tax — Rules and Application
1. Corporation Tax and Accounting Periods
2. Capital Gains Tax
3. Tax Rates
4. Meaning of “Trade”
5. Taxation of Worldwide Income
6. Payment of Corporation Tax
7. Accounting Related Matters
a. Classification of Income
b. Accounting Periods
c. Accounting Methods
d. Inventories
e. Liquidations
f. Reserves
8. Personal Holding Companies and Close (Closely Held) Companies
9. Calculation of Gross Income
a. General
b. Capital Gains
c. Dividend Income
d. Income from Foreign Sources
(1) General
(2) The Treatment of Foreign Dividends Received
10. Taxation of Capital Gains
a. Introduction
b. Special Provisions
c. Withholding Tax
d. Exemptions and Reliefs
e. Tax Exemption for Capital Gains Arising on the Disposal of Certain Subsidiaries
f. CGT Relief on Certain Purchases of Land and Buildings
11. Business Expenses
a. General
b. Organizational Expenses
c. Travel and Entertainment Expenses
d. Interest and Royalties
(1) Interest
(2) Withholding Tax on Interest
(3) Patents and Royalties
e. Annuities and Other Annual Payments
f. Taxes
g. Depreciation and Amortization
(1) Machinery and Plant (Including Ships)
(2) Industrial Structures
(3) Balancing Charges and Allowances
(4) Intangibles
(5) Accelerated Capital Allowances for Energy Efficient Equipment
h. Approved Profit-Sharing Scheme/Employee Share Ownership Trust
12. Research and Development Tax Credit
13. Loss Carryovers and Carrybacks
14. Consolidated Returns, Group and Consortium Relief for Losses
a. Group Relief
b. Consortium Relief
c. Intragroup Payments
d. Group Relief in Respect of Capital Gains
e. Miscellaneous
15. Corporate Distributions and Dividend Withholding Tax
16. Mergers
a. General
b. Cross-Border Mergers
17. Exchange of Certain Securities
18. Corporate Investments in Renewable Energy Projects
19. Real Estate Investment Trusts
20. Audit Process and Statute of Limitations for Assessment and Collection of Taxes
21. Miscellaneous
D. Other Taxes
1. Value Added Tax
2. Stamp Duties
a. Introduction
b. Rates of Duty
c. Exemptions and Reliefs
d. Self-Assessment
3. Other Withholding Taxes
a. Relevant Contracts Tax
b. Professional Services Withholding Tax
c. Encashment Tax
d. Dividend Withholding Tax
e. Deposit Interest Retention Tax
4. Carbon Tax
5. “Windfall” Tax
6. Petroleum Production Tax (PPT)
VI. Taxation of Foreign Corporations
A. Introduction
B. Advantages of Residency
C. Disadvantages of Residency
D. Advantages of Nonresidency
E. Disadvantages of Nonresidency
VII. Taxation of a Branch
A. Charge to Tax — Irish Branch
1. Introduction
2. Meaning of “Branch”
3. Meaning of “Carrying on Trade in [Ireland]”
B. Profits of the Irish Branch Chargeable to Irish Corporation Tax
1. Chargeable Profits
2. Assessment and Collection
C. Subsidiary vs. Branch
1. Introduction
2. Taxation Issues
a. Corporation Tax
(1) Subsidiary
(2) Branch
b. Stamp Duty
(1) Subsidiary
(2) Branch
c. Dividend Withholding Tax
(1) Subsidiary
(2) Branch
d. Capital Gains Tax for Parent Company
(1) Subsidiary
(2) Branch
e. Double Taxation Agreements
(1) Subsidiary
(2) Branch
f. Payroll Taxes
g. Capital Duty
h. Compliance
VIII. Taxation of Partnerships
A. Taxation of Partnership Profits
B. Period of Accounts
C. Losses
D. Tax Rates
E. Precedent Partner
F. Capital Gains Tax
G. Anti-Avoidance Provisions
IX. Taxation of Other Business Entities
A. Industrial and Provident Societies
B. Building Societies
C. Credit Unions
D. Unincorporated Associations
E. Cooperatives
F. European Economic Interest Grouping (EEIG)
X. Taxation of Individuals
A. Introduction — Income Tax
B. Residence and Domicile
1. Definitions of Residence, Ordinary Residence, and Domicile
a. Residence
b. Ordinary Residence
c. Domicile
2. Effects of Residence, Ordinary Residence and Domicile on Irish Income Tax Liability
3. The Remittance Basis of Assessment (the “Remittance Basis”)
4. Special Assignee Relief Programme
5. Special Rules Relating to Years of Arrival in and Departure from Ireland
6. Relief for Resident Employees Who Spend Substantial Periods Working Outside Ireland
7. Foreign Earnings Deduction
C. Classification of Income
1. Schedule C
2. Schedule D
