Ireland-UK Double Tax Treaty

The double taxation convention between Ireland and the United Kingdom

Ireland and the United Kingdom have signed an agreement for the avoidance of double taxation in 1976. The double taxation convention was last amended in 1998. The first articles of the treaty refer to whom the agreement applies and the taxes covered.

The Ireland-UK double tax treaty applies to both natural persons and companies residents of one or both contracting states. The following taxes are covered by the convention:

• -          the income, corporate profits, corporate and capital gains taxes in Ireland;
• -          the income, corporate, petroleum revenue and capital gains taxes in the UK.

The agreement also covers similar taxes levied in both countries.

Fiscal domicile under the Ireland-UK double tax treaty

One of the most important provisions of Ireland’s double taxation agreement with the UK refers to the fiscal domicile of those covered by the convention. Tax residents are defined as any individual paying taxes in Ireland or the UK, and any company registered for taxation purposes in Ireland or the UK.

Article 4 in the agreement emphasizes that natural persons paying taxes only on the income derived in another country is not subject to the convention. With respect to companies, these are covered by the agreement under the permanent establishment status. In order to have a permanent establishment, an Irish company must have a place of management or another site for at least 6 months in the UK. The same principle applies to UK companies doing business in Ireland.

Our specialists in Ireland can provide you with more information about tax residence under the double tax agreement with the UK.

Taxation under the Ireland-UK double taxation convention

The Ireland-UK double tax treaty provides for the following reduced tax rates:

• -          dividend payments benefit from a 5% rate on the gross amount if the recipient holds at least 10% of the voting shares in the company paying the dividends;
• -          in all other cases, a 15% reduced rate applies to dividend payments;
• -          interest payments are subject to a 0% tax rate;
• -          royalties payments are subject to a 0% tax rate.

For complete information about the content of the double taxation agreement with the UK, do not hesitate to contact our Irish experts in company formation.