IRELAND Law and Practice Contributed by: Andrew Quinn, David Burke, William Fogarty and Lynn Cramer, Maples Group
that is resident in a country with which Ireland has a double tax treaty. It has been Irish Revenue’s administrative practice since 2010 not to charge withholding tax on royal - ties payable under a licence agreement executed in a foreign territory that is subject to the law and jurisdic - tion of a foreign territory (subject to the Irish company obtaining advance approval from Irish Revenue). These exemptions and practice are subject to the Out - bound Payment Rules (see below). Outbound Payments The Finance (No 2) Act 2023 introduced taxation measures that apply to transactions between entities that are “associated” where the recipient is resident in or established under the laws of a jurisdiction on the EU list of non-co-operative jurisdictions or a “zero- tax” jurisdiction (referred to as “specified territories”). Where an Irish company makes relevant payments of interest, dividends or royalties to associated entities in specified territories, withholding tax will apply at the standard Irish rate applicable to that payment subject to certain exceptions. Accordingly, the rules potential - ly override the exemptions for interest and dividends listed above. The rules apply from 1 April 2024 for new transactions; arrangements that were in place prior to 19 October 2023 had been grandfathered but this treatment ceased on 1 January 2025. 4.2 Key Treaty Jurisdictions for Inbound Investment Ireland is an open jurisdiction that encourages invest - ment from all countries; no specific countries are pre - ferred for investing in Ireland. Many US, UK, Europe - an, Asian and Gulf Co-operation Council companies invest directly in Irish companies. 4.3 Tax Authority Scrutiny of “Treaty Shopping” Practices Generally, the use of a treaty by a tax-resident benefi - cial owner should be respected. 4.4 Transfer Pricing Issues for Inbound Investors Ireland first introduced transfer pricing in 2011, which only applied to trading transactions involving the
supply and acquisition of goods, services, money or intangible assets between associated persons or companies. Updated Irish transfer pricing provisions introduced in January 2020 extended the rules to non- trading income and capital transactions. The rules require that transactions between associ - ated persons should take place at arm’s length, and that the principles contained in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration, as updated in January 2022, must be followed when analysing whether a transaction has been entered into at arm’s length. If Irish Revenue determines that a transaction was not entered into at arm’s length and has had the effect of reducing profits or increasing losses, an adjustment will be made by substituting the arm’s length consid - eration for the actual consideration. 4.5 Challenges to Related-Party Limited Risk Distribution Arrangements Ireland should follow OECD norms and guidelines in relation to the application of transfer pricing rules. 4.6 Local Transfer Pricing Rules and OECD Standards Ireland introduced changes to its transfer pricing rules in 2019, partly to bring Ireland’s transfer pricing leg - islation in line with the 2017 OECD Transfer Pricing Guidelines. The amendments have applied since 1 January 2020. 4.7 Transfer Pricing Disputes and Mutual Agreement Procedures Irish Revenue operates a formal bilateral advanced pricing agreement (APA) programme. APAs are con - ducted under mutual agreement procedures (MAPs) of the relevant treaty where there are transfer pricing issues involving more than two tax jurisdictions, of which Ireland is one. If requested by the taxpayer, Irish Revenue is also willing, in such cases, to consider conducting multilateral meetings with the other tax administrations subject to the terms of the relevant double tax treaties and the agreement of the other tax administrations.
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