Investing in Ireland

Taxation

Ireland has developed favourable and globally competitive tax regimes for companies including competitive corporate tax, holding company regimes, R&D and IP credits.

The Irish corporate tax system has evolved gradually from the income tax system introduced in 1853. Its main distinctive element, the general relatively lower rate of 12.5%, evolved as a response to the end of the country’s policy of self-sufficiency, the need to attract inward investment and the later impact of EU rules against preferential tax rates.

Ireland’s corporation tax rules state that a company that is resident in Ireland is taxable on its worldwide profits and that a company which is trading in Ireland through a branch or agency, is only liable in respect of the profits that are attributable to that branch or agency.

Ireland’s personal income tax rules state that an individual’s liability to Irish income tax depends on their residence status. This status is determined by the number of days that they are present in Ireland in a tax year. An individual will be resident in Ireland for a tax year if they spend 183 days or more in Ireland during a tax year, or if they spend 280 days or more in Ireland over a period of two consecutive tax years, whereby they will be regarded as resident for the second tax year.

Persons who are resident and domiciled in Ireland for tax purposes are subject to tax on their worldwide income. Non-Irish-domiciled individuals who are resident in Ireland are taxable in Ireland on Irish source income (including foreign employment income referable to duties exercised in Ireland) and foreign investment income where that income is remitted to Ireland.

Favourable Corporate Tax Rates

Irish tax resident companies benefit from one of the lowest corporation tax rate of 12.5% on trading profits and certain distributions received from foreign trading subsidiaries. The scope of activities considered to be trading is broad and can include the development and exploitation of Intellectual Property. A company is tax resident in Ireland if it is incorporated in Ireland and if Ireland is the place of central management and control of the company.

Favourable Holding Company Regime

The principal benefits of locating a holding company in Ireland are the exemption from the charge to Irish capital gains tax in respect of the disposal of qualifying shareholdings in subsidiaries and the beneficial regime for the taxation of foreign dividends.

Research & Development & Intellectual Property Tax Credit

Irish tax law also contains reliefs for expenditure in relation to intellectual property and research and development. Ireland has an R&D Tax Credit to incentivise companies to undertake new and/or additional R&D activity in Ireland. This is available to Irish tax resident companies engaged in in-house qualifying R&D undertaken within the European Economic Area (EEA). R&D credits combined with corporate tax provides substantial tax deductions and credits. Companies located in Ireland can also potentially avail of favourable tax treatment in relation to intangible Intellectual Property assets transferred into Ireland.

Taxation Benefits

There are some very compelling reasons to establish a company in Ireland. These include:

  • the availability of a 12.5% corporation tax rate for trading activities;
  • a capital gains tax (CGT) exemption on disposals of subsidiaries by Irish holding companies;
  • tax relief for foreign dividends;
  • tax relief for expenditure on research and development (R&D);
  • reduced tax on income arising from certain patents and other intellectual property;
  • reduced CGT rates on disposals by entrepreneurs;
  • relief from corporation tax for certain startup companies;
  • stamp duty exemption on intellectual property transfers;
  • an extensive double-tax-treaty network;
  • industry standard transfer pricing rules;
  • full or partial exemption from withholding tax on interest payments to EU/treaty countries;
  • full or partial exemption from withholding tax on dividend payments to EU/treaty countries;
  • moderate income tax rates;
  • tax reliefs for workers assigned from abroad to take up a position in Ireland.
  • a tax deduction for employees who carry out part of their employment duties in a range of key Irish trading markets
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