Last Updated March 05, 2019

Law and Practice

Contributed By Walkers

Authors



Walkers is a global firm with ten substantive offices around the world. Its transactions often involve Cayman Islands, British Virgin Islands, Bermuda, Jersey and/or Guernsey legal matters, and it provides an integrated service to clients across its offices, legal systems and time zones. The finance and capital markets group in Ireland comprises a team of 23, including two listing agents. The group also includes four tax-advisers (including two tax partners) who support a number of practice areas and 16 dedicated capital markets fee-earners who spend the vast majority of their time advising on debt capital markets activity. In addition, the team works with asset finance, corporate, real estate and investment funds teams on multi-disciplinary, cross-border mandates. It is one of the largest dedicated debt capital markets teams in Ireland. The firm was a founding member of the Irish Debt Securities Association (IDSA) and sits on the Executive Council and Legal, Tax, CSP and Listing Sub-committees.

WHT is deducted from payments of yearly interest which have an Irish source and are made to both Irish resident persons and non-Irish resident persons. Interest is considered to be yearly interest if the principal is outstanding (or is capable of being outstanding) for at least one year. WHT is deducted from yearly interest payments at the standard rate of income tax, currently 20%.

Interest may be paid free from WHT in a number of cases, including:

  • where the interest is paid on a quoted Eurobond (please see 12.1 Main Tax Issues When Issuing & Listing Debt Securities, for further detail on the quoted Eurobond exemption);
  • where the interest is paid on a wholesale debt instrument provided certain conditions are met. The term "wholesale debt instrument" includes certain certificates of deposit issued by banks and certain types of commercial paper that mature within two years of issue;
  • where the interest is paid by an Irish securitisation vehicle (ie, a "qualifying company" within the meaning of Section 110 of the Taxes Consolidation Act 1997 (as amended) (‘the TCA”) and is paid to a person who is resident for tax purposes in:

(i)       an EU Member State (other than Ireland);

(ii) a jurisdiction with which Ireland has signed a double tax treaty that has the force of law; or

(iii) a jurisdiction with which Ireland has agreed a double tax treaty which is awaiting ratification,

a "Relevant Territory", provided that such interest is not paid to a body corporate in connection with a trade or business carried on by it in Ireland through a branch or agency.

  • Where the interest is paid by a body corporate in the ordinary course of its trade or business:

(i) to a body corporate which, by virtue of the law of a Relevant Territory, is resident for the purposes of tax in that Relevant Territory and that Relevant Territory imposes a tax which corresponds to Irish corporation tax or income tax and which generally applies to interest receivable in that territory by bodies corporate from sources outside that territory (or where the Relevant Territory provides for a remittance basis of taxation, where the interest is payable into an account located in that Relevant Territory); or

(ii) to a body corporate where the interest is exempt from the charge to Irish income tax under the terms of a ratified double tax treaty, or would be so exempt if a double tax treaty that has been signed had the force of law when the interest was paid,

provided, in each case, that such interest is not paid to the recipient body corporate in connection with a trade or business carried on by it in Ireland through a branch or agency.

While the immediately preceding exemption requires a lender to meet the conditions prescribed in the relevant double tax treaty entered into between Ireland and the jurisdiction of residence of the lender for the exemption to apply, the exemption itself is available as a matter of domestic law. Accordingly, no tax treaty relief forms have to be completed and the tax authorities of the lender's jurisdiction of residence are not required to certify residence. A number of other exemptions exist for interest paid to Irish tax resident persons, such as banks, Irish regulated funds, Irish securitisation vehicles and certain Government agencies.

In addition to the exemptions listed above, an exemption from the obligation to withhold, or reduced rates of interest WHT, may be available under Ireland's extensive double tax treaty network (for example, where interest is paid to individuals or non-corporates). Ireland currently has 73 double tax treaties in effect. To avail of these exemptions, treaty relief claim forms must be filed with the Revenue Commissioners of Ireland and the tax residence of the recipient must be certified by the tax authorities in its home jurisdiction. 

Walkers Global

The Exchange,
George's Dock, IFSC,
Dublin 1,
Ireland

+353 1 470 6600

+353 1 470 6601

info@walkersglobal.com www.walkersglobal.com
Author Business Card

Authors



Walkers is a global firm with ten substantive offices around the world. Its transactions often involve Cayman Islands, British Virgin Islands, Bermuda, Jersey and/or Guernsey legal matters, and it provides an integrated service to clients across its offices, legal systems and time zones. The finance and capital markets group in Ireland comprises a team of 23, including two listing agents. The group also includes four tax-advisers (including two tax partners) who support a number of practice areas and 16 dedicated capital markets fee-earners who spend the vast majority of their time advising on debt capital markets activity. In addition, the team works with asset finance, corporate, real estate and investment funds teams on multi-disciplinary, cross-border mandates. It is one of the largest dedicated debt capital markets teams in Ireland. The firm was a founding member of the Irish Debt Securities Association (IDSA) and sits on the Executive Council and Legal, Tax, CSP and Listing Sub-committees.

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.