IRELAND Law and Practice Contributed by: Andrew Quinn, David Burke, William Fogarty and Lynn Cramer, Maples Group
5. Taxation of Non-Local Corporations 5.1 Compensating Adjustments Irish Revenue allows for compensating adjustments where a MAP request is made and successfully resolved by Irish Revenue and any other relevant com - petent authorities. No particular difficulties are faced by claimants where double taxation conventions apply, with Irish Revenue seeking to implement best practice in line with the OECD’s Manual on Effective Mutual Agreement Procedures. 5.2 Local Branches and Local Subsidiaries Non-resident companies that carry on a trade in Ire - land through a branch or agency are subject to cor - poration tax in the same manner as local companies. 5.3 Capital Gains of Non-Residents Non-Irish tax-resident companies are liable for tax on gains arising from the disposal of certain assets, including: • land and buildings in Ireland (relief from CGT may be claimed in respect of real estate acquired between 6 December 2011 and 31 December 2014 if it was held for a period of at least seven years); • unquoted shares or securities deriving their value or the greater part of their value directly or indirect - ly from the above assets; and • assets situated in Ireland that are used, held or acquired for business carried on in Ireland through a branch or agency. The Tax Appeals Commission Decision in 72TACD2023 on Irish Real Estate Loans confirmed that loans secured on Irish land are within the scope of Irish CGT. By applying principles decided only months earlier in the case of Cintra Infraestructureas Internacional SLU v The Revenue Commissioners [2023] IEHC 72, the Tax Appeals Commission held that the loans were secured on Irish land and therefore constituted an interest in the land and within the charge to CGT. This decision is significant for non-Irish resident investors, such as international banks and investment funds, that acquire or sell Irish loans secured on Irish land because such transactions may be subject to Irish CGT or at least Irish tax filing and tax clearance obligations.
5.4 Tax Implications of Change of Control Change of control provisions could arise in relation to the indirect disposal by a non-resident of an Irish land-rich company, as explained under 5.3 Capital Gains of Non-Residents . 5.5 Formula-Based Income Attribution OECD standards would be expected to be applied in the determination of the income of foreign-owned local affiliates selling goods or providing services. 5.6 Deductibility of Intra-Group Management and Administrative Charges Irish Revenue applies a rigorous “benefit test” when examining intra-group charges. The Irish affiliate must be able to demonstrate that it received genuine, iden - tifiable services from the non-local affiliate and that those services conferred a real commercial benefit. Services that a company would not have paid for, or would not have performed in-house, had it been an independent enterprise are unlikely to satisfy this test. In addition: • the expenses must be incurred wholly and exclu - sively for the purposes of the trade; and • the charges must comply with the arm’s length principle. 5.7 Restraints on Related-Party Borrowing Other than as set out below, Ireland does not operate what would be considered statutory thin capitalisa - tion rules. In broad terms, an Irish-based borrower should be entitled to a tax deduction for payments of interest to a non-local affiliated lender. However, there are certain restrictions that would need to be considered, includ - ing but not limited to the following: • the interest payments should be an arm’s length amount (other than certain payments by qualifying companies under Section 110 TCA); • the interest payments may be subject to withhold - ing tax if the lender does not fall within relevant exemptions (see 4.1 Application of Withholding Taxes for details of potential exemptions);
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