Over the last 10 years, international tax practitioners will have become increasingly familiar with Ireland's holding company regime. With a stream of high-profile redomiciliations of US and UK listed groups and as the headquarters for global social media and technology groups, Ireland is now in the top-tier of sophisticated jurisdictions for locating a holding company. Although these groups garner the most media attention, a far wider range of corporates are seeing the benefits of Ireland, including private equity funds, sovereign wealth funds, alternative investment funds and family offices. This article examines some of the key attractions and themes which are emerging as Ireland's holding company regime continues to evolve and attract business.
With its low tax rate, wide tax treaty network and withholding tax exemptions, a capital gains participation exemption, onshore pooling of dividends and lack of CFC or thin capitalisation rules, Ireland can provide an efficient structure for financing, funds flow and profit extraction for a multinational group. These tax attributes are explained in more detail below. However, the popularity of Ireland is dependent on other factors which are crucially important in the decision to locate a holding company:
Ireland is a member of the OECD, an English speaking member of the EU and a common law jurisdiction;
Ireland is an established international services hub with a skilled, experienced and well-educated workforce especially in the pharmaceutical, social media and technologies industries;
the availability of headquarter office space and lower service costs are seen as attractive when compared with other European cities;
Ireland is a well-regulated jurisdiction (offering 'passporting' into the EU) with an efficient commercial court and is easily accessible from Europe and the US; and
many international companies have substantial existing operations in Ireland which were originally attracted by the young talented workforce and favourable fiscal environment. The introduction of a holding company can often tap into skillsets, infrastructure and people which are already in place, thus providing valuable substance and credibility to a group's holding company structure.
Capital gains tax - participation exemption
Where an Irish holding company disposes of shares in a company resident in an EU or treaty state, any gain may be exempt from tax provided at least 5% of the...