Ireland Announces Budget 2019: Government Introduces Tax On Assets Exiting State

; posted on
October 12th, 2018

Ireland’s Minister for Finance and Public Expenditure and Reform announced Budget 2019. A new tax charge on multinational companies moving assets out of Ireland was introduced as a feature in the budget.

Background and purpose

The exit tax is set to prevent the ability of these companies to engage in tax planning. This follows the decision of a number of major multinationals to move their intellectual property (IP) assets to Ireland in recent years, following restrictions and bad publicity relating to the previous use of offshore tax havens to house these assets. By imposing exit tax, it is expected that the company will keep their IP within Ireland, and the Government is unlikely to count in new tax revenues on foot of the move.

Exit tax on capitals gains

Multinational companies (MNCs) moving assets offshore to another tax jurisdiction are subject to an exit tax charge of 12.5%, which comes into effect on 10 October 2018. The tax would be levied on unrealized capitals gains, meaning the amount of capital gain derived from the difference between the market value of the assets at the time of the transfer and the value of the assets for tax purposes.

Although the new exit tax will cause a burden on asset outbound transfer, at least the rate is more favourable than the main capital gains tax rate of 33 percent, putting the rate in line with the corporate profits tax rate they face.

Sources: Budget Summary, Irish Times, Independent

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