Anti-base erosion profit shifting (BEPS) measures

Exit Tax provisions

The purpose of the Exit Tax is to prevent companies from avoiding tax when relocating assets.

The rules provide for an Exit Tax on unrealised capital gains. This might occur where companies, without making an actual disposal, migrate their residence or transfer assets offshore. Exit Tax occurs as they leave the scope of Irish tax, by deeming a disposal to have occurred. The current rules came into effect in respect of events which occurred on or after 10 October 2018.

The rate of Exit Tax is 12.5%. However, an anti-avoidance provision is included to ensure that the general rate of Capital Gains Tax (CGT) will apply if:

  • the event, that gives rise to the Exit Tax charge, forms part of a transaction to dispose of the asset
  • and
  • the purpose of the transaction is to ensure that the gain is charged at the lower rate.

Companies may defer the immediate payment of exit tax by electing to pay it in instalments over five years.

Exit Tax will not apply:

  • to assets relating to the financing of securities, which are given as security for a debt or:
    • where the transfer takes place in order to meet prudential capital requirements
    • for liquidity purposes, where the assets are to revert to the Member State of the transferor within 12 months
  • where Ireland retains taxing rights on a subsequent disposal of the assets such as where they remain within the charge to Irish tax
  • if the assets of an Irish-resident company continue to be used in Ireland by a permanent establishment of the company after the company migrates.  

For more information refer to Tax and Duty manual Part 20-02-01 - Exit Tax Provisions.

Note

Chapter 2 of Part 20 of the Taxes Consolidation Act 1997 implements Article 5 of the EU Anti-Tax Avoidance Directive (EU) 2016/1164, transposing the current Exit Tax provisions into Irish law.