IRELAND Law and Practice Contributed by: Andrew Quinn, David Burke, William Fogarty and Lynn Cramer, Maples Group
9.7 Interest Deductibility and Territorial Tax Regime Ireland does not have a territorial regime, but rather taxes companies on a worldwide basis. However, as Ireland is party to a large number of tax treaties, the operation of a foreign tax credit system means that foreign tax paid on income can, in certain cases, be used to offset any Irish tax payable on the same income. Furthermore, following a review of Ireland’s corporate tax code that was commissioned by the Department of Finance in 2017, one of the recommendations was that consideration should be given to moving to a ter - ritorial system. In December 2021, the Department of Finance launched a public consultation on a pos - sible move to a limited territorial system of taxation in respect of the income of foreign branches of Irish resident companies and in respect of the payment of foreign source dividends. In September 2024, a public consultation on the tax treatment of interest in Ireland was launched. It con - cluded at the end of January 2025. In response to the feedback received, the Department of Finance pub - lished an Action Plan on 7 October 2025. The Phase One Feedback Statement on the Reform of Ireland’s Taxation Regime for Interest was then published in November 2025. The consultation period under the Phase One Feed - back Statement closed on 16 January 2026. The government has committed to the introduction of leg - islation for Phase One in Finance Bill 2026. Further consultations are expected over a number of phases. 9.8 Controlled Foreign Corporation Reform In Ireland, CFC rules apply to certain foreign subsidiar - ies, as discussed in 6.5 Controlled Foreign Corpora - tion-Type Rules. 9.9 Anti-Avoidance Rules Ireland signed the Multilateral Convention to Imple - ment Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) in 2017. The MLI came into force in Ireland on 1 May 2019, adopting the principal purpose test (PPT) provisions in its dou - ble taxation conventions.
the impact of the SbS system, including any material competitive imbalances. 9.4 Competitive Tax Policy Objectives Ireland has undertaken to review its corporate tax code regularly to ensure that new standards such as BEPS and OECD initiatives that have global con - sensus are met while remaining competitive as the economy continues to grow. While introducing a mini - mum rate for larger enterprises (revenue greater than EUR750 million), the Pillar Two reforms are considered as “accommodating appropriate and acceptable tax competition aligned to key principles, such as sub - stance and creation of real value, including Ireland’s 12.5% rate”. For Ireland’s tax policymakers, the key balancing task is to ensure that the implementation phase of BEPS would result in the country’s tax regime being seen as meeting the standards for substance and transpar - ency while maintaining the country’s reputation as an open economy that encourages foreign direct invest - ment and has a low rate of corporation tax. 9.5 The Competitive Tax System The Irish authorities firmly voiced their opposition to the EC’s interim proposal for a “digital economy tax”, with the Irish Minister for Finance emphasising the need for unanimity before any EU digital tax proposal can be agreed. Similarly, the Irish government has urged caution in respect of the proposed EU Com - mon Corporate Tax Base, stating that discussions on harmonising tax across the eurozone are at a relatively early stage, and that much more technical analysis and discussion are needed. 9.6 Hybrid Instruments and BEPS Implementation Ireland has implemented legislation to address hybrid mismatch arrangements, as required by ATAD. One of the purposes of the anti-hybrid rules is to prevent arrangements that exploit differences in the tax treat - ment of a financial instrument under the tax laws of two or more jurisdictions to generate a tax advantage – ie, a “hybrid” situation.
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