On 7 July 2023, the Irish Department of Finance published a Consultation Document and related draft legislation which potentially impacts payments of interest, royalties and dividends by Irish companies.
In very broad terms, the measures target payments to jurisdictions on the EU list of non-cooperative jurisdictions, no-tax, and zero-tax jurisdictions. The measures apply if the recipient of the payment is "associated" with the entity making the payment, and would impose Irish withholding tax on such payments. It removes certain exemptions from withholding tax which are commonly and properly used in such structures.
The measures are potentially relevant to Irish corporate structures, who may be paying dividends, interest or royalties to related parties which are resident in a specified territory, or are formed under the laws of a specified territory. The concept of "association" broadly tracks the meaning of the same term in the Irish anti-hybrid legislation. Accordingly, an Irish company will be associated with an entity where the entity holds 50% of the shares, votes or economic interests in the Irish company. It will also be associated with an entity which has the ability to participate on the board of the Irish company.
The Department's intention is to consult on the final form of the legislation and implement it later this year. Comments on the draft legislation are invited by 8 August 2023. Potentially impacted entities should review their structures in light of the proposals.
The final remaining commitment under the NRRP is to introduce legislation applying to outbound payments to prevent double non-taxation.