Ireland Country Guide 2021 - Withholding Tax

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1. Overview

1.1. Government and Tax System

Editor's note: Measures have beenintroduced to assist taxpayers during the COVID-19 pandemic. Pleasesee our International CoronavirusRoadmap for further details.

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

The principal statutes are the:

Taxes Consolidation Act 1997 as amended (TCA); whichconsolidated 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 andservices;
Stamp Duties Consolidation Act 1999 as amended (Stamp Act),which provides for the imposition of stamp (transfer) duty oncertain instruments and transactions; and
Social Welfare (Consolidation) Act 2005 as amended (SocialWelfare Act), which provides for Pay-Related Social Insurance(PRSI) charges.

These Acts are revised and updated annually to reflect FinanceAct legislative amendments.

In addition, as Ireland is a common law jurisdiction, case lawprecedent has a significant impact on the Irish tax code.

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

In addition, certain elements of the Organization for EconomicCooperation and Development (OECD) Base Erosion and Profit Shifting(BEPS) project are in the process of being implemented throughsupranational measures, including through the OECD'sMultilateral Convention and the EU's Anti-Tax AvoidanceDirectives, (ATAD 1 and 2), both of which will impact Irish taxlaw.

The Office of the Revenue Commissioners (Irish Revenue) isresponsible for the assessment, collection, and management of taxesand duties; and the implementation of import and export controls.The Department of Finance is responsible for determining taxationpolicy. However, Irish Revenue can provide policy advice ontaxation 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 TradeOrganization (WTO).

1.4. Official Websites

In Ireland, the following are the relevant tax and financeauthority websites:

Tax Authority - http://www.revenue.ie.
Department of Finance - http://www.finance.gov.ie.

1.5. Automatic Exchange of Information

Ireland has ratified the Convention on Mutual AdministrativeAssistance in Tax Matters and is a signatory to the MultilateralCompetent Authority Agreement on Automatic Exchange of FinancialAccount Information. Ireland has also implemented the OECD CommonReporting Standard (CRS) (the agreed global standard for AEOI)through DAC.

The Directive on Administrative Cooperation 2011/16/EU (DAC) (asamended by other DAC directives) on mandatory automatic exchange oftax information within the EU broadly directs all EU Member Statesto share certain information for taxable periods starting on orafter January 1, 2014. The information exchanged is in relation toresidents of other Member States and includes:

employment income;
directors' fees;
life insurance products (not covered by other directives);
pensions; and
ownership and income from immovable property.

The EU, including Ireland, has signed agreements to apply DAC asamended by Directive 2014/107/EU (DAC2) with the followingcountries:

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

The Irish Finance Act 2019 was signed into law on December 22,2019 and, amongst other measures, enacted Directive 2018/822/EU asregards mandatory automatic exchange of information in the field oftaxation in relation to reportable cross-border arrangements (DAC6)into Irish law (see further Section 8.1).

Ireland has enacted legislation to implement a Foreign AccountTax Compliance Act (FATCA) Model 1 IGA with the United States.

Ireland is also a signatory to the Multilateral CompetentAuthority agreement on the Automatic Exchange of Country-by-Country(CbC) Reporting, with CbC reporting requirements applying inIreland for fiscal years beginning on or after January 1, 2016.

2. Corporate Tax Computation and Administration

2.1. Residence, Taxable Status, Entity Characterization

Editor's note: Measures have beenintroduced to assist taxpayers during the COVID-19 pandemic. Pleasesee our International CoronavirusRoadmap for further details.

2.1.1 Residence

Since January 1, 2015, a company incorporated in Ireland isautomatically regarded as tax-resident in Ireland (subject tocertain "grandfathering" provisions applicable up toDecember 31, 2020). In all other cases, residence is based on wherethe 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 ratherthan the day-to-day operations. It looks to the strategic controlof the company, including the formulation of company policy, howthe company deals with financing and capital structure, etc.

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

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Originally Published by Bloomberg's Tax and AccountingCountry Guide 2021

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.

Ireland Country Guide 2021 - Withholding Tax - Ireland (2024)