Stephen Donnelly (Wicklow, Fianna Fail)
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122. To ask the Minister for Finance if his attention has been drawn to section 110 companies using the 2020 tax residency exemption to avoid paying taxes following the closing of the loophole in 2015; and if he will make a statement on the matter. [44115/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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Companies which made an election to be treated as a “qualifying company” for the purposes of section 110 of the Taxes Consolidation Act 1997 (“TCA 1997”) are subject to the same residency rules as all other companies in the State.  A company can only be a qualifying company if it is resident in the State. Therefore, a company which is not treated as tax resident in Ireland, for whatever reason, cannot be a qualifying company for the purposes of section 110. 

The measures I understand the Deputy to be referring to were introduced in Finance Act 2014 to implement changes in tax residence rules for companies, and these changes are reflected in section 23A, TCA 1997.  These measures ensure that 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 by virtue of a double taxation treaty. 

This change in Ireland’s company residence rules applies to companies incorporated on or after 1 January 2015.  For companies incorporated in the State before this date, the pre-Finance Act 2014 residence rules will continue to apply until the earlier of:

(i) 31 December 2020 or

(ii) The date, after 31 December 2014, of both a change in ownership of the company and a major change in the nature or conduct of the business of the company.

This six year transitioning period was provided to give group companies that have real and substantial operations in Ireland a reasonable timeframe to plan and re-organise their business structures to take account of this change.

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.