When a payment to a foreign software vendor could trigger Irish withholding tax — and why an ordinary arm’s-length SaaS subscription generally does not.

dgm is an independent osFoundry implementation partner — not affiliated with osFoundry’s developer (the company OS LLC), and it has not yet completed any client integrations.

An often-overlooked point: withholding tax on payments to foreign vendors is a narrow case, not the rule — an ordinary SaaS subscription generally triggers no Irish royalty withholding tax.

What the scheme actually gives

  • Patent royalties are subject to a 20% withholding tax under domestic law (treaty relief can reduce this), but other royalties, including software/copyright, are not generally subject to WHT.
  • A standard SaaS subscription is usually treated as a service rather than a royalty, so it does not trigger Irish royalty WHT in the ordinary case.
  • The Outbound Payments Rules (from 1 April 2024) are an anti-avoidance measure aimed at royalty payments to associated entities in zero/low-tax jurisdictions — not ordinary third-party SaaS.

Does it fund buying AI software?

An Irish company paying a normal SaaS subscription to an independent foreign vendor generally has no Irish royalty WHT obligation; contract characterisation matters, so confirm with a tax adviser. A platform such as osFoundry lowers the cost structurally through usage-based pricing and the BYOK principle — which helps more than waiting for support that does not cover software.

Important note

This article is general information and is not legal, tax or grant advice. Tax schemes, grants, rules and rates change, and only the relevant authorities (among them Revenue, IDA Ireland, Enterprise Ireland, the Data Protection Commission and the Central Bank of Ireland) decide eligibility and awards. dgm is not a grant deliverer, approved knowledge provider or intermediary. Always confirm the current terms with the official source or a qualified tax or legal adviser.

How dgm helps

dgm is an independent implementation partner that helps businesses in Ireland adopt osFoundry — from identifying the first practical use case, through building it, to connecting AI to the systems you already use. dgm works independently of osFoundry’s developer (the company OS LLC) and has not yet completed any client integrations; everything above is therefore a description of the service offered, not a delivered result. If you would like to look at a sensible first step, dgm is happy to think it through with you. Arrange a no-obligation conversation with dgm.