Written answer
Tax Code
The Minister said alignment of the substantial shareholding and dividend exemptions is under consideration, subject to differing objectives and Exchequer costs.
425. Deputy Emer Currie asked the Tánaiste and Minister for Finance if he will provide an update on his Department’s consideration of requests to amend section 626B of the Taxes Consolidation Act 1997 to align the substantial shareholding exemption more closely with the dividend participation exemption to address the disparity with other jurisdictions who have both exemptions and address the risk of Ireland missing out on investment. [65564/26]
Comment on this
While international tax rules continue to evolve, Ireland remains committed to a tax system that is both competitive and internationally respected.
As part of our ongoing commitment to competitiveness, a Participation Exemption for Foreign Dividends was introduced in Finance Act 2024. The exemption, which applies to qualifying foreign dividend income, simplifies the double tax relief system and enhances Ireland’s attractiveness for multinational businesses. The exemption is available, subject to conditions, in respect of distributions received from qualifying subsidiaries in EEA and treaty partner jurisdictions and jurisdictions that have imposed a non-refundable withholding tax on the distribution.
Section 626B TCA 1997, Substantial Shareholding Exemption, introduced in 2004, provides for an exemption from capital gains tax on certain disposals of subsidiary shareholdings, subject to conditions including shareholding, residence and trading requirements.
I am aware of the request to align the aspects of substantial shareholding exemption regime with the dividend participation exemption, and my officials have been engaging with the industry on this matter.
However, it is worth noting that the two provisions apply to different events - dividend income and gains on disposals - and were designed with different policy objectives in mind, and any amendments to align both regimes would have to be considered in this light. Exchequer cost would also be a factor as any extension of an exemption would not be without cost implications.
Notwithstanding this, as the participation exemption for foreign dividends becomes further established in the tax system, consideration may be given in the future to align the two regimes more closely.