Ireland

Pillar Two

Finance Act 2025 advances Irelands implementation of the OECD Pillar Two framework and the European Union’s related measures. It transposes the EU’s 9th Directive in the area of administrative cooperation in the field of taxation, the so-called “DAC 9”. It also recognises the OECD Pillar Two Multilateral Competent Authority Agreement on the Exchange of GloBE Information. As anticipated, it legislates for the OECD’s January 2025 Administrative Guidance and introduces a number of technical updates to the Pillar Two rules.  

As a member of the OECD/G20 Inclusive Framework on BEPS, Ireland has agreed to the Side-by-Side System Package. It is expected that the measures included in that package will be brought into Irish law by Finance Act 2026, later this year.

Participation exemption for foreign distributions

A participation exemption for certain foreign distributions was introduced under Finance Act 2024, with effect for dividends and other distributions, received from ‘relevant territory’ resident companies from 1 January 2025.  

Finance Act 2025 introduced a number of useful extensions to the exemption, including expanding the definition of ‘relevant territory’, which previously was limited to the EU, European Economic Area (EEA), tax treaty territories (including territories where a tax treaty with Ireland has been made but is not yet in force), to now include ‘specified territories’, being jurisdictions that generally impose a nonrefundable foreign withholding tax on distributions. See Participation exemption for foreign distributions in the Income determination section for further details.