Ireland

Basic taxes (briefly)

Personal tax 20%/40%
Corporate tax (in detail) 12.5% for Trading Income, 25% - Non-trading income
Capital gains tax. Details Capital gains In Ireland are taxed at 33%. Gains on the sale of substantial shareholdings in companies resident in EU member states or a tax treaty country are exempt if certain conditions are satisfied.
VAT. Details The standard VAT rate is 23%. The reduced rates are 13.5% and 9%
Other taxes real property tax, capital acquisition tax, social security contribution
Government fee
Stamp duty 1-7,5%

International tax agreement

   


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TAXATION

Personal Income Tax

Personal income tax is levied on worldwide income and capital gains of residents and ordinarily residents, and Irish-source income and gains from immovable property of non-residents in Ireland.
An individual is resident in Ireland if he/she spends more than six months of the tax year in Ireland, or has a combined presence of at least 280 days in Ireland over that tax year and the preceding tax year. An individual is considered “ordinarily resident” if he/she was resident in Ireland during the previous three tax years.
Taxable income includes employment income, including most benefits.
Since 1 January 2012, the standard tax rate is 20%, the higher rate is 41%. These tax rates apply as follows:
20% 41%
Individuals without dependent children the first €32,800 balance
Single or widowed persons with dependent children the first €36,800 balance
Married couples with one income the first €41,800 balance
Married couples both with income €65,600 balance

Capital gains tax at 33% is charged on gains derived from the disposal of assets.
Tax year for individuals is a calendar year. Tax on employment income is withheld by the employer under the PAYE system and remitted to the tax authorities. The individual must file a tax return by 31 October in the year following the year of assessment and make a prepayment of at least 90% of the final tax due by 31 October in the year of assessment.

Corporate tax

Corporate income tax is levied on worldwide income of resident companies and Irish-source income of nonresident companies.
Corporate tax is imposed on a company’s profits, which consist of business/trading income, passive income and capital gains. Normal business expenses incurred in a trade may be deducted in computing taxable income.
The corporation tax rate is 12.5% for trading income and 25% for nontrading income. Certain dividends from EU and tax treaty territories are taxed at the 12.5% rate.

Capital gains tax

Capital gains In Ireland are taxed at 33%. Gains on the sale of substantial shareholdings in companies resident in EU member states or a tax treaty country are exempt if certain conditions are satisfied.

Dividends

Dividends received by an Irish-resident company from another Irish company are exempt from corporation tax. Dividends received from a foreign company are subject to corporation tax in the period the dividends are payable, but a credit for underlying corporate and withholding tax is generally available for foreign tax paid. Dividends received from a company resident in an EU member state may qualify for an enhanced credit up to the rate of tax on profits in that country.

Losses

Trading losses may be carried back to the immediately preceding period of equal length or carried forward indefinitely.

Tax year

The tax accounting period normally coincides with a company’s financial accounting period, except where the latter period exceeds 12 months.

VAT

Irish VAT is levied on the sale of goods and provision of services.
The standard VAT rate is 23%. The reduced rate of 13.5% is applicable to land and buildings (if taxable), building services, short term car hire, heating fuel, electricity, and waste disposal services. The reduced rate of 9% is applicable to сertain printed matter e.g. newspapers/periodicals, hotel/holiday accommodation, restaurant/ catering services, hairdressing services, cinemas, museums, art gallery exhibitions, certain musical performances, fairgrounds/amusement parks and facilities for taking part in sporting activities (eg golf green fees). Livestock and greyhounds and the hire of horses are taxed at a reduced rate of 4.8%, and exports, books, oral medicine, children’s clothing and footwear – at a rate of 0%.

VAT Registration

The registration threshold for VAT purposes in Ireland is EUR 75,000 per annum where 90% of turnover is from the supply of goods, and EUR 37,500 in most other cases. If the goods themselves are not zero-rated, but are produced from zero-rated raw materials, the threshold is reduced to EUR 37,500 per annum. Nonresidents that make taxable supplies of goods or services in Ireland must register.

