Ireland
Double Tax Treaties
Ireland
has comprehensive double taxation agreements in force
with 56 countries. The agreements generally cover income
tax, corporation tax and capital gains tax (direct taxes).
Almost
all of Ireland's treaties provide for nil withholding
tax on interest paid to a treaty partner; exceptions
are Belgium, Canada and Japan, with the Israel and Poland
treaties applying withholding tax to certain types of
interest only. Royalty payments by Irish companies are
also generally exempt from withholding, with the exceptions
being Israel, Poland, Spain and Canada.
Although
Ireland has a double tax treaty with the UK, the latter's
Treasury announced in 2002 that it was proposing to
classify Ireland as a 'tax haven', and would in future
apply its 30% corporation tax rate to the profits of
Irish subsidiaries of UK companies.
The Irish Department of Finance later announced that
UK companies with subsidiaries based in the Republic
were considering launching a legal challenge to the
change, which had been brought on by the reduction of
Ireland's corporation tax rate to an eventual 12.5%.
The situation remains unclear.
A
Convention on the avoidance of double taxation and prevention
of fiscal evasion between Ireland and Turkey was signed
in Dublin in October, 2008. The then Irish Minister
for Finance, Brian Lenihan signed the agreement with
his Turkish counterpart Kemal Unakitan. Commenting
on the signing, Lenihan said: “The signing of
this Convention completes Ireland’s network of
bilateral tax agreements with all OECD countries. The
Convention represents a significant addition to Ireland’s
existing network of double taxation treaties.”
In
November, 2008, Ireland
signed a Double Tax Avoidance Treaty with Malta - the
only EU country with which it did not already have such
a treaty. Ireland also signed a double tax avoidance
treaty with Georgia.
A
double tax agreement and a tax information exchange
agreement with the
Isle of Man government came into effect at the end of
2008.
In
February, 2009, the Irish Revenue announced the ratification
of conventions with Macedonia and Malta for the avoidance
of double taxation and fiscal evasion with respect to
income tax.
The
agreements with Macedonia and Malta, which were signed
on April 14, 2008 and November 14, 2008, respectively,
came into force following the Irish ratification of
the conventions on January 12, 2009 and January 15,
2009, respectively. Both treaties came into effect on
January 1, 2010.
In
the case of both agreements, the conventions cover taxes
on the income of individuals and companies. They operate
by either granting exclusive taxation rights to one
or other country, or where the income or gain remains
taxable in both, by providing that the country of residence
of the taxpayer will relieve double taxation by allowing
a credit for the tax paid in the other country.
In
March 2009, the Cayman Islands government announced
that it had put in place arrangements that provide access
to comprehensive tax information assistance with twenty
countries, one of which was Ireland.
On
September 23, 2009, the Irish Ambassador to Serbia,
Antóin MacUnfraidh signed a convention for the
avoidance of double taxation with Vuk Djokovic, Serbia’s
Ministry for Finance, concluding negotiations that began
in December 2007. The treaty came into effect from January
1, 2011.
On
October 13, Liechtenstein’s Prime Minister Klaus
Tschütscher and Irish Minister of Finance Brian
Lenihan signed a tax information exchange agreement.
The agreement, which follows the OECD Model Tax Agreement,
will provide for the exchange of information upon request
to aid investigations carried out by the tax authorities
of the respective countries in cases of tax crimes and
in civil tax matters.
On
October 29, 2009, Ireland’s Minister of State
at the Department of Finance, Martin Mansergh, and Ahmed
bin Mohammed Al Khalifa, Bahrain’s Minister of
Finance, signed a convention for the avoidance of double
taxation and fiscal evasion with respect taxes on income
and on capital. “The signing of this convention
is significant in that it is the first convention that
Ireland has concluded in the Gulf Region and therefore
represents an important addition to Ireland’s
existing network of double taxation treaties,"
said Mansergh at the time.
In
Sarajevo on November 3, 2009, Bosnian Deputy Minister
of Finance, Fuad Kasumovic, and the Irish Ambassador
to the nation, Patrick McCabe, signed a Double Tax Convention
on behalf of their respective countries.
In
March 2010, Ireland’s Minister of State for Overseas
Development, Peter Power, and South Africa’s Minister
of Finance, Pravin Gordhan, signed a protocol updating
the existing double taxation agreement (DTA) between
the two countries. The bilateral DTA was originally
signed in October 1997.
On
June 22, 2010, Ireland's Minister for Finance, Brian
Lenihan, and Hong Kong's Minister for Finance and Professor
K. C. Chan, signed an Agreement for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion
with Respect to Taxes on Income. The agreement came
into effect on February 10, 2011 and will come into
force on April 1, 2012. On the same day, an Agreement
was signed by Ireland's Ambassador to Morocco, James
Brennan, and Morroco's State Secretary to the Foreign
Ministry, Latifa Akharbach.
