Ireland introduced
a new holding company regime, retrospectively effected from
2 February 2004. This has two principal features:
An
exemption from tax on capital gains on the disposal by
a company of certain shareholdings in other companies.
A
substantially improved foreign tax credit system that
should help ensure that dividend repatriation to Ireland
from abroad will not result in any significant Irish taxation.
Conditions for capital gains tax
exemption on disposal of shares:
The shares being disposed of
should be part of a holding that at some time in the two
year period leading up to the disposal amounted to at
least a 5% holding.
The shares being disposed of
must be in a company which, at the date of disposal
is resident in a member state of the EU, or in a state
with which Ireland has a double tax agreement. It does
not cover a disposal of shares in a company resident
in, for example, a tax haven with which Ireland does
not have a double tax treaty. However the residence
test is a point of time test at the date of disposal
so that this is not a serious impediment to the structuring
of the group.
The shares must be
in a company which is primarily a trading company, or
else the company making the disposal together with all
of its "5%+ subsidiaries" should be primarily
a trading group.
The shares must not
derive the greater part of their value from land or mineral
rights in the State.