a. Schedule D, Cases I and II
(1) Basis of Assessment
(2) Commencement Years
(3) Cessation Years
(4) Computation of Chargeable Income
(5) Relief for Case I and Case II Losses
(6) Start Your Own Business Relief
b. Schedule D, Case III
c. Schedule D, Case IV
d. Schedule D, Case V
3. Schedule E
a. General
b. Obligation to Deduct Tax Under the PAYE System for Intermediaries, Nonresident Employers, Employments Not Wholly Exercised in Ireland, and Mobile Workers
(1) Intermediaries
(2) Nonresident Employer
(3) Employment Not Wholly Exercised in Ireland
(4) Mobile Workers
(5) International Flight Crew
4. Schedule F
D. Married Couples
E. Tax Credits and Reliefs
1. Personal Tax Credits
2. Relief Available at Marginal Rate
a. Employed Person Taking Care of Incapacitated Individual
b. Pension Contributions and Options on Retirement
c. Interest on Monies Borrowed
F. Exemption Limits
G. Restriction on the Use of Tax Reliefs by High Income Taxpayers
H. Taxes Payable and Tax Rates
1. Income Tax
2. Pay Related Social Insurance (PRSI)
3. Universal Social Charge (USC)
4. Domicile Levy
I. Further Tax Reliefs and Deductions
1. Health Insurance
2. Medical Expenses
3. Mortgage Interest Relief
4. Artists, Painters, Sculptors, Authors and Composers
5. Inventory Relief for Qualifying Farmers
6. Woodlands
7. Payments in Respect of Personal Injuries
8. Relief for Investment in Corporate Trades
9. Relief for Rent Paid
10. Relief for Fees Paid with Respect to Certain Courses
11. Donations to Charities and Other Approved Bodies
12. Film Investment
13. Tax Effective Investment Accounts
14. Other Tax Credits and Reliefs
J. Employment-Related Reliefs
1. Employee Share Schemes
a. Share Option Plans
(1) Unapproved Share Option Plans
(2) Approved Share Option Plans
(3) Share Options, Nonresidents, Mobile Workers and Cross-Border Workers
b. Approved Profit-Sharing Schemes/Plans
c. Employee Share Ownership Trust
d. Save-As-You-Earn Plans
e. Convertible Securities
f. Restricted Shares
g. Forfeitable Shares
h. Reporting and Payroll Obligations
2. Benefits-in-Kind
3. Redundancy and Termination Payments
a. Ex Gratia Payments
(1) The Basic Exemption
(2) Increased Basic Exemption
(3) Standard Capital Superannuation Benefit Calculation
b. Payments Made as a Result of a Claim Made by an Employee or Former Employee
c. Payments in Lieu of Notice
d. Pay Related Social Insurance and USC
K. Assessment and Appeal
1. Payment and Assessment
2. Appeals
L. Audit Process and Statute of Limitations for Assessment and Collection of Taxes
M. Example
N. Other Taxes
1. Capital Gains (in Relation to Individuals)
a. Introduction
b. Exemptions and Reliefs
c. Anti-Avoidance Provisions
d. Self-Assessment
2. Value Added Tax
3. Stamp Duties
4. Other Withholding Taxes
a. Relevant Contracts Tax
b. Professional Services Withholding Tax
c. Encashment Tax
d. Dividend Withholding Tax
e. Deposit Interest Retention Tax
5. Carbon Tax
6. “Windfall Tax”
7. Bankers' Tax
XI. Taxation of Nonresident Individuals
XII. Capital Acquisitions Tax
A. Introduction
B. Territoriality of Capital Acquisitions Tax
C. Tax-Free Threshold
D. Shares in Foreign Company
E. Exemptions and Reliefs
1. Dwelling House Relief
2. Business Relief
3. Agricultural Relief
4. Other
F. Free Use of Property/Free Loans
G. Capital Gains Tax Set-off/Same Event Allowance
H. Self-Assessment
I. Discretionary Trust Tax
XIII. Intercompany Pricing
A. Transfer Pricing in Ireland
1. Introduction
2. Key Features
3. Details of Ireland's Transfer Pricing Legislation
4. Exemption for Small and Medium Businesses
5. Adjustments of Profits Pursuant to the Legislation
6. Domestic Offset Provisions
7. Documentation Required for Transfer Pricing Transactions
8. Grandfathering Provision
B. Additional Measures — Intercompany Pricing
1. General Provisions
2. Trading Companies
3. Losses
4. Interest
5. Land Dealing Companies
6. Tax Depreciation for Certain Assets
7. Capital Gains
8. Control over Residents
C. Determining an Arm's-Length Price
D. Compliance
XIV. Multinational Corporations — Special Provisions Relating Thereto and Ireland as a Location for the Operations of Multinational Corporations
