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Ireland: MLI signed

11 July 2017

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Catherine O’Meara Trevor Glavey

Ireland, along with 67 other countries, signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) on June 7 2017. The key changes to Ireland's double tax treaties (DTTs) that will be made under the MLI are:

  • Adoption of a principal purpose test (PPT);
  • Adoption of a tie-breaker test based on mutual agreement to determine tax residence for dual resident entities; and
  • Adoption of a number of measures, including mandatory binding arbitration, to resolve DTT disputes more efficiently.

Perhaps of most interest, are Ireland's reservations to the MLI. Ireland will not:

  • Adopt the changes to the permanent establishment (PE) definition designed to treat commissionaires as PEs; or
  • Adopt the narrower specific activity exemptions within the PE definition.

Which Irish DTTs will be affected by the MLI?

Ireland has agreed 73 DTTs (of which 72 are in effect). Ireland has confirmed that it will treat 71 of those DTTs as covered tax agreements. It has been bilaterally agreed not to include the Ireland / Netherlands DTT as a covered tax agreement as that DTT is currently being renegotiated.

If a DTT partner does not sign the MLI (the current US position) or does sign the MLI but does not opt to treat the Irish DTT as a covered tax agreement (the current Swiss position), no amendments will be made to that DTT under the MLI.

When will the changes become effective?

The changes become effective for withholding tax provisions on the first day of the calendar year that begins after the MLI enters into force between two countries – at the very earliest, this would be January 1 2019 for Ireland's DTTs.

The changes become effective for all other provisions for taxable periods beginning on or after the expiration of six months after the date the MLI enters into force between two countries – at the very earliest, this would be taxable periods beginning on or after October 1 2018.

However, these dates depend on the MLI being ratified by Ireland in the next Finance Act (later in 2017) and being ratified by the DTT partner relatively quickly. For now, it is unclear whether the MLI will be ratified in the Finance Act 2017.

What should taxpayers do now?

Taxpayers that claim relief under any of Ireland's DTTs should review the treatment in light of the MLI. Most reliefs will continue to be available after the MLI becomes effective, however it is a good idea to confirm that position sooner rather than later.

Catherine O'Meara ( and Trevor Glavey (
Tel: +353 1 232 2000

International Correspondents