IRELAND Law and Practice Contributed by: Amelia O’Beirne and Trevor Glavey, A&L Goodbody
dends received from a company which is tax-resident in an EU or EEA member state, in a country with which Ireland has concluded a DTA or in a jurisdiction that generally imposes a non‑refundable withholding tax on distributions, where: • the paying entity is not generally exempt from foreign tax; • the paying entity is not resident in a jurisdiction that is included on the EU list of non-cooperative jurisdictions; and • the above conditions have been satisfied through - out the preceding three years, reduced from five years with effect from 1 January 2026, in respect of the paying entity. A number of other technical requirements must be satisfied for the participation exemption to apply. The participation exemption for foreign dividends is an optional regime and therefore only applies to tax - payers who elect for it – otherwise, the existing tax and credit rules (noted above and below) continue to apply. Where foreign dividends, interest and royalties received by an individual or company are taxed in Ire - land, credit may be available for foreign withholding taxes suffered under the terms of a DTA or domestic law. With respect to foreign dividends received by an Irish company, credit may also be available for under - lying taxes suffered on the profits out of which the dividend was paid, subject to certain conditions. Taxation of Interest and Royalties Interest and royalties received by an Irish tax-resident company may be taxed at the 12.5% rate of corpora - tion tax (where received as trading income) or the 25% rate of corporation tax (where received as non-trading As a general rule, dividends and other distributions paid by an Irish tax-resident company are subject to dividend withholding tax (DWT) at a rate of 25%, subject to a broad range of exemptions. Payments of interest, patent royalties and other annual payments attract withholding tax at a rate of 20%. However, there are broad domestic law exemptions that can or passive income). Withholding Taxes
be availed of to relieve the paying company from the obligation to withhold. For example, no DWT arises on dividends paid to a non-Irish tax-resident company: • that is resident in an EU member state or a country with which Ireland has a DTA, provided that com - pany is not controlled by any person or persons resident in Ireland; or • that is ultimately controlled by a person or persons resident in an EU member state or a country with which Ireland has a DTA. Similarly, patent royalties are eligible for a domestic law withholding tax exemption where the payments are made by a company in the course of a trade or business to a company that is tax-resident in an EU member state (other than Ireland) or in a DTA coun - try that generally imposes a tax on royalty payments receivable from outside that territory. The payments must be made for bona fide commercial reasons, and the exemption does not apply where the royalties are paid in connection with a trade carried out in Ireland through a branch or agency by the receiving company. See 5.3 Blacklists and Non-Cooperative Jurisdic- tions for how Ireland’s outbound payments defensive measures regime interacts with Ireland’s withholding tax exemptions. 3.4 Capital Gains Currently, the chargeable gains of an individual are subject to Irish capital gains tax (CGT) at the rate of 33%. Companies pay corporation tax on their charge - able gains at an effective rate of 33%. Broadly, Irish CGT applies to the difference between the sale pro - ceeds and acquisition costs of a capital asset. Cer - tain allowable expenses can also be deducted from the sale proceeds in calculating the chargeable gain subject to Irish CGT. Irish tax-resident persons pay CGT on gains arising on the disposal of all capital assets, regardless of where those assets are located. In the case of foreign situ - ated property, the terms of a DTA can apply to elimi - nate double taxation where it arises.
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