Ireland-India DTAA (Avoid Double Tax on Investments)

Indian residents are turning to Paasa to hold Irish equities such as Kerry Group, Ryanair, or broad Ireland ETFs. Dividend income from these holdings is paid in Ireland and reported in India, which can create confusion about who taxes what and how to avoid paying twice.

The India–Ireland Double Taxation Avoidance Agreement (DTAA) solves this by ensuring your cross-border equity income is taxed only once. This guide explains how the treaty works for dividends, interest, and capital gains, and how Paasa helps you complete the Irish dividend relief (V2) and Form 67 so your post-tax returns reflect a single effective tax.

Table of Contents 

• What is Double Taxation
• Understanding the India–Ireland DTAA
• Residency Rules under DTAA
• Source vs Residence (Who gets to tax what)
• How DTAA Applies to Dividends, Interest & Capital Gains
• How to avoid double taxation?
• Example 1: Interest Income
• Example 2: Dividend Income
• Irish Inheritance/Gift Tax (What the DTAA Does Not Cover)
• Common Mistakes Investors Make
• Conclusion
• FAQs

What Is Double Taxation?

When you earn income in one country but live in another, both countries may try to tax the same income. This overlap is called double taxation.

Example: You are an Indian resident investing in Irish stocks through Paasa.

• Ireland deducts Dividend Withholding Tax (DWT) at 25% from company dividends by default.
• When you file your return in India, you must declare that same income again because India taxes global income.
• Without relief, you would pay both taxes in full, once in Ireland and again in India.

The Double Taxation Avoidance Agreement (DTAA) prevents this by setting limits on tax at source and letting you claim credit in India for tax already paid abroad. For Ireland, you can also reduce DWT by using the treaty 10% cap or by claiming a non-resident exemption (V2 forms) so the payer does not deduct DWT at all.

With DTAA, Ireland limits or removes tax at source, and India gives a Foreign Tax Credit for any Irish tax actually suffered. The result is one effective layer of tax (your Indian rate), not two.

Note: Non-resident investors who qualify can have Irish company dividends paid without DWT by filing Revenue’s V2 form with the payer. In that case, Irish tax at source is 0%, you report the income in India and pay Indian tax there, and there is no FTC to claim. Paasa helps with the V2 process and, and where Irish tax is withheld, with Form 67.

What is the India & Ireland DTAA Treaty?

The India–Ireland Double Taxation Avoidance Agreement (DTAA) makes sure the same income isn’t taxed twice–once where it’s earned (the source country) and again where the investor lives (the residence country).
For Indian residents earning income from Irish shares or Irish-domiciled UCITS ETFs via Paasa, this treaty is what keeps your total tax fair and compliant. (Ireland may deduct tax first; the treaty + India’s credit rules ensure you don’t pay twice.)

While the DTAA covers many income types, this guide focuses only on investing income, specifically:

• Dividends from Irish companies and equity ETFs
• Interest from Irish bonds/debt and interest-type payouts from bond ETFs/funds
• Capital gains on listed shares/UCITS units

In simple terms, the DTAA works through two mechanisms:

1. Allocating taxing rights: It defines which country has the primary right to tax each category of income (e.g., dividends vs. interest vs. capital gains).
2. Granting relief: If both countries tax the same income, your country of residence (India) allows a Foreign Tax Credit (FTC) for tax already paid abroad.

You can read the official India–Ireland DTAA text on this from the Government of India, here.

For a practical investing workflow for this market, read Invest in Ireland from India.

Residency rules under DTAA

The treaty’s first step is to decide where you are a tax resident. If you’re considered a resident in both India and Ireland during a financial year, the India–Ireland DTAA uses a tie-breaker to pick one country for treaty purposes.
For example, if you live in India but spend significant time in Ireland, the tie-breaker decides which country will treat you as its resident for tax purposes. It follows a clear sequence:

• Permanent home: Where you have a fixed home available.
• Centre of vital interests: Where your personal and economic ties are stronger.
• Habitual abode: Where you stay more frequently.
• Nationality: If still unresolved, the country of citizenship applies.
• Mutual agreement: In rare cases, both tax authorities mutually decide.

Understanding residency is crucial because DTAA benefits apply only to residents of one of the treaty countries. For most Indian investors earning Irish equity income (dividends, ETF distributions) or capital gains, India is the country of residence and Ireland is the source country.

