Roadmap for the Introduction of a Participation Exemption to Irish Corporation Tax

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The Minister for Finance Michael McGrath has announced a plan to exempt foreign-sourced dividends from Irish corporate tax in a move toward the territorial regime of taxation.

The proposed exemption will take shape over the coming months before being introduced in Finance Bill 2024, with effect from 2025.

The Minister’s Roadmap includes a series of consultation questions inviting views from stakeholders to assist with the specific design of a participation exemption for foreign dividends.

Interested stakeholders will also have the opportunity to provide their views on the possible introduction of a foreign branch participation exemption.  The Minister wishes to assess the potential benefits and impacts of such an exemption before reaching a final decision on its introduction.

Grant Thornton View

The announcement of the roadmap towards a participation exemption on foreign-sourced dividends is a very welcome development.  We would hope that this is closely followed by a foreign branch participation exemption.  The adoption of a full territorial regime will bring Ireland in line with other EU and OECD countries, simplify our corporation tax system and help retain Ireland’s position as the ideal location for international groups during a period of critical change in the global tax environment.

Project timeline

Action Timeline

Publication of project roadmap, including detailed consultation on introduction of a participation exemption(s) to the Irish corporation tax system

September 2023

Close consultation and consider responses

13 December 2023

Consideration of responses & further stakeholder engagement

December 2023 – March 2024

Feedback Statement 1 (Dividend Exemption)

End March 2024

Feedback Statement 2 (Dividend exemption) – if required

Circa July 2024

Finance Bill 2024 – Legislate for dividend exemption to take effect from 2025

October – December 2024