Bill signals welcome boost
This year's Finance Bill has been noted as being a bit of a 'damp squib' in some quarters, with many of the announcements simply following up on provisions outlined in December's Budget.
However, the biggest news in the Bill was probably the decision to change the double taxation relief crediting rules for foreign branches of Irish companies.
Up until recently foreign tax credits could only be offset against the Irish tax arising on that same item of income, but the Finance Acts in 2004 and 2006 extended the pooling of foreign taxes. However pooling did not apply at all to foreign branches of Irish companies, which placed Ireland at a disadvantage with competing jurisdictions such as the Netherlands and Luxembourg, who had participation exemptions in place for foreign branch operations.
The new measures will enable Irish companies with foreign trading branches to significantly enhance the tax credits they can currently avail of, thus improving their competitiveness vis-a-vis Dutch and Luxembourg companies, and it should therefore greatly facilitate financial service companies who wish to use the EU passport by headquartering banking and insurance operations in Ireland, and then branching into foreign countries.
The 2004 Finance Act first introduced a headquarter regime, and although it did make Ireland a much more attractive location for holding companies/headquarters, its impact was not as far reaching as was hoped.
Despite the IDA's high hopes for the Irish headquartering regime, there have been few announcements, with the aviation financing firm AWAS' decision to transfer its headquarters from Seattle in the US to Dublin at the end of 2006, one of the few.
However, the new regime should provide a welcome boost to the headquarter product, and will be one of the topics on the agenda at the forthcoming 8th Annual Finance Dublin Conference on March 26th and 27th, when a panel of chief executives of US companies based in Ireland will discuss the opportunities an Irish location presents for their firms.
Also to be discussed at the event will be the impact of the convergence of US/European capital markets, and the opportunities/threats for companies as a result, as well as issues of direct relevance to Ireland's international financial services sector. (for more see www.financedublin.com/conference) |