Source vs Residence (Who gets to tax what)

The treaty divides taxing rights between the country of source (where the income arises – Ireland) and the country of residence (India).

Here’s how it works for income types relevant to Irish investing:

How DTAA Applies to Dividends, Interest & Capital Gains

When Indian investors earn income from Irish assets such as stocks or equity ETFs, Ireland may deduct tax at source before paying out. This is called withholding tax. Under the India–Ireland Double Taxation Avoidance Agreement (DTAA), this burden reduces. You limit Irish tax to the treaty rate of 10%, and then you claim a foreign tax credit in India for the tax already paid abroad. Let’s see how it works for the most relevant income types:

Dividends

• By default, Ireland withholds 25% on dividends paid by Irish companies.
• Under the DTAA, once relief is applied, the rate comes down to 10% for India-resident beneficial owners.
• The balance Indian tax is paid in India, with a credit for the 10% Irish tax that finally remains.

Note: For most Paasa investors, the final Irish tax is 10% after relief. The initial 25% can be reduced at source or reclaimed. The same 10% can be claimed as a foreign tax credit when filing Indian taxes via Form 67.

Interest

Interest income from bond coupons or ETF distributions classified as interest (not bank deposits) may face Irish source withholding. Under the DTAA, for individual investors the treaty rate is 10%. Relief is by capping Irish tax at 10%.

Example: You receive €30,000 in Irish-source interest.

• Ireland withholds €3,000 (10%).
• In India, at a 30% slab, tax on this interest is €9,000.
• You claim foreign tax credit of €3,000 for the Irish tax that finally remains after relief.
• You pay the balance €6,000 in India.
• Total tax = €9,000 (your Indian rate), not more.

Capital Gains

Under the India–Ireland DTAA and Irish domestic rules, capital gains from the sale of listed Irish shares or UCITS units by an India-resident individual are taxed only in India, not in Ireland.

• Ireland generally does not levy capital gains tax on non-residents disposing of listed shares/UCITS units.
• Indian residents must report and pay capital gains tax in India as part of global income.
• The applicable Indian rate depends on the holding period: long-term capital gains on foreign shares (held for more than 24 months) are taxed at 12.5% without indexation.
• Short-term capital gains (held for 24 months or less) are taxed at the investor’s income-tax slab rate.

How to avoid double taxation?

Once both countries have exercised their taxing rights, the DTAA gives you relief through India’s Foreign Tax Credit (FTC) system under Sections 90 and 91, read with Rule 128.

Here’s how it works:

• If Ireland finally keeps 10% on your dividend (after relief) and your Indian slab rate is 30%, India allows a credit for the 10% already paid abroad.
• You pay only the remaining 20% in India so that your total equals your Indian rate, not both countries added together.

Note: Paasa helps streamline this flow with clear income summaries, Irish DWT relief documentation support, and ready-to-file Form 67 figures so every rupee earned abroad is taxed only once.

Example 1: Interest income

Imagine an Indian investor holding an Irish corporate bond that pays annual coupons. The coupons are interest income.

• When those coupons are paid while the person is living in India, Ireland may withhold 20% at source if relief is not in place.
• Under the India–Ireland DTAA, the final rate for individuals is 10%. You apply relief so the rate comes down to 10%.
• Since the person is an Indian tax resident, India also taxes that same income as part of global earnings.
• Under the DTAA, the individual can claim a Foreign Tax Credit (FTC) in India for the 10% Irish tax that finally remains.
• Effectively, they pay only the difference in India if India’s rate is higher, not the full amount twice.

Example: Suppose an Indian investor receives €25,000 of coupon income this year while living in India.

Paasa’s role:

• Paasa guides investors through the Irish documentation so the treaty 10% rate is applied correctly and prepares ready figures for Form 67 so the FTC is claimed correctly in India.
• We keep payout breakdowns and Irish tax vouchers organized, reducing source-tax drag and protecting long-term returns. 

Example 2: Dividend income from Irish stocks and ETFs

An Indian investor using Paasa may hold individual Irish stocks like Kerry Group plc or Ryanair Holdings plc, or equity ETFs with Irish exposure.

• Irish companies pay regular dividends, and Ireland withholds 25% at payment by default.
• Under the India–Ireland DTAA, you apply treaty relief to reduce this to 10% if you are an India-resident beneficial owner.
• In India, you must still declare the dividend and claim a Foreign Tax Credit (FTC) for the 10% finally kept by Ireland.

