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Australian cement firm James Hardie is seeking shareholder approval to move its corporate domicile from the Netherlands to Ireland for tax reasons.

The company moved its domicile from Australia to the Netherlands in 2001 to take advantage of the US-Netherlands tax treaty.

However, the treaty was amended in 2006 to include a substantial presence requirement. A statement from the company said it had been reviewing its corporate domicile for some time and the change to the treaty was one of the "primary factors" driving the review.

"The Netherlands has become unsustainable due to a change in the treaty with the US," said Michael Hammes, the chairman of James Hardie. "Corporate tax rates were not the primary concern. Ireland has a stable political environment and educated workforce."

Favourable tax concessions for the company under the financial risk reserve regime in the Netherlands expire in December 2010. The company said it anticipates the move to Ireland will mean the company will pay less tax than in the Netherlands. The move will permit most shareholders to be eligible to receive dividends not subject to withholding tax.

"We did explore moving to the US or Australia," he said, although this was not pursued due to the potential tax consequences for shareholders such as incurring capital gains tax.

Louis Gries, James Hardie's chief executive, said the amended treaty requires substantial presence and this would prove a problem for the company. "The problem is the requirement for key senior managers to spend substantial time in the Netherlands away from key markets," he said.

Substantial presence is not required under the US-Ireland treaty.

"The Netherlands treaty was amended so you have to make sure that the executive spends a lot of time in the Netherlands," said an Irish adviser who did not wish to be named.

Gries also said the company faced continuing disputes with the US Internal Revenue Service (IRS). "The IRS asserted that James Hardie did not qualify for tax benefits under the US-Netherlands tax treaty and issued a proposed tax adjustment for 2006 to 2007 of $49 million," he said. The company prevailed in this row but it is does not want any more disputes with the US tax authorities.

The company's European operations will continue to be based in Amsterdam. However, it plans to move its corporate secretariat, treasury and intellectual property functions to Dublin.

The company or its advisers in Ireland, Australia or the Netherlands were not available for comment.

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