A. General Provisions
1. Certain Cross-border Mergers, Divisions, Transfers of Assets and Exchanges of Shares
2. Close Companies
3. Groups
4. Withholding Taxes
5. Country-by-Country Reporting
B. Ireland as Business Location
1. Tax Benefits of Doing Business in Ireland
2. Activities that Qualify for the 12.5% Corporation Tax Regime
3. Why Choose Ireland?
C. Ireland as a Headquarters and Holding Company Location
1. Introduction
2. Corporation Tax Exemption for Gains on Sale of Shares in Subsidiaries
3. Treatment of Dividends Received
4. Tax Credits for Overseas Branches Taxes
5. Other Benefits Ireland Offers
a. Withholding Tax Exemption for Dividends Paid
b. Withholding Tax Exemption for Interest
c. Exemption from Capital Gains Tax on Migration
d. No Significant Thin Capitalization/Controlled Foreign Company Rules
e. Tax Deduction for Borrowings
f. Tax Treaty Network
D. Ireland as a Location for the Development, Management and Exploitation of Intellectual Property Rights
1. Applicable Rate of Corporation Tax
2. Intellectual Property Exploitation Generally
3. Business Models for Intellectual Property Exploitation
4. Application of 12.5% Tax Rate to an Irish Company Holding/Managing Intellectual Property
5. Onshore IP Structure
6. Nonresident Company Structure
7. Knowledge Development Box
8. Stamp Duty Exemption
9. Research and Development Tax Credit
10. Preserving the Low-Tax Benefits
11. Conclusion
E. Ireland as a Location for Structured Finance Special Purpose Vehicles
1. Introduction
2. Onshore Status
3. Ireland's Tax System
4. Conditions for a Qualifying SPV
5. Calculation of Taxable Profits
6. Irish Withholding Tax
a. Quoted Eurobond Exemption
b. Qualifying Person Exemption
7. Value Added Tax and Stamp Duty
8. Tax Treaty Network
9. Offering of Securities
10. LTD, DAC or Public Limited Company
11. Listing on the Irish Stock Exchange
12. Alternative Investment Fund Managers Directive
13. Conclusion
F. Ireland as a Center for Islamic Finance
G. BEPS, ATAD and ATAD 2
XV. Avoidance of Double Taxation
A. General
1. Tax Treaty Relief
2. Unilateral Relief
a. The Treatment of Dividends Received
b. Foreign Dividends Received — Tax Treatment
c. Interest
d. Royalties
e. Tax Credits for Overseas Branches Taxes
B. Tax Treaties
1. Treaties Entered into by Ireland
2. Common Reporting Standard
3. Standard Definitions
a. Resident of Ireland and Resident of Treaty Partner
b. Permanent Establishment
4. Ireland-United Kingdom Tax Treaty
5. Ireland-United States Tax Treaty
XVI. Anti-Avoidance
Introductory Material
A. Specific Legislation
1. Dividend Stripping
2. Bond Washing
3. Limited Partnerships
4. Transfer of Assets Abroad
5. Sale of Rent
6. Notional Loans
7. Limitation on Capital Allowances
8. Tax Treatment of Prepaid Interest
9. Loans from Employee Benefit Trusts
10. Miscellaneous
B. General Anti-Avoidance Legislation
C. Mandatory Disclosure Regime
D. Duties of Auditors and Tax Consultants to Report Tax Evasion

Working Papers

Table of Worksheets
Worksheet 1 Form VAT 3, Return of Annual Trading
Worksheet 2 List of Countries with Which Ireland Has In Force Income Tax Treaties and Other Tax-Related Agreements as of March 1, 2018