clover leaves of Ireland

Ireland is one of the most sought-after countries to incorporate in Europe and European Union. A huge amount of multinational organizations has headquartered in Ireland (at least their European offices), mostly due to the taxation benefits provided to them by the local government. To name just a few from the titans in Technology, Pharma and Finance industries, there is Facebook, LinkedIn, Twitter, Google, Apple, GSK and Pfizer. Ireland is second only to Singapore for attracting foreign investment.

Below you can find the full insight on Ireland’s taxation. We will start with the corporate tax which is one of the lowest in Europe at 12.5% for trading activities. The passive rate is set at 25% and is applied for business that operate internationally and have no Irish-sourced income, land dealing, mining and petroleum extractions.

The same rates apply for a branch office establishment. However there is no withholding tax for profit repatriation to the mother company.

The corporate tax is applied to an Irish company on their worldwide income. The residency is determined by the fact that a legal entity is i) Ireland-registered, ii) included in the Irish Business Register and iii) the management is residing in Ireland. Even if an Irish company respects all requirements above, a company can be declared as non-resident under a Double Tax Treaty exemption, if it is considered resident in another DTA country.

Value added tax is set on the higher side at 23% for most goods and services. There are 3 reduced rates of 13.5% for power, fuel and some services, 9% for some tourism and entertainment services and 0% for exports, some medicine and children’s clothing.

An Irish-incorporated company needs to abide by the following filing requirements:

  • Annual tax returns and financial statements are to be filed within almost 9 months from the financial year end;
  • Vat returns are to be filed every two months;
  • Audit is required for most of the legal entities incorporated in Ireland, and must be filed within 9 months of the financial year end;
  • Consolidated returns are not allowed;
  • Filing is electronic;

Some additional considerations:

  • Withholding taxes are 20% for dividends, interest and royalties;
  • Real property tax is levied at 0.18% or 0.25%;
  • Stamp duty also applies at a rate between 1% – 2%;
  • Companies are required to contribute to the social contributions; the pay-related social insurance (PRSI) tax rate is set at 10.75%;
  • If the legal entity is active, trading company and has a registered IP, it can claim tax deduction of 100% from the IP-generated profits;
  • Start-up companies registered and that started active trading between 2009 and 2018 and which have a payable corporate tax amounting to below €40,000 can take advantage of a 3-year tax holiday;
  • Ireland has signed 73 Double taxation relief treaties.

According to the PWC tax guide for 2018, Irish accounting and taxation rules allow for deductions for trade expenses, such as below:

With our business owner being Irish, Healy Consultants Group PLC has been assisting Clients to set up Irish businesses for over 15 years. Let us know if you have further questions about accounting and tax regime in Ireland by contacting us at email@healyconsultants.com or +6567350120.