Tax on inbound investment—Ireland—Q&A guide

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Tax on inbound investment—Ireland—Q&A guide
  • 1. What are the differences in tax treatment between an acquisition of stock in a company and the acquisition of business assets and liabilities?
  • 2. In what circumstances does a purchaser get a step-up in basis in the business assets of the target company? Can goodwill and other intangibles be depreciated for tax purposes in the event of the purchase of those assets, and the purchase of stock in a company owning those assets?
  • 3. Is it preferable for an acquisition to be executed by an acquisition company established in or out of your jurisdiction?
  • 4. Are company mergers or share exchanges common forms of acquisition?
  • 5. Is there a tax benefit to the acquirer in issuing stock as consideration rather than cash?
  • 6. Are documentary taxes payable on the acquisition of stock or business assets and, if so, what are the rates and who is accountable? Are any other transaction taxes payable?
  • 7. Are net operating losses, tax credits or other types of deferred tax asset subject to any limitations after a change of control of the target or in any other circumstances? If not, are there techniques for preserving them? Are acquisitions or reorganisations of bankrupt or insolvent companies subject to any special rules or tax regimes?
  • 8. Does an acquisition company get interest relief for borrowings to acquire the target? Are there restrictions on deductibility generally or where the lender is foreign, a related party, or both? In particular, are there capitalisation rules that prevent the pushdown of excessive debt?
  • 9. What forms of protection are generally sought for stock and business asset acquisitions? How are they documented? How are any payments made following a claim under a warranty or indemnity treated from a tax perspective? Are they subject to withholding taxes or taxable in the hands of the recipient? Is tax indemnity insurance common in your jurisdiction?
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Tax on inbound investment—Ireland—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to tax on inbound investment in Ireland published as part of the Lexology Getting the Deal Through series by Law Business Research (published: November 2020).

Authors: A&L Goodbody—Peter Maher; Philip McQueston

1. What are the differences in tax treatment between an acquisition of stock in a company and the acquisition of business assets and liabilities?

In a share purchase, the purchaser assumes the historic tax liabilities of the company. In the case of an asset purchase, the purchaser does not generally assume past tax liabilities of the business.

Stamp duty is generally assessed on the transfer of Irish registered shares at 1 per cent of the consideration, whereas the sale of assets, subject to certain exemptions (eg, non-Irish situate assets, intellectual property and assets transferred by delivery only), may be assessed for stamp duty at the rate of 6 per cent of the consideration due. Stamp duty on transfers of shares of Irish companies that derive the greater part of their value from Irish real estate may, subject to certain conditions, also be assessed at the rate of 6 per cent.

Share sales are exempt from VAT. Irish asset sales are subject to VAT at rates of up to 23 per cent, although full VAT relief can be obtained where, broadly, the assets are being transferred as

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