Irish Tax Issues on UK Transactions

When an Irish resident individual undertakes an investment or has dealings with England and Wales UK tax may arise. UK income tax and companies tax will be charged on income from an asset situated in the United Kingdom, irrespective of the fact that the recipient resides in Ireland.

 

In the case of business, UK taxation will only apply where the business establishes a branch or subsidiary within the United Kingdom. The UK has enacted special anti-abuse legislation to prevent UK based companies avoiding tax. A UK based company will itself be subject to overseas tax if it has branches or subsidiaries outside the UK or earns income from a source outside the UK.

 

In addition to UK tax implications, transactions and dealings with or in the UK will raise Irish tax issues for individuals who reside or ordinarily reside in Ireland and companies who are controlled in Ireland. Where an individual or company is resident in Ireland, Irish taxation will also apply by reason of residence. Because UK taxation may also arise on the same income, double taxation relief will generally be available to ensure that a credit is given in Ireland for tax charged in the UK and vice versa. There are particular provisions in relation to double taxation relief for dividend income.

 

The UK does not charge CGT on gains to most individuals and companies who are neither resident nor ordinarily resident in the UK. This is an unusual exemption and there is no equivalent exemption in Ireland. There are some situations in which UK capital gains tax can arise for Irish individuals and companies with branches in the UK.

 

Value Added Tax (VAT) is a European Union wide tax. It is designed specifically so as to facilitate trade within the EU. The Irish VAT treatment of transactions with countries outside the European Union is different to those within the European Union. There are special VAT rules on the supply of services abroad. There are also special rules where a business undertakes distance sales from Ireland into another EU country.

 

Irish Inheritance tax is significantly different from its UK equivalent. There are scenarios in which Irish Inheritance Tax and UK Inheritance Tax can apply There is a double taxation relief for where the same benefit is taxed under UK and Irish Inheritance Tax.

This information on this website is intended as an overview and broad outline of the matters covered in it. Its purpose is to inform and raise awareness. We are happy to offer specific legal advice on particular circumstances. Our guides should not be relied on as a substitute for comprehensive legal advice with reference to the particular circumstances. While we have taken due care in their preparation, we do not accept legal liability as a result of any reliance placed on anything in the guides. The reader should rely only on specific legal or taxation advice.