23 October 2014 EY Global Tax Alert Library Access both online and pdf versions of all EY Global Tax Alerts. • Copy into your web browser: http://www.ey.com/GL/en/ Services/Tax/InternationalTax/Tax-alert-library#date Global Tax Alert Ireland publishes draft legislation phasing out ”Double Irish” Executive summary On 14 October 2014, the Irish Minister for Finance announced plans to introduce various enhancements to the Irish IP regime and a phasing out of the ”double Irish.”1 On 23 October, the proposed legislation giving effect to the phasing out of the ”double Irish” was published. The legislation is in line with the Minister’s announcement on 14 October. Consultation on the design of a best in class ”Knowledge development box” will commence shortly with a plan to bring forward enacting legislation in 2015. Speaking in Dublin about the introduction of this regime, Mr. Pascal Saint-Amans, the Director of the Centre for Tax Policy and Administration at the Organisation for Economic Co-operation and Development (OECD), said the fact that countries want to promote innovation in a way which is not just about attracting patents, but also activity, “is something which is accepted and promoted.” Detailed proposal Corporate residence rules will be amended such that all Irish incorporated companies will be regarded as Irish tax resident and thus subject to Irish tax on worldwide income and gains. When in force this rule will not regard an Irish incorporated company as tax resident if one of Ireland’s tax treaties operates to treat the entity as resident elsewhere. Nothing in this proposal alters the current position whereby companies (Irish or foreign) which are centrally managed and controlled in Ireland will continue to be regarded as Irish tax resident absent the application of an override in one of Ireland’s tax treaties. • For companies incorporated before 31 December 2014 this change is effective 1 January 2021. This confirms the six-year grandfathering period announced by the Minister. • The rule will apply immediately for companies incorporated on or after 1 January 2015. Effective date The proposed effective date of this rule is determined solely by the date of incorporation of a company: Endnotes 1. For background, see EY Global Tax Alert, Ireland announces improvement to IP regime and phasing out of “double Irish,” dated 14 October 2014. 2 Global Tax Alert For additional information with respect to this Alert, please contact the following: Ernst & Young (Ireland), Dublin • Joe Bollard +353 1 221 2457 • Kevin McLoughlin +353 1 221 2478 [email protected] [email protected] Ernst & Young (Ireland), Cork • Frank O’Neill +353 21 480 5700 [email protected] Ernst & Young (Ireland), Limerick • John Heffernan +353 61 319 988 [email protected] Ernst & Young (Ireland), Waterford • Paul Fleming +353 51 872 094 [email protected] Ernst & Young LLP, Irish Tax Desk, New York • Karl Doyle +1 212 773 8744 [email protected] Global Tax Alert 3 EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. © 2014 EYGM Limited. All Rights Reserved. EYG No. CM4826 This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com