IRELAND Law and Practice Contributed by: Nicholas Blake-Knox, Jonathan Sheehan, Damien Barnaville and Joe Mitchell, Walkers
annual revenues of at least EUR750 million are also in scope. Irish regulated funds are excluded from a domestic top-up tax that can be imposed under the rules. An exclusion from top-up taxes is also available under an income inclusion rule and an undertaxed profits rule for Irish regulated funds that are “investment entities” (as defined). In practice, most Irish regulated funds and entities within investment fund structures should fall out - side the scope of the rules. There is no exclusion applicable to investment management entities, which need to be assessed based on the rel - evant facts and circumstances. Each structure should be assessed on a case-by-case basis to determine the potential impact, if any, of these rules. Outbound Payments Defensive Measures Legislation was included in Finance (No.2) Act 2023 to apply new tax defensive measures to certain outbound payments of interest, royalties and distributions (including dividends) towards jurisdictions on the EU list of non-cooperative jurisdictions (the “EU Blacklist”) and no-tax and zero-tax jurisdictions. In short, the measures can disapply existing withholding tax exemptions on certain payments of interest, royalties and divi - dends by an Irish company to an “associated entity” located in a relevant jurisdiction. The provisions apply to payments made on or after 1 April 2024. However, grandfathering applies in the case of existing arrangements in place on or before 19 October 2023, such that the provisions only apply to payments made on
or after 1 January 2025 under such arrange - ments. The measures do not apply to the long- standing withholding tax exemption that applies to distributions and redemption payments made by regulated funds to non-resident investors, which remains in place. The measures do not affect the vast majority of Irish funds but they may be relevant for debt financing of regulated Irish funds by associated entities in no-tax and zero-tax jurisdictions. Participation Exemption The Finance Act 2024 introduced a participa - tion exemption, which is available for distribu - tions of foreign dividends received on or after 1 January 2025 from subsidiaries in EU/EEA and Irish treaty partner source jurisdictions. The participation exemption, where applicable, exempts in-scope dividends from corporation tax in Ireland and may be relevant for entities within investment fund structures, but would not directly impact Irish regulated funds as they are exempt from Irish corporation tax. The participa - tion exemption is optional and, where an election is made, the exemption applies to all in-scope dividends for an accounting period. Existing “tax and credit” provisions to provide relief from Irish tax for foreign withholding tax deducted remain in place, as does an existing relief for portfolio investors. The DoF announced that it will give further con - sideration to the geographic scope of the par - ticipation exemption during 2025. As such, it is possible that the geographic scope of the par - ticipation exemption may be expanded.
259 CHAMBERS.COM
Powered by FlippingBook