How DTAA helps

• The 10% Irish tax that remains after relief can be claimed as FTC in India through Form 67.
• If your Indian slab rate is 30%, you pay only the remaining 20% in India, so your total stays 30%, not 25% + 30%.
• Compliance stays straightforward with Paasa’s relief guidance and ready FTC figures.

Example: Let’s say an Indian investor using Paasa holds Kerry Group plc and receives €20,000 in annual dividends.

Paasa’s role: Paasa guides investors through the Irish relief process and the Form 67 credit step so that global income is reported correctly and DTAA benefits apply automatically.

Irish Inheritance and Gift Taxes (What the DTAA does not cover)

Many Indian investors holding Irish equities are unaware that inheritance and gift taxes are outside the India–Ireland DTAA. The treaty covers taxes on income only.

• Inheritance and gift tax in Ireland is charged under Capital Acquisitions Tax. A charge arises if either the person giving the asset or the beneficiary is resident or ordinarily resident in Ireland, or if the asset is situated in Ireland. Where neither party is Irish-resident and the asset is not situated in Ireland, CAT does not apply to movable assets such as listed shares.
• Ireland does not have a wealth tax. Non-residents are not charged an Irish wealth tax on portfolio shares.

Paasa’s role: Paasa helps investors stay organized for succession and tax filing by providing clear dividend and transaction statements, guidance on Irish documentation where needed, and records that keep global equity income compliant, so it is simpler for heirs to step in if needed.

Common Mistakes Investors Make

Even seasoned investors slip up when managing Irish equity income across two tax systems. These aren’t about intent, just clarity. Here are the most common ones to avoid:

Assuming Irish withholding is automatically adjusted in India
The 25% Irish DWT deducted on company dividends does not sync with Indian filings. You must get relief to 10% or 0% at source first and then use Form 67 for the credit in India.

Skipping Form 67 submission
Missing Form 67 can forfeit your Foreign Tax Credit, even if Irish tax was capped at 10%.

Not reporting foreign assets in Schedule FA
Every overseas brokerage account and security must be disclosed in your Indian return. Non-disclosure can trigger scrutiny later.

Confusing inheritance/gift taxes with double taxation
The India–Ireland DTAA covers income taxes only. Irish Capital Acquisitions Tax (inheritance/gifts) is separate. Don’t mix this with dividend withholding or FTC.

Forgetting the treaty mechanics on dividends and interest
Ireland withholds 25% at payment on company dividends. Under the DTAA, you reduce to 10% (or 0% with V2 at source) and then claim FTC in India only for what finally remains. For interest, the treaty cap is 10%; bank/deposit interest is outside this guide.

Claiming credit for the wrong amount
You cannot claim FTC for the full 25% deducted at payout or for any foreign withholding suffered inside Irish UCITS on their own holdings. Credit only the 10% (or the actual Irish tax that remains after relief), capped by Indian tax on that income.

Relying on W-8BEN for Ireland
W-8BEN is a U.S. form. It does nothing for Irish withholding. Use Ireland’s V2 process with your TRC for company dividends, and the fund’s non-resident declaration for UCITS.

Conclusion

The India–Ireland DTAA ensures that Indian residents earning from Irish equities pay tax only once on their global income. Using Irish relief to reach the 10% treaty rate and claiming credit in India helps you stay compliant and protect post-tax returns.

About Paasa

Paasa is an Indian investor’s gateway to compliant global investing, trusted by HNIs, family offices, and professionals with overseas income. It helps you diversify into markets across the U.S., Europe, Japan, and more.

What sets Paasa apart is its India-first compliance layer for cross-border investors:

• FEMA, LRS, and DTAA alignment built into every transaction and cash flow.
• Integrated tax analytics and reporting for Indian residents investing abroad, covering LTCG, STCG, dividend tax, and TCS tracking.
• End-to-end support for remittances, reconciliation, and tax-credit documentation such as Form 67.

Whether you invest in U.S. equities, UCITS ETFs, or curated global equity strategies, Paasa provides one transparent platform to keep your portfolio aligned with India’s tax and regulatory framework.

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Disclaimer

This article is intended for information only and does not constitute investment, tax, or legal advice. The material is based on public sources and our interpretation of current regulations, which may change. Investing in global markets entails risks, including currency risk, political risk, and market volatility. Past performance does not predict future outcomes. Please seek advice from qualified financial, tax, and legal professionals before acting.