Ireland's Holding Company Regime

Author:Mr Conor Hurley, Caroline Devlin, Alan Heuston, Fintan Clancy, Ailish Finnerty and Jonathan Sheehan
Profession:Arthur Cox
 
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Ireland has become one of the most attractive locations for the establishment of regional, intermediate and top holding companies of both listed and private multinational groups that are seeking to optimise their operational and fiscal performance. Key reasons for Ireland's popularity are its favourable holding company tax regime; the fact that it is an onshore EU jurisdiction with a good network of double tax treaties and trade agreements; its developed corporate legal system; and the professional and administration services that are available locally.

TAX ATTRIBUTES OF THE IRISH HOLDING COMPANY REGIME

Double Tax Treaty Network

Holding companies resident in Ireland are able to take advantage of the extensive network of double tax treaties between Ireland and other countries worldwide. To date Ireland has signed 63 double tax treaties, including treaties between Ireland and the United States, Canada, Australia and China and all EU member states and OECD countries. The full list of treaty countries is set out in the Schedule.

Capital Gains Tax

Shareholders

A non-Irish resident person without an Irish taxable presence disposing of shares in an Irish incorporated company will not have a liability to Irish tax unless the shares are not listed and derive the greater part of their value from Irish land, minerals or exploration rights.

Shares and Related Assets

A full participation exemption from capital gains tax (at the rate of 25%) is available in Ireland in respect of the disposal of shares in a company resident in an EU member state or country with which Ireland has a double tax treaty. The conditions for the relief are:

The "EU/treaty" condition. The target company is resident for tax purposes in an EU/treaty country. The "parent" condition. The holding company must have held at least 5% of the ordinary shares in the target company (and have been entitled to at least 5% of the profits available for distribution and assets available on a winding up) for a continuous period of 12 months at the time of the disposal or ending within two years of the disposal. The "trading" condition. At the time of the disposal either (i) the target company is a trading company, or (ii) the holding company, and each of its 5% subsidiaries, and the target company and each of its 5% subsidiaries, together form a trading group (i.e. the business of each company taken together consist wholly or mainly of the carrying on of a trade or trades). A trading company or...

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