A company is generally regarded as Irish tax-resident if it is managed and controlled in Ireland. This is the case irrespective of its place of incorporation.
Furthermore, Finance Act 2014 introduced a measure to provide that an Irish incorporated company is to be regarded as Irish tax resident subject to one exception.
If, under the provisions of a double tax agreement, an Irish incorporated company is regarded as tax resident in another territory, the company will not be regarded as Irish tax resident.
Previously, there was also an exception where the company concerned or a related company carries on a trade in Ireland and either
(i) the company is ultimately controlled by persons resident in the EU or another territory with whom Ireland has a double taxation agreement (‘treaty territory’) or
(ii) the company or a related company is quoted on a recognised stock exchange.
However, Finance Act (No 2) 2013 introduced a measure to ensure that this exception would not apply if it resulted in an Irish incorporated company being regarded as ‘stateless’ in terms of its tax residence by virtue of a mismatch between Ireland’s and another country’s residence rules. The measure provides that, where an Irish incorporated company is managed and controlled in an EU or treaty territory and would not be regarded as tax resident in any territory because (i) it is not managed and controlled in Ireland, and (ii) it is not resident in that other territory because it is not incorporated in that territory, the company will be regarded as Irish tax-resident. This measure has effect from 23 October 2013 for companies incorporated in Ireland on or after this date and from 1 January 2015 for companies incorporated in Ireland before 23 October 2013.
The Finance Act 2014 provisions outlined above have effect from 1 January 2015 for companies incorporated in Ireland on or after 1 January 2015. For companies incorporated before that date, a transitional period applies, meaning that the provisions apply only from the earlier of either:
(a) 1 January 2021, or
(b) the date, after 1 January 2015, of a change in ownership of the company in circumstances where there is also a major change in the nature or conduct of the business of the company within the period which begins one year before the date of the change of ownership (or on 1 January 2015, whichever is later) and ends five years after that date.
The previous corporate tax residence provisions outlined above therefore continue to apply to companies incorporated before 1 January 2015 until 31 December 2020 at latest.
Permanent establishment (PE)
Non-resident companies are subject to Irish corporation tax only on the trading profits attributable to an Irish branch or agency, plus Irish income tax (generally by way of withholding, though this is not the case with Irish-source rental profits) on certain Irish-source income.
Subject to the terms of the relevant DTT, a non-resident company will have a PE in Ireland if:
- it has a fixed place of business in Ireland through which the business of the company is wholly or partly carried on, or
- an agent acting on behalf of the company has and habitually exercises authority to do business on behalf of the company in Ireland.
A fixed place of business includes (but is not limited to) a place of management; a branch; an office; a factory; a workshop; an installation or structure for the exploration of natural resources; a mine, oil or gas well, quarry, or other place of extraction of natural resources; or a building, construction, or installation project. A company is not, however, regarded as having an Irish PE if the activities for which the fixed place of business is maintained or which the agent carries on are only of a preparatory or auxiliary nature (also defined in the statute).
See the Other taxes section for a description of the exit tax rules.