UPDATE 1-James Hardie to switch domicile to Ireland

* Hardie shifting domicile from the Netherlands to Ireland

* Sees favourable tax treatment, improved company structure (Adds details)

WELLINGTON, June 24 - Australian building materials group James Hardie Industries <JHX.AX> is to shift its corporate domicile to Ireland, partly to reduce its tax payments, the company said on Wednesday.

James Hardie, which moved its domicile from Australia to the Netherlands in 2001 and had been mulling a further shift, said the move would cost its between $51 million and $71 million.

Moving to Ireland would provide greater certainty over its tax treatment by U.S. authorities, simplify its governance structure to a single board of directors, and allow most shareholders to receive dividends free of withholding tax.

"The proposal will not change the overall commitment of James Hardie to make contributions to the Asbestos Injuries Compensation Fund," Chief Executive Louis Gries said in a statement.

The company, once Australia's largest asbestos maker, agreed to set up the fund after several years of negotiations with state governments, unions and former workers, and made its first payment in 2007.

Hardie said that if a payment to the fund was due in its 2011 financial year, which is not yet known, it may be reduced by costs associated with the move, but in the longer term the switch may boost contributions by increasing the company's cash flow.

Shares in Hardie, which earns up to 80 percent of its revenue in the U.S., were down 1.9 percent at A$4.07 in early trade in a broader market up 0.3 percent.

The stock has fallen 12 percent so far this year, compared with a 4 percent rise in the benchmark S&P/ASX 200 index <.AXJO>, as it continued to struggle amid the U.S. housing slump.

Shareholders will vote on the move at a special meeting to be held in Amsterdam on Aug. 21.

Hardie had examined moving the company to the U.S., or back to Australia, but rejected those options due to the tax implications for shareholders.

In May the company reported a 57 percent dive in fourth-quarter operating profit, but said it believed the housing slump was near the bottom.

Hardie said it was suspending its dividend to preserve capital as it concentrates on on cutting costs and increasing its market share to cope with the downturn. ($1=A$1.29)