Ireland Fact-File Part 4:
Personal Business Tax-Efficient Structures

4.4 Ireland Controlled Foreign Corporation (CFC) Rules

Controlled Foreign Company rules

There are no Controlled Foreign Company Rules that apply to small businesses in Ireland.

In view of this, maintaining a non-resident company may be an option for the small business owner, as correctly structured non-resident companies carrying on business in Ireland are liable to corporation tax on their Irish-sourced income only.

The low tax regime in place for companies provides some tax advantages ‘onshore'. That said, however, as there are no Controlled Foreign Company rules in place in Ireland, foreign trading can theoretically be carried out from Ireland through a corporate form in any low-tax jurisdiction, as long as the proceeds are not repatriated.

Under the Finance Act, 1999 (as part of a general response to the EU's initiative against 'harmful tax competition'), all Irish-incorporated companies became resident; however, there are a number of exceptions to the rule, including:

- An Irish-incorporated company which is resident in a treaty country, and which is not resident in Ireland will continue to be regarded as non-resident in Ireland;
- An Irish-incorporated company which is under the ultimate control of a person or persons resident in an EU member state or in a country with which Ireland has a double tax agreement, or which is, or is related to, a company whose principal class of shares is substantially and regularly traded on a stock exchange in an EU country or a treaty country AND which carries on a trade in Ireland or is related to a company which carries on a trade in Ireland will continue to be able to be non-resident under the management and control test. ('Related to' means that either one of the two companies owns at least 50% of the other, or that both are owned at least 50% by a third company; 'Control' is interpreted within Irish rules that attribute the rights of shareholders to related parties and associates.)

Alongside these exceptions, some additional reporting requirements have been imposed on non-resident companies, and some stiffer incorporation rules have been imposed on all companies:

- Non-resident companies must declare their country of residence, the name and address of any qualifying trading company in Ireland, the name and address of any qualifying quoted controlling company, or else the name and address of the ultimate beneficial owners;

Companies to be incorporated must intend to trade in Ireland, and will have to have at least one Irish resident director or else provide a bond.

Introductory Guides

Brief, clearly written summaries with links to relevant sections of the Fact-File. The Fact-File itself is linked in full below.

Ireland Artist Tax Guide

Ireland Contractor Tax Guide

Ireland Entrepreneur Tax Guide

Ireland Professional Tax Guide

Ireland Small Business Tax Guide

Ireland Sportsperson / Entertainer Tax Guide

Fact-File

Part 1: Business Formation for Individuals

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