Ireland: Double Tax Treaties

Ireland Double Tax Treaties

Ireland has comprehensive double taxation agreements in force with 56 countries. The agreements generally cover income tax, corporation tax and capital gains tax (direct taxes).

Almost all of Ireland's treaties provide for nil withholding tax on interest paid to a treaty partner; exceptions are Belgium, Canada and Japan, with the Israel and Poland treaties applying withholding tax to certain types of interest only. Royalty payments by Irish companies are also generally exempt from withholding, with the exceptions being Israel, Poland, Spain and Canada.

Although Ireland has a double tax treaty with the UK, the latter's Treasury announced in 2002 that it was proposing to classify Ireland as a 'tax haven', and would in future apply its 30% corporation tax rate to the profits of Irish subsidiaries of UK companies.

The Irish Department of Finance later announced that UK companies with subsidiaries based in the Republic were considering launching a legal challenge to the change, which had been brought on by the reduction of Ireland's corporation tax rate to an eventual 12.5%. The situation remains unclear.

A Convention on the avoidance of double taxation and prevention of fiscal evasion between Ireland and Turkey was signed in Dublin in October, 2008. The then Irish Minister for Finance, Brian Lenihan signed the agreement with his Turkish counterpart Kemal Unakitan. Commenting on the signing, Lenihan said: “The signing of this Convention completes Ireland’s network of bilateral tax agreements with all OECD countries. The Convention represents a significant addition to Ireland’s existing network of double taxation treaties.”

In November, 2008, Ireland signed a Double Tax Avoidance Treaty with Malta - the only EU country with which it did not already have such a treaty. Ireland also signed a double tax avoidance treaty with Georgia.

A double tax agreement and a tax information exchange agreement with the Isle of Man government came into effect at the end of 2008.

In February, 2009, the Irish Revenue announced the ratification of conventions with Macedonia and Malta for the avoidance of double taxation and fiscal evasion with respect to income tax.

The agreements with Macedonia and Malta, which were signed on April 14, 2008 and November 14, 2008, respectively, came into force following the Irish ratification of the conventions on January 12, 2009 and January 15, 2009, respectively. Both treaties came into effect on January 1, 2010.

In the case of both agreements, the conventions cover taxes on the income of individuals and companies. They operate by either granting exclusive taxation rights to one or other country, or where the income or gain remains taxable in both, by providing that the country of residence of the taxpayer will relieve double taxation by allowing a credit for the tax paid in the other country.

In March 2009, the Cayman Islands government announced that it had put in place arrangements that provide access to comprehensive tax information assistance with twenty countries, one of which was Ireland.

On September 23, 2009, the Irish Ambassador to Serbia, Antóin MacUnfraidh signed a convention for the avoidance of double taxation with Vuk Djokovic, Serbia’s Ministry for Finance, concluding negotiations that began in December 2007. The treaty came into effect from January 1, 2011.

On October 13, Liechtenstein’s Prime Minister Klaus Tschütscher and Irish Minister of Finance Brian Lenihan signed a tax information exchange agreement. The agreement, which follows the OECD Model Tax Agreement, will provide for the exchange of information upon request to aid investigations carried out by the tax authorities of the respective countries in cases of tax crimes and in civil tax matters.

On October 29, 2009, Ireland’s Minister of State at the Department of Finance, Martin Mansergh, and Ahmed bin Mohammed Al Khalifa, Bahrain’s Minister of Finance, signed a convention for the avoidance of double taxation and fiscal evasion with respect taxes on income and on capital. “The signing of this convention is significant in that it is the first convention that Ireland has concluded in the Gulf Region and therefore represents an important addition to Ireland’s existing network of double taxation treaties," said Mansergh at the time.

In Sarajevo on November 3, 2009, Bosnian Deputy Minister of Finance, Fuad Kasumovic, and the Irish Ambassador to the nation, Patrick McCabe, signed a Double Tax Convention on behalf of their respective countries.

