Ireland’s largest public companies, CRH, Flutter Entertainment and Smurfit Westrock, are on track to be cocooned from the Trump administration’s planned controversial “revenge tax”, as tax advisers warn of the potential impact on other Irish businesses and individuals invested in the US.
A provision in Donald Trump’s One Big Beautiful Bill Act (OBBBA), known as section 899, would allow the US to impose higher taxes of as much as 20 per cent over time on foreign companies, individuals or investors connected to jurisdictions that impose “unfair foreign taxes” on US individuals and companies.
Specified “unfair” taxes include the 15 per cent global minimum effective tax regime that Ireland and other EU countries implemented last year on foot of an agreement, reached in 2021, by members of the Organisation for Economic Co-operation and Development (OECD).
Foreign companies operating in the US that are majority-owned by US investors would not be affected by the special tax, according to the Bill’s wording. Dublin-based CRH, Flutter Entertainment and Smurfit Kappa, each of which has major US operations, are all majority-owned by US investors, according to spokespeople for the three.
Spokesmen for Kingspan and Kerry Group, the next two largest Irish plcs with significant US business, which are believed to be majority-owned by investors outside the US, declined to comment. Companies may dip in and out of scope over time as investor registers evolve.
The US House of Representatives passed the OBBBA last month. A Senate Republican version of the Bill, published on Monday, also includes the revenge tax, even if it proposes that enforcement is delayed by a year until 2027. The Senate version is set to be voted on by July 4th.
“If the provisions are enacted and commenced, it will suddenly become more expensive for an Irish company to have a presence in the US,” said Cormac Kelleher, an international tax partner with Forvis Mazars Ireland. “It could also cause Irish companies planning to set up a business in the US to think twice – and maybe to look at alternative markets. Still, others might just have to take the tax hit, if the US is a very important market strategically for them.”
Section 899 would increase the rate of US tax imposed on companies and investors from what the Senate version calls “offending foreign countries” by 5 percentage points per year, up to a maximum increase of 20 points above the statutory rate. The surcharges would apply to areas including withholding taxes on dividends, royalties and interest as well as income tax on US business.
While the Senate version specifies interest on US bonds would be exempt – providing relief for overseas investors in the country’s $36.2 trillion (€31.4 trillion) government debt market – European investors in dividend-distributing US companies stand to be affected.
Capital gains on investments are not included in this new tax plan.
“It is likely too early at this point for individuals to be able to get a clear picture of how the rules might affect Irish individuals that have US investments,” said Harry Harrison, a tax partner with PwC Ireland. “Individuals holding investments in US stocks should talk to their tax advisers about the potential impacts, but bear in mind it will take time for the companies they have invested in to figure out to what extent they will be affected, and to make this information available to the market.”
The Global Business Alliance lobby group estimates that Section 899 could cost the US 700,000 jobs over time, reduce gross domestic product by $100 billion annually, and negatively impact the value of US assets.
