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Ireland: Finance Bill 2013 published


Gerry Thornton

The Irish Finance Bill 2013 published recently contains a number of features designed to bolster Ireland's attractiveness for international companies doing business in and through Ireland. An overview of the most relevant changes is as follows:


Ireland was one of the first countries in the world to conclude an inter-governmental agreement with the US in relation to FATCA. The Finance Bill enables the Irish Revenue to make regulations to collect the necessary FATCA information from financial institutions and to exchange such information with the US. These regulations are expected to be published over the coming months.

Real estate investment trusts

Ireland is introducing real estate investment trust (REIT) companies. It is hoped REITs will attract foreign investment into the Irish real estate market and establish Ireland as a hub for the management of international real estate. The Finance Bill sets out the tax legislation that will underpin REIT companies. Subject to certain criteria, a REIT will be exempt from tax in respect of the income and chargeable gains of a property rental business. Dividends paid by a REIT will be subject to dividend withholding tax, unless exempted under one of Ireland's 68 tax treaties.

Investment limited partnerships

Irish investment limited partnerships (ILPs) are a form of regulated Irish fund. Historically, ILPs have been rarely used, partly because they have not been treated as tax-transparent. The Finance Bill amends the tax treatment of ILPs to ensure that they are tax-transparent. This change is expected to allow the Irish regulated funds sector to compete globally to attract new business lines to Ireland following the implementation of the Alternative Investment Fund Managers Directive (AIFMD) in 2013.

Structured finance

The tax regime relating to the issuance of Islamic finance and other structured instruments is being enhanced and the stamp duty treatment applying to the redemption of debt securities by Irish SPVs has been clarified and improved.

Intangible asset regime

The existing Irish intangible asset regime provides for tax depreciation (capital allowances) in respect of the acquisition of intellectual property but contains a claw-back of capital allowances if the assets are disposed of within 10 years. The claw-back period is now being reduced to five years.

Aviation infrastructure tax depreciation

The Finance Bill applies tax depreciation to hangars, tear down pads, parking and ancillary facilities and also provides for an accelerated capital allowance scheme over seven years in relation to construction or refurbishment of certain buildings or structures used in connection with the maintenance, repair or overhaul of commercial aircraft.

Foreign tax credits for dividends

In a welcome development, the Finance Bill introduces an additional credit for tax on certain foreign dividends received from subsidiaries resident in EU or EEA countries. This provision is a reaction to the ruling of the European Court of Justice (ECJ) in the Test Claimants in the FII Group Litigation case. The total credit under the new regime (including the additional credit) cannot exceed the Irish corporation tax attributable to the dividend and there are limitations on pooling and carry forward by reference to the additional credit. The amendment is stated to apply to all dividends paid on or after January 1 2013.

Employee incentives

The proportion of time that key employees must spend solely on R&D activities to qualify for the R&D tax credit surrender regime is being reduced from 75% to 50%. The foreign earnings deduction scheme, which provides for a tax deduction for individuals who carry out the duties of their office or employment in BRICS countries is being extended to include Algeria, the Democratic Republic of the Congo, Egypt, Ghana, Kenya, Nigeria, Senegal and Tanzania.


The Finance Bill is expected to be enacted by April 5. Changes may be introduced as the Bill progresses through the various parliamentary stages.


These improvements to Ireland's tax regime underline Ireland's continued commitment to be a leading jurisdiction to attract and retain inward investment.

Gerry Thornton (


Tel: +353 1 232 2664

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