Establishment Without Incorporation

A branch or permanent establishment of a UK resident company is taxable on its branch profits in Ireland and the UK with a tax credit as described in another section.If the degree of presence does not constitute a permanent establishment, then in principle Irish taxation does not apply. There is quite a low threshold of presence for there to be a permanent establishment.

There is a permanent establishment once there are sufficient elements of the business present to allow it to be conducted from a base within the State.  Any amount of activity or presence sufficient to generate trading activity within Ireland may constitute a (branch/ ) permanent establishment for this purpose.

Deemed equivalent to a permanent establishment for this purpose, is a branch agency receivership or factorship. There are further specific tests in particular contexts.

An agency which merely obtains orders and transmits them and does not conclude contracts would not constitute a permanent establishment.An agent is not regarded as independent in this context, unless having regard to its legal financial and commercial characteristics, the relationship between them is an arms’ length relationship with the non-resident principal.

Double Taxation Relief of Branches

The profits of an Irish branch or permanent establishment/branch of a UK resident company are taxable in Ireland and the UK. There is an exemption available for foreign branches under UK corporation tax subject to election and to compliance with conditions. Detailed UK tax issues arise.

Generally, in double taxation treaties, profits are taxed primarily in the jurisdiction where they are earned, in this case, Ireland. A credit would be given against Irish corporation tax at its effective rate against the UK corporation tax liability in respect of the Irish branch.

In addition, an exemption may be available to remove UK tax liability on the profits earned by a branch or establishment in Ireland. Detailed UK advice would be required.