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Ireland-US Double Tax Treaty

Updated on Monday 09th May 2016

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Ireland-US-double-tax-treatyDouble tax agreement between Ireland and USA

Ireland signed a double taxation treaty with the United States of America in 1997. The agreement was enforced a year later by both countries. The double taxation agreement covers individuals and companies resident of both states. The Ireland-US double tax convention also contains a provision on the exceptions of the treaty. Our specialists in Ireland can provide you with more information about the exceptions from the avoidance of double taxation covered by the agreement with the US.

Taxes covered by the Ireland-US double tax treaty

The double tax treaty between Ireland and the US covers the following taxes:

  • -          the federal income tax and the federal excise taxes in the United States;
  • -          the income, the corporate and the capital gains taxes in Ireland.

The agreement also applies to similar taxes levied in both countries. The treaty covers individuals and legal entities based on tax residence. Special provisions apply to permanent establishments which are deemed as business sites where an US or an Irish company will carry out their activities. Branch offices are considered permanent establishments.

Taxation under the Ireland-USA double tax convention

According to the double taxation treaty between Ireland and the US, business profits of a company will be taxed only in its residence country, except for permanent establishments whose profits will be taxed in the country they are carrying out their activities. Shipping and air transport activities will also be taxed in the country where the company carrying out those activities is registered. Income derived from immovable property will be taxed in the country the property is situated in.

Reduced tax rates under the agreement between Ireland and the US

Where the avoidance of double taxation cannot be imposed, the treaty between Ireland and the United States provides for reduced taxes, as it follows:

  • -          a 5% rate applies to dividend payments if the recipient owns at least 10% of the shares in the company paying the dividends and a 15% tax rate in all other cases;
  • -          a 0% rate applies to interest payments;
  • -          a 0% tax rate applies to royalties payments.

For complete information about taxation under the agreement with the United States, do not hesitate to contact our Irish consultants in company formation.

 

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