Review Of 2017 And Looking To 2018

Author:Mr John Gulliver, Maura Dineen and Niamh Keogh
Profession:Mason Hayes & Curran

The last twelve months have seen renewed international focus on Ireland's 12.5% low tax offering and its interaction with other tax systems around the globe. The OECD Base Erosion and Profit Shifting (BEPS) initiative has driven international groups to restructure their business structures away from zero tax haven locations and into Ireland. Ireland's focus on the knowledge economy and technology has made the country a natural location to develop new innovative products and processes that generate new business. Accordingly, many internationally focused groups that have or are developing a significant presence here have onshored their intellectual property into Ireland. This has had the added benefit of enabling groups to develop licensing hubs from Ireland that can avail of the EU Royalties Directive to avoid withholding taxes on licence fees, whilst sheltering taxable profits for tax depreciation on expenditure incurred on specified intangible assets. Withholding tax on licences to non-EU tax residents can be avoided having regard to Ireland's network of double tax treaties and the specific obligations of the licensor under the terms of the licence. The 6.25% tax rate on the knowledge development box has also attracted new business to Ireland's shores with a steady wave of computer software and programmes being developed, improved or created by Irish tax resident companies supported by technology engineers employed in Ireland and in other EU locations. For certain non-listed groups the introduction of a new share-based incentive that taxes gains at 33% instead of rates in excess of 50% is to be welcomed, and will encourage further entrepreneurs to establish businesses here and share the wealth creation with key Irish employees.

The boom in Irish real estate and the influx of numerous foreign based investors that purchased distressed Irish real estate loans has unfortunately continued to attract the attentions of the Irish Government. Notwithstanding the introduction of a 20% tax on gains made by non-Irish residents using Central Bank tax exempt approved funds to access Irish real estate assets and similar changes impacting the overseas market for loans secured on Irish property, the last quarter of 2017 saw the Irish Government raise stamp duty on commercial property to 6%. Further, in December the Finance Bill was amended to extend the scope of the 6% charge to partnership and other indirect interests in Irish commercial property. Whilst...

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