Derek Nolan (Galway West, Labour)
Link to this: Individually | In context | Oireachtas source

80. To ask the Minister for Finance the impact thus far of his announcement in budget 2014 that Irish-resident companies must also be tax resident here; the estimate of revenue lost due to the change; the estimated loss to the Exchequer of revenues that may arise when the scheme is fully abolished in 2020; and if he will make a statement on the matter. [22826/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I would like to inform the Deputy that measures were introduced in Finance Act 2014 implementing the changes in tax residence rules that were announced in Budget 2014.  A company incorporated in the State is regarded as resident for tax purposes in the State, unless it is treated as resident in a treaty partner country for the purposes of a double taxation treaty. The changes introduced in Finance Act 2014 do not prevent a foreign-incorporated company that is centrally managed and controlled in the State being resident in the State for tax purposes.

The change in Ireland's company residence rules applies directly to companies incorporated on or after 1 January 2015. For companies incorporated in the State before this date, the change will come into effect after 31 December 2020. This transition period was provided to give existing groups of companies that continue to have substantial operations in Ireland a reasonable timeframe within which to reorganise their business structures to take account of the change. However, where there is a change in ownership of a company before or after a major change in the conduct of the business of the company, the transition period will not apply and the new residence rules will apply from the date of the change of ownership of the company.

The new residence rules are expected to principally affect companies that do not have any Irish operations within the charge to corporation tax - their only link with Ireland being their incorporation here. There should not be any loss of corporation tax revenues in respect of such companies. Those companies may also be part of multinational groups of companies with associated companies which do have substantive operations in Ireland and which pay corporation tax.  It is not anticipated that there will be any significant change in the activities which those associated companies undertake in Ireland.

The residence rules change is part of a package of measures which was announced on Budget day 2014 in the new Road Map for Ireland's Tax Competitiveness, which is intended to increase the substantive Irish operations of foreign-owned and indigenous companies. While it is not possible to predict how all individual companies will react to the company residence measure, it is unlikely to affect companies with substantive operations here and the broader Road Map will provide the foundations for Ireland to advance and prosper as a location for both indigenous and foreign corporate investment.