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Irish 2019 Budget Confirms 12.5% Corporate Tax Rate

Irish 2019 Budget Confirms 12.5% Corporate Tax Rate

Ireland also announces an “exit tax” regime


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Ireland "strongly reaffirms" its 12.5% corporate tax rate in its 2019 budget, which it released on October 9, 2018. This budget also introduces a new exit tax regime, which EU member states are required to implement under the European Union's Anti-Tax Avoidance Directive (ATAD). Ireland's announced exit tax will be levied at the 12.5% rate, effective as of midnight October 9, 2018. The budget also confirms that Ireland will introduce a controlled foreign corporation (CFC) regime that's compliant with the EU Commission's Anti-Tax Avoidance Package (ATAD), effective January 1, 2019. The budget also reiterates previous commitments to review Ireland's transfer pricing regime during 2019.

Ireland's commitment to the 12.5% corporate tax rate, the European Union's ATAD measures and its transfer pricing review were previously announced in its Corporation Tax Roadmap, which it released in September.

Irish exit tax
Exit tax rules under the ATAD prevent companies from avoiding tax when relocating tax residence and/or assets to low tax jurisdictions.

Under Ireland's new exit tax regime, corporations will pay a 12.5% tax on unrealized capital gains on assets where:

  • A company resident in an EU member state transfers assets from an Irish permanent establishment to another territory
  • A company resident in an EU member state transfers a business carried on by an Irish permanent establishment to another territory, or
  • A company ceases to be a resident of Ireland.

Corporation tax roadmap
Ireland's Corporation Tax Roadmap lays out the country's intentions for its future corporate tax regime. According to the Roadmap, released September 5, 2018, Ireland plans to continue implementing EU and OECD wide transparency related initiatives, such as exchange of mandatory reporting on cross-border arrangements under the EU's Directive on Administrative Cooperation (DAC). The Roadmap details Ireland's adoption of measures that all EU member states are required to implement under the European Union's ATAD and also announces that Ireland plans to review a number of transfer pricing matters.

CFC rules

CFC rules are designed to limit the artificial limitation of tax by using low-tax or no-tax offshore entities. The OECD proposed that jurisdictions strengthen these rules in the BEPS Action 3 report. Ireland released some draft legislative CFC measures in September 2018 but final legislation and guidance is still pending.

For more on the 2019 Irish budget, see the KPMG TaxNewsFlash, "Ireland: Tax provisions in budget 2019" and the commentary and in-depth analysis prepared by KPMG's member firm in Ireland, or contact your KPMG adviser.

Information is current to October 16, 2018. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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