VAT tax period and returns

Persons obliged to register for VAT must submit periodic VAT returns, generally bi-monthly; in certain cases however, monthly, four monthly, bi-annual or annual returns may be submitted. Some accountable persons may elect to account for their VAT liability on the basis of cash received in a taxable period rather than on the basis of invoiced sales.

Withholding tax

Dividends and interest paid to a nonresident are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty or exempt under the EU parent-subsidiary directive or the EU interest and royalties directive.
The withholding tax is 20% on patent royalties. All other royalties are exempt. The rate may be reduced under a tax treaty or the payment may be exempt from withholding under the EU interest and royalties directive.

Stamp duty

Stamp duty at rates of 1%-2% is levied on the transfer of property. The top rate of stamp duty for nonresidential property is 2%.
Rate
1% Transfer of certain stocks and shares
0% Issue of shares
1%-2% Transfer of property other than stocks and shares
1%-2% Premiums on leases
of houses, land and other real property
1%-12% Average annual rent reserved by lease (rate depends on the length of the lease)

Government fee

There is an annual return fee in Ireland. For annual returns sent on paper, the filing fees amount to € 40 euro, while for returns that are filed electronically, the fee is €20 euro.

Other taxes and duties

Real property tax levied by the municipal authorities on the occupation of commercial real property (which are deductible in calculating corporation tax liability). Residential real estate is subject to an annual tax at 0.18% on values up to EUR 1 million and at 0.25% on values over EUR 1 million.
Capital acquisition tax comprises principally gift and inheritance tax. Tax rate is 33%.
Social security employers are required to make pay-related social insurance (PRSI) contributions by deducting up to 10.75% from the salary of employees.

Anti-avoidance rules

Transfer pricing: The arm’s length principle should generally be observed, although there are specific transactions, such as interest-free loans, that are recognized and continue to be available in certain situations.
Thin capitalization: There is no specific thin capitalization legislation, but interest paid by a non-trading company to a nonresident non-treaty parent company that owns at least 75% of the Irish payer is generally reclassified as a dividend.
Controlled foreign companies: No
Disclosure requirements: No

Double Tax Agreements

Ireland has entered a whole range of double tax and tax information exchange mechanisms:
  • 73 DTCs: Albania, Armenia, Australia, Austria, Bahrain, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Chile, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Hong Kong (China), Hungary, Iceland, India, Israel, Italy, Japan, Kazakhstan, Korea (Republic of), Kuwait, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova (Republic of), Montenegro, Morocco, Netherlands, New Zealand, Norway, Pakistan, Panama, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Viet nam, Zambia.
  • 27 TIEAs: Anguilla, Antigua and Barbuda, Argentina, Bahamas, The, Belize, Bermuda, Cayman Islands, Cook Islands, Dominica, Gibraltar, Grenada, Guernsey, Isle of Man, Jersey, Liechtenstein, Marshall Islands, Montserrat, Saint Kitts and Nevis, Saint Lucia, Samoa, San Marino, Turks and Caicos Islands, Vanuatu, Virgin Islands, British.

Foreign exchange control

There is no exchange control in Ireland. No restrictions are imposed on the import or export of capital. Repatriation payments may be made in any currency. Both residents and nonresidents may hold bank accounts in any currency.

ACCOUNTS

Accounting records

Every company is required to maintain proper books of account. The company must keep books of account for at least 6 years.

