IRELAND - Ireland and the United States have entered into an agreement concerning the treatment of Common Contractual Funds (CCF) under the Ireland-United States Double Taxation Convention.
The agreement was entered into at the request of Ireland in order to clarify the transparent nature of the CCF and in order to preserve the tax benefits under the convention of Irish resident unit holders in a CCF.
Ireland and the US had been concerned that difficulties could have arisen concerning the income received by Irish unit holders in a CCF.
According to Sean Langdon, business development manager of the Investment and Development Agency, if a UK company for example, establishes a CCF in Ireland the treaty that will apply will be the UK/US treaty. A UK pension fund would be entitled to receive 10% gross without any withholding tax.
Langdon said: “In the case of an Irish investor, there was a question mark over whether or not the US authorities would look through the vehicle.
“The agreement just clarifies the situation for Irish investors. An Irish investor in a CCF will be no worse off than if they had invested directly.
“Any concerns as to whether a company would wish to domicile in Ireland and set the vehicle up has been abated,” Langdon concluded.
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