Double
Tax Treaties
Ireland
has comprehensive double taxation agreements in force
with 44 countries. The agreements generally cover
income tax, corporation tax and capital gains tax
(direct taxes).
New agreements with Greece and Iceland, which were
signed in 2003, became effective for tax periods in
2005. Under the Icelandic treaty, the rate of taxation
of dividends is limited to 5% or 15% of the amount
of the gross dividend (depending on the taxpayer's
ownership interest in the paying company). The taxation
of royalties is limited to 10% in the case of royalties
from copyrights of literary, artistic and scientific
works, but royalties of a technical nature, such as
from patents, are generally exempted. Payments of
interest are also exempted from taxation in the source
country. Both new agreements include exchange of information
provisions.
An agreement replacing the existing treaty with Canada
was also signed in 2003. Parliamentary procedures
to bring the treaty into force were completed by Ireland
in December 2004 and by Canada in April 2005. This
treaty became effective for tax periods in 2006.
New treaties with Argentina, Egypt, Kuwait, Malta,
Morocco, Singapore, Tunisia, Turkey and Ukraine are
being negotiated.
Existing
treaties with Cyprus, France and Italy are in the
process of re-negotiation.
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.
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 |
| Italy |
Israel |
| Japan |
(South)
Korea * |
| Latvia |
Lithuania |
| Luxembourg |
Mexico |
| Netherlands |
New
Zealand |
| Norway |
Pakistan |
| Poland |
Portugal |
| Russia |
South
Africa |
| Spain |
Sweden |
| Swizerland |
United
Kingdom |
| United
States |
Zambia |
Agreements
were, as at January 2006, also in force with Bulgaria,
Chile (subject to the necessary parliamentary procedures
being completed in 2006; it is expected that they
will become effective for tax periods in 2007), China,
Croatia, India, Malaysia, Romania, the Slovak Republic,
and Slovenia.
*
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.
