Revenue eBrief No. 47/16 Revised tax treatment of royalty income, with effect from 1 January 2016, under the terms of the Ireland – Estonia Double Taxation Convention 1997
Ireland’s Double Tax Convention (DTC) with Estonia came into effect in 1999. It contains a provision whereby the tax treatment of royalty income under the Convention may be revised if more favourable terms are subsequently agreed by Estonia with another OECD country. Estonia has recently agreed such terms with Switzerland and those terms are now to apply to the Ireland-Estonia DTC with effect from 1 January 2016.
The new Estonia – Switzerland Protocol provides that royalties are taxed only in the residence state and amends the definition of royalties to exclude payments for the use of, or the right to use, industrial, commercial or scientific equipment. This Protocol entered into effect on 1 January 2016.
Accordingly Article 12 of the Ireland-Estonia DTC should be regarded as having been amended, with effect from 1 January 2016, in accordance with the terms of the Estonia-Switzerland Protocol. Source state taxation no longer applies and payments for the use of, or the right to use, industrial, commercial or scientific equipment no longer come within the scope of Article 12.
Source: Revenue Commissioners. www.revenue.ie. Copyright Acknowledged.