IRELAND Law and Practice Contributed by: Andrew Quinn, David Burke, William Fogarty and Lynn Cramer, Maples Group
company if those shares derive the majority of their value from land and buildings in Ireland and certain mining or exploration rights. The Irish Key Employ - ee Engagement Programme (KEEP) share option scheme, which applies to SMEs and start-up busi - nesses, provides for a tax-efficient employee share option scheme whereby, broadly, no tax charge arises when KEEP-compliant share options are exercised by an employee. Instead, a CGT liability will arise when the employee actually disposes of them. The KEEP scheme has been extended to 31 December 2028 subject to EU approval. 3.5 Taxation of Individuals on Shares in Public Corporations The treatment set out in 3.4 Taxation of Individuals on Shares in Closely Held Corporations also applies to dividends from quoted companies and gains on the disposal of shares in quoted companies. 4. Taxation of Inbound Investments 4.1 Application of Withholding Taxes DWT at a rate of 25% applies to dividends and distri - butions made by Irish tax-resident companies. There are a wide range of exemptions from DWT where the dividend or distribution is paid by an Irish- resident company to certain parties, including: • another Irish tax-resident company; • companies that are resident in an EU member state (other than Ireland) or a country with which Ireland has concluded a double tax treaty, and that are not controlled by Irish residents; • companies that are under the control, directly or indirectly, of a person or persons who are resident in an EU member state or a country with which Ireland has concluded a double tax treaty and are not controlled by persons who are not resident in that country; • companies whose shares are substantially and regularly traded on a recognised stock exchange in another EU member state or country with which Ireland has concluded a double tax treaty, or where the recipient company is a 75% subsidiary of such
a company or is wholly owned by two or more such companies; and • a company resident in another EU member state with at least a 5% holding in the Irish paying com - pany (under Directive 90/435/EEC on the taxation of parent companies and subsidiaries – the Parent- Subsidiary Directive). These exemptions are subject to the Outbound Pay - Irish tax legislation provides that tax at the standard rate of income tax (currently 20%) is required to be withheld from payments of Irish-source interest. However, a large number of exemptions from the requirement to withhold on payments of interest are available, including with respect to: • interest paid in Ireland to a bank or by a bank in the ordinary course of business; • interest paid to a company that is resident in an EU member state or a country with which Ireland has signed a double tax treaty, where that terri - tory imposes a tax that generally applies to inter - est receivable in that territory by companies from outside that territory; • interest paid to a US corporation that is subject to tax in the US on its worldwide income; ment Rules (see below). Interest Withholding Tax • interest paid in respect of a “quoted Eurobond”, provided certain other conditions are met (however, this exemption is also subject to the outbound pay - ment rules – see below); and • interest paid to certain Irish entities, including qual - ifying companies for the purposes of Section 110 of the Taxes Consolidation Act, 1997 (as amended) (TCA), investment undertakings and certain gov - ernment bodies. Withholding Tax on Patent Royalties Withholding tax at a rate of 20% applies to payments of a royalty or other sum paid for the use of a patent. Withholding tax will not apply to royalty payments that are made to associated companies resident in another EU member state, nor to royalties paid by a company in the course of a trade or business to a company
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