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Ireland: Offshore Legal and Tax Regimes

The Shannon Free Zone

The Shannon Free Zone, administered by the Shannon Free Airport Development Company Ltd, was one of Ireland's earliest tax-reduction initiatives. In order to establish an operation in the Free Zone, a licence is required under the Customs Free Airport (Amendment) Act 1958; this is issued by the Minister for Enterprise and Employment. A certificate entitling a company to the tax benefits of the Free Zone (10% corporation tax rate, VAT and customs duty exemptions, etc, although see below for implications of the 12.5% tax regime) is issued by the Minister for Finance. A wide range of activities can qualify for licenses and certificates, including:

  • The repair and maintenance of aircraft; or
  • Trading activities in regard to which the Minister for Finance is of the opinion, after consultation with the Minister for Transport, that they contribute to the use or development of the Shannon Free Zone; or
  • Trading activities which are ancillary to either of the above or to any operation consisting of the manufacture of goods; or
  • Activities relating to the acquisition, disposal, licence, sub-licence and exploitation generally of intellectual property rights.

It is important to remember that the Free Zone, like the IFSC in Dublin, was primarily a job-creating measure.

Existing companies in the Free Zone had certificates giving tax benefits until the end of 2005. After that, the tax rate increased to the 12.5% mainstream rate of corporation tax agreed by the Irish Government with the EU, which came into force generally from 1st January 2003. Companies which obtained certificates during 1999 had the 10% rate only until the end of 2002. However, unlike entry into the IFSC, which was quota-limited during 1998 and 1999, no quota was set for entry into the Free Zone, which will continue to operate fully other than in respect of the special corporation tax rate.

 

 

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