IRELAND

Source: IMF, International Financial Statistics, June 2021.

• The Irish central bank is the Central Bank of Ireland (CBI – www.centralbank.ie).
• The CBI is a member of the European System of Central Banks (ESCB) and operates certain activities, such as issuing currency, under the authority of the European Central Bank (ECB – www.ecb.europa.eu).

Bank Supervision

• In November 2014, the ECB, via the Single Supervisory Mechanism (SSM), assumed responsibility for supervising the financial stability of banks operating within the euro zone. However, while the ECB has final supervisory authority over all banks operating within the euro zone, it will only directly supervise those banks classified as ‘significant’ under the terms of the SSM (115 significant banking groups have been recognized to date). ‘Less significant’ banks will continue to be supervised by the national supervisory authority, i.e. the CBI.

• Lifting fees are not applied on payments between resident and non-resident bank accounts.
• Item based charges and/or subscription fees are typically applied on payments between resident and non-resident bank accounts.

Ireland is serviced from the United Kingdom.

Please consult the United Kingdom pages.

• Credit transfers are used by companies to pay salaries and suppliers, and to make tax and treasury payments.
• SEPA credit transfers can be settled via STEP2 or via correspondent banking networks.
• Approximately 207 banks in Ireland participate in the SEPA credit transfer scheme.
• High-value and urgent domestic and cross-border (within the euro zone) credit transfers can be settled in real time via TARGET2-IE.
• High-value and urgent cross-border payments can also be settled with end-of-day value via the Euro Banking Association’s EURO1 system. Two banks in Ireland participate directly in EURO1.
• Cross-border transfers can be made via SWIFT and settled through correspondent banking and bank branch networks.
• The European Payment Council’s SCT Inst scheme (a pan-European 24/7 instant payment scheme for SEPA credit transfers) enables the transfer of funds (the maximum threshold value is EUR 100,000) to another account in less than ten seconds. Three banks in Ireland participate in the scheme.
• EBA Clearing and Italy’s SIA Group have developed and implemented a pan-European platform for instant EUR payments called RT1. It is fully compliant with the SCT Insts scheme and is in line with the ISO 20022 global messaging standards for instant payments.
• TIPS is a pan-European service for the settlement of instant payments in central bank money. The service enables payment service providers and ACHs with access to TARGET2 to offer fund transfers 24/7, 365 days a year. TIPS is aligned with SCT Insts. It is primarily focused on EUR payments but is technically capable of settling payments denominated in other currencies.

• Direct debits are used for regular payments, such as utility bills.
• SEPA direct debits can be cleared and settled on a same-day basis via STEP2.

• The cheque is not a common cashless payment instrument. In 2019, cheque volumes decline by 12.9% to 31.7 million.
• Cheques are no longer a payment option when dealing with government departments, state agencies and local authorities.
• All cheque payments incur a 50 cents stamp duty.
• Cheques are settled on a three-day cycle via the IPCC. Cheques issued and deposited at the same bank branch are settled on a same-day basis.
• High-value cheques issued in Dublin can be truncated into electronic items before being settled on a same-day basis via TARGET2-IE.

• Card payments, particularly debit card payments, are increasingly popular, especially for retail transactions.
• In 2019, debit card volume and value increased by 17.2% and 12.6% respectively, to 999.6 million, with a value of EUR 40.1 billion. Credit card volume and value increased 18.4% and 23.4% respectively, to 150 million, with a value of EUR 12.1 billion.
• There were 1.9 million credit and 5.6 million debit cards in circulation at the end of March 2021.
• There are approximately 4.6 million contactless debit cards and 1.3 million contactless credit cards in circulation. There were 611 million contactless payments in 2020 valued at more than EUR 9.2 billion, significantly more than the volume (508 million) and value (EUR 6.1 billion) in 2019, caused partly by the increase in threshold for contactless payments in April 2020 to EUR 50. Ireland’s largest banks have announced that they will start charging for contactless payments.
• Visa and MasterCard-branded payment cards are most widely issued.
• American Express and Diners Club credit cards are also available.
• All cards issued are SEPA-compliant with EMV chips.

• There were 2,876 ATMs in Ireland at the end of 2019
• There were 313,152 POS terminals in Ireland at the end of 2019.
• All ATMs and POS terminals are EMV-compliant.

• Pre-paid cards such as Mastercard Everyday Money prepaid card, Swirl and Skrill are available in Ireland.
• Mobile wallet schemes such as Apple Pay and Google Pay are available.
• E-money payments increased 144.4% and 100% respectively in volume and value terms in 2019, to 15.4 million, with a value of EUR 0.4 billion.

