Following the budget statement last week, the Irish Finance Bill 2014 (the "Bill") was published yesterday, 23 October 2014. The key points relevant to multinational companies were announced last week and the Bill contains the details relating to those announcements.
As expected, the Bill did not include any detail relating to the "Knowledge Development Box" announced last week. Over the coming weeks we expect a consultation process to be launched with a view to implementing legislation being published in 2015. Matheson will participate in that consultation process.
Corporate Tax Residency Rules
Under existing Irish law, certain companies incorporated in Ireland are not treated as tax resident in Ireland if they are managed and controlled outside of Ireland.
The Bill replaces the old corporate tax residence rules. The new provisions provide that:
the general rule will be that an Irish incorporated company will be treated as Irish tax resident; and the general rule will not apply to companies treated as tax resident in another jurisdiction by virtue of the terms of a double tax treaty. The new rules will apply:
after 31 December 2014 for companies incorporated on or after 1 January 2015; and after 31 December 2020 for companies incorporated before 1 January 2015. Ireland's Onshore IP Amortisation Regime
The Bill seeks to enhance Ireland's onshore intellectual property ("IP") amortisation regime in a way that should interest multinational groups with valuable IP currently held outside Ireland. We expect these changes to make Ireland even more attractive for multinationals wishing to onshore IP over the coming years.
The key enhancements to the onshore IP amortisation regime include:
the definition of qualifying IP is broadened to specifically include customer lists. The definition of qualifying IP is already very broad and includes patents, trademarks, secret processes, secret information, licenses and goodwill related to qualifying IP; all of the profits derived from the exploitation of qualifying IP may be sheltered by the amortisation of the qualifying IP plus interest paid on the sums borrowed to acquire the qualifying IP. Previously the combined deduction was limited to 80% of the relevant profits. Research and Development Tax Credits
The 2003 base year threshold has been removed for research and development ("R&D") expenditure incurred in a relevant period commencing on or after 1 January 2015, allowing for a full volume...