In March 2010, Ireland’s Minister of State for Overseas Development, Peter Power, and South Africa’s Minister of Finance, Pravin Gordhan, signed a protocol updating the existing double taxation agreement (DTA) between the two countries. The bilateral DTA was originally signed in October 1997.

On June 22, 2010, Ireland's Minister for Finance, Brian Lenihan, and Hong Kong's Minister for Finance and Professor K. C. Chan, signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. The agreement came into effect on February 10, 2011 and will come into force on April 1, 2012. On the same day, an Agreement was signed by Ireland's Ambassador to Morocco, James Brennan, and Morroco's State Secretary to the Foreign Ministry, Latifa Akharbach.

On July 1, 2010, Ireland's Amassador to the UAE, Ciaran Madden, and the UAE's Undersecretary to the Ministry of Finance, Younis Haji al Khoori, signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.

On October 7, 2010, Ireland's Ambassador to Montenegro, John Deady, and Montenegro's Foreign Minister, Milan Rocean, signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.

On October 28, 2010, Ireland's Minister for Science, Technology, Innovation and Natural Resources, Mr Conor Lenihan T.D, and Singapore's Minister of State for Trade, Industry and Education, Mr S. Iswaran, signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.

On November 23, 2010, Ireland's Ambassador to the UAE, Ciaran Madden, and Kuwait's Undersecretary to the Ministry of Finance, Khalifa M. Hamada, signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.

In March 2011, Ireland's Minister for Finance, Michael Noonan and His Excellency, German Ambassador Busso von Alvensleben signed a Revised Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital. After the signing, Mr Noonan commented: "Ireland’s Double Taxation Agreement with Germany was signed in Dublin in October 1962 and is Ireland’s oldest Double Taxation Agreement. As both Ireland and Germany’s taxes and laws have altered considerably since that time, many of the provisions of that Agreement needed to be replaced and updated."

Ireland Table of Treaties

Here is a list of some countries with which Ireland has signed and ratified Double Tax Treaties.

Australia	Austria
Belgium	Canada
Cyprus	Czech Republic
Denmark	Estonia
Finland	France
Germany	Greece
Hungary	Iceland
Isle of Man	Italy
Israel	Japan
Latvia	Lithuania
Luxembourg	Mexico
Netherlands	New Zealand
Norway	Pakistan
Poland	Portugal
Russia	South Africa
(South) Korea *	Spain
Sweden	Switzerland
United Kingdom	United States

* In March 2006, the South Korean finance ministry drew up a list of several "tax havens" from which investors will be prevented from taking advantage of double tax treaties in an effort by the authorities to clamp down on 'treaty shopping'.

According to reports, Ireland, Labuan, Belgium and the Netherlands were among the countries and offshore territories named on the list.

Under new laws introduced from July 1, 2006, investors from these countries are subject to withholding taxes of up to 27.5% on South Korean income, including that derived from interest, dividends, and capital gains.

The move was the latest step by the South Korean government to clamp down on what it considered to be aggressive tax avoidance by foreign entities.

More Treaties Needed?

In its Pre-Budget Submission 2007, published in October 2006, the Irish Taxation Institute called on the government to increase the number of tax treaties in place with other countries.

The ITI observed that: "If we wish to maintain our competitive position as an attractive location for foreign investment, we will need to address a number of key tax policy issues."

It continued: "The overall tax package rather than purely the tax rate will be a critical factor for any business faced with a location or expansion decision...Our tax treaty network is a central part of the overall tax package. A comprehensive tax treaty network is critical to enabling global business to do business."

"In short, those countries with a comprehensive tax treaty network are best placed to attract inward investment and win the economic and employment benefits that come with such developments."

The ITI went on to suggest that Ireland's tax treaty network is lagging behind traditional competitors such as the UK, the Netherlands and Belgium, as well as newer EU member states, such as Malta and Hungary, which are "actively marketing their particular advantages as a location for business and currently have more treaties in place than Ireland".

In order to reverse this trend, the ITI proposed four changes to the country's tax code. These were: