Corporate Tax in Ireland

The taxation of companies in Ireland

An Irish company will be levied the corporate tax on its worldwide incomes and capital gains. The corporate tax in Ireland is applied for each financial year and the assessment is based on the accounting period. If the accounting period overlaps two financial years, it will be separated and taxed accordingly. The Irish corporate tax is applied to the all the profits earned by a company in a financial year no matter if the income was received in the country or abroad.

A company is considered tax resident if it is registered and managed in Ireland. Ireland also applies the corporate tax to foreign companies on the income a branch makes in the country and on any other income derived from any other immovable property.

What are the rates of the corporate tax in Ireland?

Start-up companies in Ireland benefit from three-year exemption that is reflected in the corporate tax. The exemption applies for a yearly net profit worth 320,000 euros. The relief is connected to the amount paid as related social insurance (PRSI) on behalf of its employees.

The standard rate of the Irish corporate tax is 12.5%. Companies are also charged with the value added tax and this is why they also need to conclude the necessary formalities for VAT registration in Ireland. The tax applied to foreign dividends related to trading profits is 12.5% in Ireland. Dividends arising from other activities are applied the 12.5% only if certain requirements are met:

• - if 75% or more of the profit the company made come from trading activities in an EU country or a country Ireland has a double tax treaty with,
• - if 75% or more of the assets received by the Irish company consist of trading assets.

Irish companies with a 5% shareholding in the paying company in an EU state will be applied the 12.5% dividend tax.

A higher rate of 25% is applied to the following incomes:

• - an untaxed interest from foreign property,
• - other incomes that do fall under any tax assessments,
• - incomes earned from rentals,
• - incomes from mining and petroleum activities.

What are the main reliefs from the corporate tax in Ireland?

Irish companies may benefit from the following corporate tax reliefs:

• - interests and royalties,
• - interests on money borrowed for reinvestments,
• - investments in renewable energy and film projects,
• - investments in the research and development sector.

For details about investment opportunities and incentives please contact our specialists in company incorporation in Ireland.