Canada – Ireland Double Tax Treaty
Canada – Ireland Double Tax TreatyUpdated on Saturday 23rd January 2021
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Canadian investors interested in opening a company in Ireland can benefit of various tax deductions and favorable business conditions, which were set out in the treaty for the avoidance of double taxation signed between Canada and Ireland. The double taxation agreement was amended in Ottawa in October 2003, thus replacing the initial treaty signed by the two states in 1966. Canadian businessmen who want to find out more details on the provisions of the treaty, from which they can benefit of, can receive an in-depth presentation on this matter from our team of Irish solicitors.
Taxes covered by the double tax treaty
The taxes covered by the Canada – Ireland double tax treaty are applicable to tax residents (citizens and legal entities) of Canada and Ireland. The contracting states have agreed upon the below-mentioned income taxes, as prescribed by the local legislations of each country.
Ireland will apply the following taxes, in accordance with the Irish law:
• the income tax;
• the corporation tax;
• the capital gains tax.
Canadian taxes refer to the income taxes prescribed by the Income Tax Act.
A Canadian company set up in Ireland will be considered a permanent resident of this state, thus paying income taxes here, if the business is established as one of the following:
• a place of management;
• an office;
• a branch;
• a factory or a mine;
• a building site (if the construction lasts for a period longer than twelve months).
Foreign investors who need more details on the taxes applicable to their business in Ireland can receive assistance on this matter from our team of Irish attorneys.
Taxable income under the Canada- Ireland double tax treaty
The treaty stipulates that a Canadian business set up in Ireland will be taxed for its business profits in Canada; the company will be taxed in Ireland only if the business profits are obtained through activities set out in a permanent establishment (PE); at the same time, Irish authorities will tax only the income attributable to that PE.
Withholding tax on dividends is established at 5% for affiliated companies and at 15% in other cases. The interest rate is taxed at the rate of 10%, while the withholding tax on royalties is also set out at 10%.
If you need further information on the Canada- Ireland double taxation treaty, please contract our Irish law firm for assistance on this matter. Canadians who live in the country can also reach out to us for services related to personal or family matters, such as divorce in Ireland.