Financial statements

Companies are also required to disclose details of their accounts at the Annual General Meeting (AGM) and to attach a copy of those accounts to the annual return filed with the CRO.
The Companies Acts 1963-2013 require directors of all companies to lay the following accounts and reports before the company members at the AGM:
  • a profit and loss account (or an income and expenditure account if the company is not trading for profit)
  • a balance sheet
  • a directors' report
  • an auditor's report

The annual accounts and directors' report must be signed on behalf of the directors by two directors.
The above-listed documents are required to be annexed to the annual return of a limited company on delivery to the CRO. (Small and Medium companies have certain exemptions). In addition, there must be a certificate, signed by both a director and the secretary, certifying that the accounts and reports are true copies of those laid before or to be laid before the company's AGM.
If a company fails to comply with the requirements of section 7 of the 1986 Act, the annual return will be rejected by the CRO. In addition the company and every officer of the company who is in default will be liable to a fine not exceeding €2,500.
No accounts are required to be annexed to the first annual return which is delivered by a company post-incorporation. This return is required to be made up to the date which is six months after the date of the company's incorporation. Accounts are required to be attached to all subsequent annual returns filed by the company.

Audit

Irish companies are obliged to audit their accounts. However, small companies may be exempt from audit if thee meet two of the following conditions:
  • Balance sheet total not exceeding €4.4 m
  • Turnover not exceeding €8.8 m
  • Employees not exceeding 50

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.


Every Irish company is required to deliver an Annual Return (Form B1) to the CRO once at least in every calendar year.
The annual return of a company is required to be made up in every year to a date which is not later than its Annual Return Date (ARD). The ARD of every company can be checked free of charge on the CRO website. An annual return must be delivered to the CRO not later than 28 days after its effective date. This means that if an annual return is made up to a date earlier than the company's ARD, it should be delivered to the CRO within 28 days after that earlier date. If the 28 day filing period expires on a Saturday, Sunday or public holiday, the 28 day period is extended to the next working day. Where accounts are required to be attached to the return, the filing deadline is either the company's ARD plus 28 days or the company's financial year-end plus nine months and 28 days, wherever is the earlier.
Although not statutorily required to do so, the CRO has a policy of sending an ARD reminder to each company at its registered office in advance of the company’s ARD every year.
Where returns are not filed on time, a substantial late filing penalty must be paid and further enforcement actions may be pursued by the CRO. Returns which are filed late (i.e. more than 28 days after the effective date of the return) with the CRO incur a substantial late filing penalty of €100 with effect from the expiry of the company’s filing deadline, with a daily penalty of €3 accruing thereafter, up to a maximum of €1,200 per return.
Some other enforcement options are open to the CRO in respect of non-filing of annual returns:
  • Prosecution: The CRO prosecutes companies and their directors for failure to file annual returns on time. Companies and directors may receive a conviction in respect of each year that annual returns are outstanding. On conviction in the District Court, the penalty can be up to €1,900 for each offence. A director with three such convictions may be disqualified from acting as a director or having any involvement in the management of any company.
  • Court injunction: Where a notice calling upon a director to comply with a statutory provision under the Companies Acts has been served on him/her and 14 days have elapsed since the date of service, application may be made to the High Court by the Registrar of Companies or the Director of Corporate Enforcement (“the Director”) for an order directing compliance by a defaulting director with the statutory provision in question within such period as the court may specify.
  • Strike off: Any company which does not file its annual return in respect of any one year is liable to be struck off the register and dissolved.

Tax returns

The tax return of a company is due within 9 months of the year-end of the company, but not later than the 21st day of the 9th month after the company’s year-end.
The corporation tax, if any, will be payable in up to three instalments. If the company is a small company (i.e. if its previous year’s tax liability is under €200,000) the company is obliged to pay preliminary corporation tax one month (but not later than the 21st day of that month) before the end of the accounting period, amounting to 100% of the prior years corresponding tax liability or 90% of the current years liability, if the company so wish’s. The balance of tax payable, if any, is payable when the return is being filed.
For start up companies no preliminary tax is payable if the companies taxable profits for its first year trading are less than €200,000. The total tax liability for the accounting period will be payable on the filing of the company’s corporation tax return.

    Taxes of Ireland

    Min. rate for corporate tax 12,5%/25%
    Capital gains tax 33%
    VAT 23%
    Withholding tax 25%/20%/20%
    Exchange control No
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