Ireland Enhances Its Leasing Regime

New tax credit for non-treaty withholding taxes

Ireland is a world-leading jurisdiction for leasing business and has recently improved its tax regime for cross-border leasing.  Irish lessors have always been entitled to the benefit of Ireland's wide tax treaty network (currently 66 tax treaties).  Tax treaties play a key role in Ireland's successful leasing industry by reducing or eliminating withholding taxes on inbound lease rental payments.  Tax treaties also allow Irish lessors to claim tax credits against their Irish corporation tax for any unrelieved foreign withholding taxes.  However, until recently, an Irish lessor could not claim a similar tax credit for foreign withholding taxes where no tax treaty applied.  In a welcome development, an Irish lessor carrying on a trade in Ireland may now also claim a tax credit for foreign withholding taxes on lease rentals where there is no applicable tax treaty.  The relief is granted on a unilateral basis by