Tax residence and fiscal domicilei Corporate residence
Companies incorporated in Ireland on or after 1 January 2015 are automatically regarded as Irish tax resident unless treated as tax resident elsewhere under a tax treaty with Ireland. For companies incorporated before that date, this 'incorporation rule' applies from the earlier of 1 January 2021 or the date where there is a change in the ownership of the company and within a specified period there is also a major change in the nature or conduct of the business of the company. Otherwise until either of those events occurs the tax residence of a company incorporated in Ireland prior to 1 January 2015 is broadly determined by virtue of the common law rule that a company is Irish tax resident if it is 'centrally managed and controlled' in Ireland. This is subject to a 'stateless' company rule where an Irish-incorporated company is managed and controlled in another EU Member State or jurisdiction with which Ireland has a DTA and is not regarded as tax resident in any territory. In such a case, the company is regarded as resident in Ireland for tax purposes. The provision does not, however, affect structures that involve Irish-incorporated companies that are in fact managed and controlled in a non-EU or non-DTA jurisdiction (e.g., Bermuda).
A non-Irish-incorporated company (whether incorporated before or after 1 January 2015) can become resident in Ireland if its 'central management and control' is exercised in Ireland. Generally speaking, this case law concept is taken to denote control at the highest strategic level of a company's business rather than at the level of day-to-day activities. Many factors need to be looked at when considering where a company is to be regarded as having its place of central management and control, for example, the place where company board meetings are held and the place where the directors of the relevant company are themselves resident.ii Branch or permanent establishment
A company not resident in Ireland is subject to corporation tax if it carries on a trade in Ireland through a branch or agency, and it will be chargeable on all profits arising therefrom. However, an exemption exists in the case of an authorised investment manager who acts as an agent on behalf of a non-resident in carrying on a financial trade and is independent of the non-resident. This exception was extended so that appointing an Irish management company to manage a non-Irish undertaking for the collective investment in transferable securities (UCITS) fund should not as a result bring the non-Irish UCITS into the Irish tax net. The Finance Act 2014 extended the exemption further to an Irish management company appointed to manage a non-Irish alternative investment fund.
The concept of branch or agency is not defined in Irish statutory tax law; although similar to the OECD Model Treaty concept of the permanent establishment, it is likely wider in its scope. For example, the emphasis on a fixed presence, and on a degree of permanence, is probably not necessary for a branch or agency to exist for the purposes of Irish law. Liability to Irish tax will normally depend on whether the operation of the non-resident company constitutes trading in Ireland. The major consideration in this determination is whether there is power to conclude contracts and whether contracts are in fact concluded in Ireland.
In cases where the company is resident in a country with which Ireland has a tax treaty, liability to Irish corporation tax will depend on whether the company carries on a trade in Ireland through a permanent establishment. The treaty may displace an Irish corporation tax charge that would apply in the absence of the treaty.
There are many views as to how profits should be allocated to a permanent establishment, but given the wording of the business profits article in the majority of Ireland's tax treaties, an approach that treats the permanent establishment as being a fictitious separate legal entity to which income and expenses are allocated as if it were an independent company is likely to be acceptable to the Irish Revenue Commissioners. There is no statutory basis for the calculation of profits to be allocated to a branch, but an approach that treats the Irish branch as a fictitious separate legal entity, similar to the approach taken for a permanent establishment, may be considered to be reasonable.