Orders in relation to Ireland's DTA's with Portugal and Chile were signed into force on 13 December last.

The SI relating to Chile ratifies on the Irish side the agreement signed earlier this year. The Portuguese SI apparently inserts a new paragraph that deals with the taxation of capital gains in Article 13 of the convention. According to the description offered in the Dáil: “The new paragraph grants Ireland more extensive taxing rights in respect of capital gains arising from the disposal of shares for as long as Portugal does not have a comprehensive charge to tax on such gains. Specifically, in the event that gains from the disposal of certain shares are not subject to tax in Portugal, Ireland can tax such gains arising to an individual for a period of three years after he or she ceases to be an Irish resident. The new paragraph will apply to holdings of shares of at least 5% of the issued share capital or, where the individual's shareholding is less than 5%, the value of the shareholding exceeds £500,000.”

The protocol apparently makes two other amendments to the Portuguese DTA. Again, by reference to the Dáil statement: “The first of these deletes the existing paragraph 2 of Article 13, which deals with capital gains, and replaces it with a new paragraph to put it beyond doubt that Ireland can tax gains arising from the disposal of shares where the immovable property is held by a sub-subsidiary of the company whose shares were disposed of. The second amendment is in the area of nondiscrimination.”

When new DTAs or Protocols are ratified, they normally take effect from 1 January in the year following ratification.

On a related matter tax.point also understands that an amendment relating to the Arbitration Convention is in process, to extend the Convention to the ten new EU accession States.

The full text of the Portugal Protocol is reproduced at 2.01 below.