Double Taxation Treaty between Ireland and Turkey

Although the diplomatic relations between Ireland and Turkey do not stretch back from century old, they have significantly strengthened over the past years. Both the two countries are active members of many European organizations such as the Organization for Security and Co-operation in Europe (OSCE), Organisation for Economic Co-operation and Development (OECD), the Council of Europe, World Trade Organization (WTO) and the Union for the Mediterranean.
 
For business aficionados, the most significant relationship between Ireland and Turkey is the Double Taxation Agreement Between Turkey and Ireland. The treaty was signed in an effort to prevent double taxation and fiscal evasion with respect to taxes on capital gains and income. The terms in the treaty are applicable to persons who are residents of either Ireland or Turkey.
 
 
Irish Tax Regime
In Ireland, Turkish business persons will be imposed with taxes such as:

• The income tax

Income tax is charged on the gross income earned by an entity from its business activities within Ireland

• The corporation tax

Businesses resident in Ireland will be taxed on trading profits they receive from their activities. 

• The capital gains tax

Capital gains tax is applicable on the revenue gained from asset disposal.

 
Turkey Tax Regime
In Ireland, Turkish business persons will be imposed with taxes such as:

• The income tax

Income tax is charged on the gross income earned by an entity from its business activities within Turkey

• The corporation tax

Businesses resident in Turkey will be taxed on trading profits they receive from their activities. 
 
Since the above-mentioned tax criteria are subject to change, every year Irish and Turkish authorities will notify each other of any changes that may have transpired in their respective taxation regulations.
 
 
7 facts you should know about the Ireland-Turkey Double tax treaty

1. Income acquired from immovable property should be taxed in the country in which the property is located.
2. Profits derived from the operation of aircraft, ships, and road transport vehicles shall only be taxed in the respective resident country.
3. A business entity can only be considered as an Irish resident if its business operations are conducted and managed in the Irish territory. 
4. An company or business shall only be considered a Turkish resident, provided that it’s influential management is located in the Turkish territory.
5. If a company is conducting business activities in either Ireland or Turkey through an agent of independent statuses such as a broker or commission agent — it does not automatically become a permanent establishment in the state in which it is operating. The same applies to an entity which is controlled or controls a resident of either the two countries — it does not automatically become a permanent establishment in the state where it is controlling or in the state from which it is controlled.
6. The profits of an Irish or Turkish business are only taxable in the respective countries unless the business conducts business operations either of the two countries through a permanent establishment situated therein. The tax charged in the country where the permanent establishment is located should only be limited to the profits acquired from the establishment.
7. The fees for directors and other similar payments obtained by a resident of Ireland or Turkey should be taxed in the resident country of the respective company where the director works.

 
Conclusion
The Double Tax Treaty between Ireland and Turkey was signed on the 24th of October 2008. Over the years many Turkish and Irish companies have greatly flourished because of the privileges offered by this treaty. As you might have guessed, there is probably more to this treaty not mentioned in this article. For more specific details and assistance about the Ireland-Turkey Double Tax Treaty, don’t hesitate to contact our expert consultants at SIGTAX.