Irish Finance Minister Michael Noonan announced October 14 that Ireland will eliminate the ability of new companies to use the "double Irish" tax arrangement, effective January 1, 2015, by changing residency rules to require all companies registered in Ireland to be Irish tax residents as well.
Noonan provided the details of a roadmap setting forth the government's international tax strategy in a financial statement for the 2015 budget that calls for attracting and retaining foreign direct investment while staying in alignment with measures being developed on a global scale to reduce base erosion and profit shifting.
The "double Irish" tax arrangement allows companies to shift profits to low- or no-tax jurisdictions by taking advantage of mismatches in corporate residency rules.
Ireland plans to change its residency rules so that new companies registered in Ireland on or after January 1, 2015, will be required to also be Irish tax residents. Existing companies would have until the end of 2020 to come into compliance with the new law.
However, Noonan emphasized that no change will be made to the country's 12.5 percent corporate tax, a rate that he said "never has been and never will be up for discussion."
Multinationals that use the double Irish arrangement recognize that they will need to make changes to ensure that profits are allocated to jurisdictions where substantive operations are located.
From a U.S. multinational's perspective, Ireland is already an attractive location for investment because of a shared language and similar laws on corporate governance and employment.