Ireland’s existing interest limitation rules are different in structure to the new Anti-Tax Avoidance Directive that requires EU member states to implement an interest limitation to a maximum of 30 per cent of EBITDA. Integrating the new rules will present three particular challenges for Ireland, says Nora Cosgrove. One of these will be ensuring that the rules take into account the aggregate position of Irish resident entities, particularly with respect to domestic provisions requiring the use of a debt financed holding company to make an acquisition.
Meanwhile, the existing provisions in respect of Ireland’s Research & Development tax credit have also come under the spotlight with the commencement of a review of its effectiveness under the Department of Finance’s tax expenditure guidelines. The fact that over three quarters of respondents in a recent survey identifying the credits as either ‘important’ or ‘critically important’ in investment decisions on the location of mobile R&D investment is a clear indicator of the need for caution in making any changes to the existing provisions. David O’Connell also points out that the current scheme’s qualifying criteria for the scheme ensure that high added-value R&D is supported over more routine development.