Double Taxation Treaty between Ireland and United Kingdom

The Ireland-UK double tax agreement was signed between Ireland and the United Kingdom in 1976. Over the years, certain amendments have been made to the treaty. The treaty pertains to the following reduced tax rates:

• If the recipient has at least 10% of the voting shares in the company paying the dividends, the dividend payment rates benefit from a 5% rate on the gross amount;
• For all other normal cases, a 15% reduced rate pertains to dividend payments;
• All interest payments are accountable for 0% tax.
• The same goes for royalty payments, they are also accountable for 0% tax

General provisions of the double taxation treaty
This agreement was made between Ireland and the United Kingdom. The purpose of the treaty was to lower and prevent fiscal evasion and double taxation on capital and income gains. According to the treaty, a taxable person is an individual, a partnership, a company, a trust or a body of persons. All companies are considered legal entities and are liable to pay corporate tax under the laws of the state where they are headquartered. In simple terms, this means that if a company is headquartered in the UK, it is liable to pay taxes in the UK and if it is headquartered in Ireland, it is liable to pay a tax in Ireland. A national is an individual who holds a nationality or citizenship of one of the two countries signing the agreement.

Ireland stipulates the following taxes to US companies:

Income tax is charged on the gross income earned by an entity from its business activities within Ireland

• The corporation tax

Businesses resident in Ireland will be taxed on trading profits they receive from their activities.

• The capital gains tax

Capital gains tax is applicable on the revenue gained from asset disposal. Certain exemptions are applicable in the case of asset transfer between spouses. There is also an annual individual tax exemption awarded, this particular exemption is non-transferable between spouses.

The UK stipulates the following taxes to Irish companies:

Income tax is charged on the gross income earned by an entity from its business activities within the United Kingdom

• Petroleum revenue tax

Popularly known as the PRT, this tax is imposed on "super-profits" which are acquired from the exploitation of oil and gas in the United Kingdom.

Businesses resident in the United Kingdom will be taxed on the trading profits they receive.

• Capital gains tax

Capital gains tax is applicable on the revenue gained from asset disposal. Certain exemptions are applicable in the case of asset transfer between spouses. There is also an annual individual tax exemption awarded, this particular exemption is non-transferable between spouses.

Note that these taxes apply to all people and legal entities conducting business activities in Ireland or the UK.

To date, Ireland has signed over 73 double taxation treaties with countries from all around the world. For further details about the provisions of your country’s double taxation treaty with Ireland, you can reach out to our expert and well-informed consultants at SIGTAX.