Changes To Irish Corporate Residence Rules

Author:Mr Joe Duffy and Shane Hogan

On October 14 2014, Ireland's Minister for Finance (the Minister) announced changes to Ireland's corporate residence rules. Following much speculation, the Minister confirmed that Ireland would change its rules to restrict the ability of Irish incorporated companies to be treated as non-Irish resident.

Under existing Irish law, an Irish incorporated company that satisfies certain conditions is treated as non-Irish resident if it is managed and controlled in another jurisdiction.

Proposed change

Finance Bill 2014 (the Bill) replaces the existing corporate residence rules. Under the new provisions:

 the general rule will be that an Irish incorporated company will be treated as Irish tax resident; and that general rule will not apply to companies treated as tax resident in another jurisdiction by virtue of the terms of a double tax treaty. In summary, following the change, an Irish incorporated company may only be treated as non-Irish resident if it is managed and controlled in a jurisdiction with which Ireland has agreed a double tax treaty and is considered tax resident in that jurisdiction under the terms of the relevant treaty.

Grandfathering provisions

The new rules will apply from January 1 2015. However, a grandfathering period is available to companies incorporated before January 1 2015 and the existing rules will continue to apply to those companies until December 31 2020. The grandfathering period will end earlier for companies incorporated before January 1 2015 if there is both:

 a change of ownership of the company; and a major change in the nature or conduct of the company's business. The early termination of the grandfathering period is an anti-abuse measure designed primarily to...

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