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On 23 June 2016,  the UK electorate voted to leave the European Union.The process of exit may well take up to two years and over the coming months negotiations will ensue on the specific terms of the departure. At this stage it remains unclear what an exit will look like, in particular whether the UK will maintain access to the Single Market which is key in terms of its trading relationship with other Member States, most notably Ireland. What is clear, however, is that many Irish businesses will be impacted by the UK’s decision.We have already seen the volatility in sterling and this will no doubt have an impact on the Irish export market.  It is also expected that lower economic growth in the UK will have an adverse impact on Ireland’s GDP.

Purely from a tax perspective, Brexit could have widespread implications such as;

• Import VAT on imports from the UK

• Withholding tax on certain payments between Irish and UK companies

• Applications of tax reliefs which only apply within the EU

Brexit may also present an opportunity for Ireland, with our EU status meaning that we are a more active proposition for FDI vis-à-vis the UK. However, it has also been suggested that the UK will look to reaffirm its FDI offering through the adoption of more competitive corporate tax policies which would not be subject to EU scrutiny. We have already seen (the now former) chancellor of the Exchequer George Osborne announce plans to reduce the corporation tax rate in the UK to under 15%.The full impact of Brexit will become clearer as negotiations progress over the coming months and years.

Our dedicated Brexit webpage will keep you up-to-date on the key details as they emerge.



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