Companies
Foreign entities: opaque or transparent for Irish tax?
Last updated 16 October 2026
Whether a foreign business, partnership or fund is taxed like an Irish company or partnership depends on a two-stage test from case law. Revenue's approach.
Irish tax law is built around two models. A company is taxed on its own profits ('opaque'). In a partnership, the partners are taxed on their shares of the profits as they arise ('transparent'). Many foreign entities, such as US companies known as LLCs, or foreign limited partnerships, don't fit neatly into either. How an Irish resident is taxed on income from one depends on which it is more like.
Revenue's approach
Revenue looks at each foreign entity on its own merits, using principles from case law. The main cases are the UK case of Memec plc v Commissioners of Inland Revenue and the Irish case of Quigley v Harris. The question is whether the entity is more like an Irish company or an Irish partnership. It is asked for the particular tax rule being applied.
The two-stage test
- Work out the entity's characteristics, rights and obligations under the law of the country where it was set up.
- Compare them, applying Irish law, with those of an Irish company and an Irish partnership, and decide which they match more closely.
Signs an entity is opaque
- it has a legal existence separate from its members
- it issues share capital, or something that does the same job
- it carries on the business itself, rather than its members carrying it on jointly
- members share in profits only when the entity decides to distribute them, not as they arise
- it is responsible for the debts of the business
- the business assets belong beneficially to it, and it can own and transfer them in its own right
- it continues regardless of the death or incapacity of its members
No single factor is decisive. The overall pattern decides, and some factors can matter more for some tax provisions than others. The list isn't exhaustive: the entity's constitution and the legal framework it was formed under need to be examined.
Foreign bodies corporate that act like partnerships
Some foreign entities have separate legal personality, so they could count as a company, but in every other way resemble a partnership. Section 1009A covers these. If the test above shows such a body corporate to be transparent, it and its members are taxed as a partnership and its partners.
Why it matters
- transparent: you are taxed on your share of the profits each year, whether or not they are paid out. Losses may flow through to you, subject to restrictions
- opaque: you are generally taxed only on what the entity distributes to you, and on any gain when you dispose of your interest
Where the answer is unclear, Revenue asks for classification queries to go through the Revenue Technical Service. See asking Revenue for an opinion.
Work it out
Sources
- Revenue: Corporation Tax: basis of charge (12.5% trading, 25% non-trading and excepted trades) (checked 25/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.