Ireland's rules on permanent establishment (PE) are not defined under law, but in practice are in line with OECD guidelines. Generally, a non-resident will be deemed to have a permanent establishment in Ireland, and therefore subject to corporate tax, if engaged in trading activities attributable to a branch or agency in Ireland.

Permanent establishments are further defined under comprehensive tax treaties which Ireland has signed with over 70 countries. The following outlines the key rules pertaining to permanent establishments in Ireland as per the tax treaties, which go into greater detail than the general practice covered above.

The concept of permanent establishment in Ireland is generally consistent across all tax treaties that Ireland has with foreign jurisdictions. As an OECD member, Ireland's treaties are in line with the OECD model. Most treaties concluded by Ireland dictate that non-resident enterprises located in those jurisdictions will be considered to have permanent establishment in Ireland (and vice versa) in the following three scenarios:

Physical PE;
Project PE; and
Agency PE.

Physical PE

A physical PE is defined as a fixed place of business through which the business of an enterprise is wholly or partly carried out. Although exact terms for what constitutes a fixed place PE vary somewhat between Ireland’s treaties, they generally include:

A place of management;
A branch;
An office;
A factory;
A workshop; and
A mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

Project PE

A project PE can take the form of a building site, a construction, assembly or installation project, or related supervisory activities within Ireland. The period of time before a PE is constituted is typically specified as greater than 12 months, but in some agreements can be greater than 6 months, 9 months, or 24 months. In addition, a few treaties specify the time to be 6 months or 9 months within a 12-month period.

Agency PE

An agency PE will be constituted when a dependent agent acts in Ireland on behalf of a non-resident enterprise, and has and habitually exercises an authority to conclude contracts in the name of the non-resident enterprise. However, under some treaties, a PE is not deemed to be constituted if the authority of an agent is limited to the purchasing of goods or merchandise.

Independent agents acting on behalf of a non-resident enterprise will not constitute a PE if the agent is acting in the ordinary course of its business. However, if the agent is devoted wholly or almost wholly on behalf of the non-resident enterprise it will be considered as a PE for the non-resident. Further, more recent treaties may specify that an agency PE is formed if the agent is substantially involved in all the steps leading to the conclusion of contracts, even if these are formally signed without major alterations by the principal.

If an agent is conducting activities included in the following list of activities exempt from PE in general, that agent activity will not constitute PE.

General PE Exclusions

The following preparatory or auxiliary activities do not constitute a permanent establishment in Ireland when engaged in by a non-resident enterprise:

A place for storage, display or delivery of goods only;
A place for maintenance of goods only;
A place for maintenance of goods to be processed by another enterprise;
A place for purchasing goods or merchandise or for collecting information for the enterprise; and
A place for carrying on an activity of a preparatory or auxiliary character for the enterprise.

Additional PE Provisions in Ireland’s treaties

The following PE provisions are included in a limited number of treaties between Ireland and other jurisdictions.

Offshore PE

A person conducting offshore activities in connection with exploration or exploitation of natural resource in Ireland will be deemed to have constituted a PE in Ireland. In most cases there is no specific time-frame before the PE is constituted. When a time frame is provided, it is typically either 30 days, 3 months, or 183 days in a 12-month period. This provision is included in roughly one third of Irish treaties.

Service PE

A service PE is constituted when a non-resident enterprise furnishes services in Ireland, including consultancy services, by the enterprise directly or through employees or other personnel engaged by the enterprise. The period of time before a PE is constituted is either 6 months or 9 months within a 12-month period. This provision is included in roughly one sixth of Irish treaties.

Insurance PE

If an insurance enterprise collects premiums or insures risks in Ireland through a dependent agent, they will be deemed to have a PE in Ireland. Re-insurance is generally excluded. This provision is included in roughly one sixth of Irish treaties.

Controlled PE

If a non-resident enterprise participates directly or indirectly in the management, control, or capital of an enterprise in Ireland that produces, packages, or distributes goods on behalf of the non-resident, it will constitute a PE. A PE will also be constituted when the same individual persons participate directly or indirectly in the management, control, or capital of both enterprises.

Online Supply of Products or Services

Ireland has taken the position that Ireland's existing tax law is neutral in its application to electronic commerce. If all other factors to a transaction remain constant, the tax treatment of an online business transaction will be the same as conventional commerce.

Ireland has adopted the anti-fragmentation rule in line with BEPS Action Plan 7, which is incorporated in its tax treaties through the Multilateral Instrument (MLI). Accordingly, where the relevant tax treaty is a covered agreement for the purposes of the MLI, the above exemptions do not apply effective from 7 June 2017 if the non-resident company is deemed to have artificially fragmented its operations to avoid forming a permanent establishment in Ireland.

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