45. Deputy Shay Brennan asked the Tánaiste and Minister for Finance if his Department will examine the need for closer alignment of the substantial shareholding exemption with the dividend participation exemption, to ensure that Ireland remains a viable holding company location for global investment activities. [35514/26]

Ireland’s corporation tax approach has been consistent for many years – a low rate on a broad base, providing stability and certainty for businesses. The intent has been to provide a consistent and predictable framework, supporting long-term investment decisions and Ireland’s position as a key location for multinational activity.

Despite the major changes to the corporation tax landscape over the last number of years in response to global changes, Ireland remains committed to having an internationally credible and competitive tax regime.

In line with our continuing commitment to competitiveness, a Participation Exemption for Foreign Dividends was introduced in Finance Act 2024. It exempts qualifying foreign dividend income from Irish corporation tax and was introduced to simplify double tax relief and enhance Ireland’s competitiveness for multinational businesses.

The substantial shareholding exemption, namely Section 626B Taxes Consolidation Act 1997, was first introduced in 2004 and provides for an exemption from tax in respect of certain capital gains arising from the disposal of holdings in subsidiaries. Certain conditions must be met before a gain can be exempt, including a shareholding requirement, a requirement concerning the investee company’s residence and a trading requirement.

The two provisions operate in respect of different events – the receipt of dividend income and a gain on disposal of a shareholding – and the individual criteria were developed with those circumstances in mind. However it is expected that, as the participation exemption for foreign dividends becomes further established in the tax system, consideration may be given in future to any potential to align the two regimes more closely, having regard to the core principles outlined above.