• BNP Paribas' Global Trade Solutions (GTS) team, based in Dublin, provides comprehensive solutions and services to corporations headquartered, or operating in Ireland. In addition to trade finance products and supply chain management solutions, the Dublin-based trade finance platform provides a dual role as the location of the Utexam franchise including two key trading companies: Utexam Logistics Ltd and Utexam Solutions Ltd, which manage all inventory management transactions worldwide.

• The EU has trade agreements in place with over 30 countries.
• The EU is currently in free trade negotiations with a number of countries, including the Association of Southeast Asian Nations (ASEAN), Australia, Indonesia, Mercosur (the Southern Common Market), Uruguay, and the USA. The EU-UK Trade and Cooperation Agreement came into force on 1 May 2021.

Sources: IMF, International Financial Statistics and Central Statistics Office, Ireland, June 2021.

• Import licences with quotas are required for textile products, shoes, ceramics, steel and certain agricultural products (in accordance with the Common Agricultural Policy) from outside the EU.
• Special licences are required for armaments, ammunition, explosives and specific drugs.

• Tariffs are set according to the EU customs code for all imports from outside the EU, with higher tariffs for agricultural imports.

• None

• None

• Ireland prohibits the import of certain items in line with EU regulations and UN Security Council resolutions.
• Specific imports are prohibited in order to protect fauna and flora, for health and safety or moral reasons, and/or for national security.

• Export licences are required for military items and dual-use goods subject to international export controls.

• None

• None

• Ireland has implemented the EU directive on export credit insurance.
• Export credit insurance is available from private insurance companies.
• Export financing is available from commercial banks.

• Ireland prohibits the export of certain items in line with EU regulations and UN Security Council resolutions.

• Ireland does not apply exchange controls.
• Restrictions apply to foreign investment in specific industries (airlines, fisheries, shipping, and flour milling).

• Generally, the Revenue Commissioners take the view that the tax treatment of a derivative financial instrument should follow the accounting treatment adopted where the instrument relates to the company’s trade.
• Where financial instruments are used by a company to hedge underlying exposures, the tax treatment should resemble that of the underlying transaction involved. If the hedging is used for a trading transaction, then the gain or loss should be treated as a trading item. Similarly, the gain or loss should be treated as a capital item where the underlying transaction is capital in nature.
• The Irish tax authorities have issued a Statement of Practice in relation to swaps, and therefore regular receipts under such a swap agreement should be treated as income. There is no requirement to withhold tax on such payments. The receipts should be taxed as trading income if they are trading receipts or passive income for non-trading receipts.
• Incidental costs incurred in arranging interest rate swaps should be tax deductible when computing trading income where the underlying interest is itself deductible.
• If caps, floors and collars are entered into as part of a trading transaction, any payment received should be taxable as trading income and payments made should be allowed as a trading expense. Premiums paid up front should also qualify for a corresponding trading deduction for the borrower where the instrument is used to hedge a trading expense.
• Irish legislation provides that an option is an asset for the purposes of capital gains tax (CGT). The grant of an option is a disposal of an asset separate to the underlying asset. CGT treatment will not be appropriate in all cases, for instance where the option is considered to be trading in nature.
• Transactions and options that are regarded as profits or losses of a trade will not be treated as capital in nature.
• Profits or losses arising to a bank or other financial trader dealing in options are usually treated as forming part of their trading income unless, exceptionally, the activities or some part of them are designed to hedge transactions on capital account.

• Interest incurred wholly and exclusively for trade purposes should be tax deductible. If the interest does not meet the ‘wholly and exclusively’ test, it may still qualify as a charge on income (‘Interest as a charge’) in certain circumstances, e.g. interest on money borrowed by a company to buy shares in another company, or to lend to another company, can be tax deductible on a paid basis, subject to certain conditions regarding certain shareholdings, common directorships etc being met.
• A number of changes to the ‘Interest as a charge’ legislation have been made in recent periods. Where any group financing is contemplated, these provisions must be carefully analysed.
• Specific anti-avoidance provisions deny a deduction for the interest paid where such payments are made for the purposes of tax avoidance or are effected such that the sole or main benefit is to provide, to the borrower, a reduction in liability to tax.