On
July 1, 2010, Ireland's Amassador to the UAE, Ciaran
Madden, and the UAE's Undersecretary to the Ministry
of Finance, Younis Haji al Khoori, signed an Agreement
for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with Respect to Taxes on Income.
On
October 7, 2010, Ireland's Ambassador to Montenegro,
John Deady, and Montenegro's Foreign Minister, Milan
Rocean, signed an Agreement for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect
to Taxes on Income.
On
October 28, 2010, Ireland's Minister for Science, Technology,
Innovation and Natural Resources, Mr Conor Lenihan T.D,
and Singapore's Minister of State for Trade, Industry
and Education, Mr S. Iswaran, signed an Agreement for
the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with Respect to Taxes on Income.
On
November 23, 2010, Ireland's Ambassador to the UAE,
Ciaran Madden, and Kuwait's Undersecretary to the Ministry
of Finance, Khalifa M. Hamada, signed an Agreement for
the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with Respect to Taxes on Income.
In
March 2011, Ireland's Minister for Finance, Michael
Noonan and His Excellency, German Ambassador Busso von
Alvensleben signed a Revised Agreement for the Avoidance
of Double Taxation and the Prevention of Fiscal Evasion
with Respect to Taxes on Income and on Capital. After
the signing, Mr Noonan commented: "Ireland’s
Double Taxation Agreement with Germany was signed in
Dublin in October 1962 and is Ireland’s oldest
Double Taxation Agreement. As both Ireland and Germany’s
taxes and laws have altered considerably since that
time, many of the provisions of that Agreement needed
to be replaced and updated."
Ireland
Table of Treaties
Here
is a list of some countries with which Ireland
has signed and ratified Double Tax Treaties.
| Australia |
Austria |
| Belgium |
Canada |
| Cyprus |
Czech
Republic |
| Denmark |
Estonia |
| Finland |
France |
Germany |
Greece |
| Hungary |
Iceland |
| Isle
of Man |
Italy |
| Israel |
Japan |
| Latvia |
Lithuania |
| Luxembourg |
Mexico |
| Netherlands |
New
Zealand |
| Norway |
Pakistan |
| Poland |
Portugal |
| Russia |
South
Africa |
| (South)
Korea * |
Spain |
| Sweden |
Switzerland |
| United
Kingdom |
United
States |
*
In March 2006, the South Korean finance ministry
drew up a list of several "tax havens"
from which investors will be prevented from taking
advantage of double tax treaties in an effort
by the authorities to clamp down on 'treaty shopping'.
According
to reports, Ireland, Labuan, Belgium and the Netherlands
were among the countries and offshore territories
named on the list.
Under
new laws introduced from July 1, 2006, investors
from these countries are subject to withholding
taxes of up to 27.5% on South Korean income, including
that derived from interest, dividends, and capital
gains.
The
move was the latest step by the South Korean government
to clamp down on what it considered to be aggressive
tax avoidance by foreign entities.
More
Treaties Needed?
In
its Pre-Budget Submission 2007, published in October
2006, the Irish Taxation Institute called on the
government to increase the number of tax treaties
in place with other countries.
The
ITI observed that: "If we wish to maintain
our competitive position as an attractive location
for foreign investment, we will need to address
a number of key tax policy issues."
It
continued: "The overall tax package rather
than purely the tax rate will be a critical factor
for any business faced with a location or expansion
decision...Our tax treaty network is a central
part of the overall tax package. A comprehensive
tax treaty network is critical to enabling global
business to do business."
"In
short, those countries with a comprehensive tax
treaty network are best placed to attract inward
investment and win the economic and employment
benefits that come with such developments."
The
ITI went on to suggest that Ireland's tax treaty
network is lagging behind traditional competitors
such as the UK, the Netherlands and Belgium, as
well as newer EU member states, such as Malta
and Hungary, which are "actively marketing
their particular advantages as a location for
business and currently have more treaties in place
than Ireland".
In
order to reverse this trend, the ITI proposed
four changes to the country's tax code. These
were:
-
That
a policy be adopted to remove the preference
for dealing with tax treaty jurisdictions;
-
That
certain benefits within the treaties be extended
where the ultimate parent company is in an EU
or treaty country;
-
That
a 'white list' of key countries be formulated
through consultation with business and the tax
profession; and
-
That
a minimum of 10-15 new treaties be ratified
by Budget 2012, with an immediate focus on key
jurisdictions with which Ireland does not as
yet have a tax treaty, and where one is deemed
to be urgently needed.
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