A foreign corporate investor may invest in Irish property directly, or through a local Irish subsidiary company. The selection of the appropriate structure for an Irish property investment should be heavily influenced by a consideration of the tax issues that are likely to be relevant to that investment, such as the rate of tax applying to Irish profits, the tax rules applying in the investor’s home country and the investor’s plans in relation to the repatriation of profits generated in Ireland.
If it is anticipated that the Irish investment will be in a loss-making position for tax purposes, or will only generate small profits in the initial years, there is probably little merit in seeking to defer taxation in the investor’s home country. In these circumstances, a branch of a company that is tax resident in the investor’s home country may be the most suitable structure.
Where the Irish operation is generating significant taxable profits, the structuring decision is likely to be more complex. The primary aim of the structuring decision in this situation might be to defer home country tax on Irish source profits either permanently or until such time as those profits are repatriated. However, other factors that will inform the structuring decision include the investor’s future plans for utilisation of the after-tax profits earned in Ireland, and the potential application of anti-avoidance legislation such as controlled foreign corporation legislation in the investor’s home country.
On a related note, Ireland is increasingly being selected as the low-taxed ‘principal’ company in a number of key global corporate structures. These structures provide a robust and sustainable platform to manage a group’s international business and also help deliver a tax efficient result. Many of our multinational clients have successfully implemented the structures outlined in this document.
Source : PWC