• Where foreign exchange gains/losses are trade-related, the tax treatment should follow the accounting treatment, and therefore foreign exchange gains should be taxable and foreign exchange losses should be tax deductible.
• Where such gains and losses are not trade-related, the gain should not be taxable as a trading item and the loss should not be tax deductible. However, where there is a disposal of a chargeable asset and the asset was acquired or sold in a foreign currency, the calculation of the chargeable gain for CGT purposes should take into account the foreign exchange gain or loss, and the cost price and the proceeds should be converted into euros using the exchange rates applicable at the relevant dates.
• Where foreign currency is held in a bank account and is not used for the purposes of the company’s trade, it should be considered to be an asset for CGT purposes. Therefore any movements (e.g. withdrawals) from the account could give rise to a chargeable gain or loss.
• Relieving measures have been introduced for certain holding companies with foreign currency bank accounts. A disposal of non-euro currency by a holding company will not require a capital gains calculation where that company has at least one trading subsidiary. Instead, the accounting calculation of such a gain or loss will be charged to corporation tax under Case IV of Schedule D. Tax on such gains will be at an effective rate of 30%. The new measures apply to accounting periods ending on or after 1 January 2012.
• Where financial statements are prepared in a currency other than EUR, the taxable profits should be calculated by converting the functional currency to EUR using the average exchange rate for the period.
• Any trading losses should be carried forward in the company’s functional currency.

• Irish tax legislation includes a number of specific provisions for which advance statutory clearance may be sought. Also, under a non-statutory clearance procedure, the Irish tax authorities’ view of the tax consequences of specific transactions can be sought, on a named basis, with full disclosure, where there is both commercial significance and material uncertainty.

• Capital gains are taxed at 33%  (40% in certain circumstances) on gains derived on the disposal of assets.

1. The withholding tax on yearly interest paid to a non-resident is 20%, unless the rate is reduced under a tax treaty or the interest is exempt from withholding under the EU Interest and Royalties Directive or under a specific exemption under domestic legislation. Interest paid to deposit holders of certain Irish banks is subject to a withholding tax at 33%, unless an exemption under domestic legislation applies.

2. Dividends paid to another Irish company are exempt from withholding tax. Dividends paid to a non-resident company or an individual (whether resident or non-resident) are subject to a 25% withholding tax, unless the rate is reduced under a tax treaty or exempt under the EU Parent-Subsidiary Directive or under a specific exemption under domestic legislation.

3. The withholding tax is 20% on patent royalties. All other royalties are exempt. The rate may be reduced under a tax treaty or the payment may be exempt from withholding under the EU Interest and Royalties Directive or under a specific exemption under domestic legislation.

• Ireland has exchange of information relationships with 99 jurisdictions through 73 double tax treaties and 27 TIEAs.
• Ireland, as part of the OECD/G20 Base Erosion and Profit Shift (BEPS) initiative, has signed a multilateral co-operation agreement with 30 other countries (‘the MCAA’). Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on some key indicators of economic activity within multinational enterprises (MNE).
• With country-by-country reporting, tax administrations of jurisdictions where a company operates have aggregate information annually relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It also covers information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information is collected by the country of residence of the MNE group, and then exchanged through exchange of information supported by such agreements as the MCAA.

• There is no specific thin capitalisation legislation.
• Interest paid by a non-trading company to a non-resident, non-treaty parent company that owns at least 75% of the Irish payer is generally reclassified as a dividend.
• It is expected that Ireland will introduce the EU’s Anti-Tax Avoidance Directive effective from 1 January 2022.

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• The arm’s length principle generally should be observed, and transfer pricing rules apply to certain transactions.
• A tax deduction is not available for any amount paid or payable by a person to a connected person in another territory for adjustments made to the profits of that connected person for which relief is available under the provisions of a tax treaty with Ireland or for a similar adjustment made to the profits of a connected company resident in a non-treaty country.
• From 1 January 2020, Ireland expanded its transfer pricing legislation to bring them in line with the 2017 OECD  guidelines on transfer pricing. This expanded the application and scope of Ireland’s transfer pricing rules to cover certain non-trading income, capital allowances and chargeable gains between associated entities while also enhancing the documentation requirements for certain taxpayers.

• Stamp duty at rates of 1–7.5% is levied on the transfer of property including stocks and shares. The top rate of stamp duty for non-residential property is 7.5%.

• Ireland does not have any specific tax rules that apply to cash pooling arrangements. The general rules in relation to taxation of interest, domestic withholding tax exemptions, thin capitalisation and transfer pricing (further details in respect of these are set out above) may apply.
• Short interest (less than a year) paid will be deductible to the extent that the recipient country levies a tax on such interest (where the tax is less than 12.5%, a proportionate discount in the deduction will apply).

• None.

All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021 (see www.deloitte.com).