IRELAND Law and Practice Contributed by: Nicholas Blake-Knox, Jonathan Sheehan, Damien Barnaville and Joe Mitchell, Walkers
certain circumstances), and no subscription tax is payable on the issue of shares or units of an Irish investment fund. If a declaration of non-Irish residence is provided to the fund, Irish tax is not payable on distri - butions or redemption payments to non-Irish resident investors in Irish funds. Distributions or redemption payments to certain classes of exempt Irish resident investors (eg, pension funds, charities and other Irish regulated funds) may also be paid by the fund free from Irish tax, provided a relevant declaration is in place. The IUT Regime and Tax Transparent Funds Where an investor is resident (or ordinarily resi - dent) in Ireland for Irish tax purposes and is not an “exempt Irish investor”, an Irish investment fund must deduct Irish tax on certain “charge - able events” (eg, distributions, redemptions and transfers) and on a “deemed disposal”, which takes place eight years from the date of each acquisition of shares or units in an Irish fund, and each subsequent period of eight years thereaf - ter. Simplification measures to dispense with the IUT withholding obligation for the fund on a deemed disposal are available where the shares or units held by non-exempt Irish investors are worth less than 10% of the value of the total shares or units in the fund. Such investors must instead pay tax on the deemed disposal on a self-assess - ment basis. Irish tax at the rate of 41% must be deducted from all distributions and redemptions, and in respect of any gains arising by virtue of a transfer of shares or units in the fund held by Irish resident individuals who are not otherwise exempt. If the distribution, redemption or pro - ceeds of transfer are paid to a company, the rate of withholding tax is 25%.
Irish investment funds structured as CCFs or ILPs are transparent for Irish tax purposes, and profits are treated as arising directly to inves - tors. Investors in investment funds structured as CCFs may be able to claim double tax treaty relief at investor level in respect of the underlying investments of a CCF. Ireland has an extensive and growing network of double taxation treaties that provide, inter alia, access to favourable tax reclaim rates (comprehensive double taxation treaties are currently signed with 78 countries, of which 75 are in effect). The Finance Act 2021 introduced ATAD-compli - ant reverse hybrid mismatch provisions into Irish law, which can apply to tax transparent funds such as CCFs or ILPs. The provisions apply in limited circumstances only and should only be relevant to Irish regulated funds that are consid - ered transparent for Irish tax purposes, such as CCFs or ILPs. As is the case with most EU member states and multiple jurisdictions globally, Ireland introduced new OECD Pillar Two rules for large multination - als; see 4.1 Recent Developments and Propos- als for Reform . The IREF Regime A further specific tax regime applies to Irish AIFs structured as ICAVs, investment companies or unit trusts that invest in Irish real estate (IREFs). Introduced in the Finance Act 2016, the IREF regime applies where 25% or more of the value of the assets of the investment fund (or of a sub- fund in the case of an umbrella fund) is made up of Irish real estate assets, or where it would be reasonable to consider that the main purpose or one of the main purposes of the fund is to acquire IREF assets or carry on an IREF busi - ness (ie, activities involving IREF assets, includ -
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