Susquehanna International - Irish Court of Appeal finds that a US LLC was not a resident of the US for purposes of the US-Ireland treaty

The taxpayers were Irish resident companies whose ultimate parent was a single member LLC (“SIH LLC”), which was fiscally transparent for U.S. tax purposes. SIH LLC was, in turn, owned by a Delaware LLP, the members of which were six Delaware S corporations, each of which was owned by a U.S. resident businessman. Those individuals included the income of the LLC in their income for U.S. tax purposes.

Whether the Irish companies were entitled to group relief (i.e., consolidation of losses) by virtue of a non-discrimination article in the Ireland-U.S. Treaty (the “DTA”) turned on whether SIH LLC was a "resident" of the U.S. Article 4 of the DTA defined "resident of a Contracting State" to mean "any person who under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature."

Allen JA stated that, as “the purpose of the treaty is to avoid double taxation … it stands to reason that it should only apply to persons who otherwise would be exposed to a liability to pay tax. SIH LLC had no such exposure.”

He further suggested that TD Securities (which found a US LLC to be a resident of the U.S. for purposes of the Canada-U.S. Treaty) appeared to be incorrectly decided, stating:

As to Boyle J.'s conclusion that TD LLC must be considered to be liable to tax by virtue of all of its income being fully and comprehensively taxed under the U.S. Code, albeit at the member level, I agree with the judge that this conflated the taxation of the LLC with the taxation of the income and ignored the legal separation between the entity and the members. The DTA applies to persons who are liable to tax, not to income that is liable to be taxed.

The taxpayers’ appeal was dismissed.

Neal Armstrong. Summary of Revenue Commissioners v Susquehanna International Group Ltd & ors [2025] IECA 123 under Treaties – Income Tax Conventions – Art. 4.