Tax System in Ireland

It is mandatory for all Irish companies to register for Corporation Tax within one month of trading. The process typically takes up to 2 weeks but may take longer depending on the volume of registrations at the time. The Corporation Tax rate in Ireland currently stands at 12.5% and 6.25% for companies involved in Research and Development. Companies with non-resident directors may need to demonstrate an active trade in Ireland to successfully register.

Residence - A corporation is resident in Ireland if it is managed and controlled in Ireland or, in certain circumstances, if it is Irish-incorporated. Specifically, companies incorporated in Ireland from 1 January 2015 are deemed to be tax resident in Ireland, while companies incorporated before that date will be deemed to be resident in Ireland from 1 January 2021 (subject to some exceptions that may apply where there has been a change of ownership, which can result in the company being treated as resident in Ireland from the point of change of ownership). However, these incorporation-based residence rules will not apply to Irish-incorporated companies that are currently tax resident in a treaty country under the terms of tax treaty between Ireland and that country (competent authority approval confirming place of residence may be required), nor will they apply to non-Irish incorporated companies that are resident in Ireland by virtue of management and control.

Basis - Irish tax resident companies are subject to corporation tax on worldwide profits and gains; foreign-source income derived by resident company carrying on business abroad though a branch or permanent establishment generally will be subject to tax in Ireland at a rate of 12.5 % on the profits of the foreign business.

Where a company is not tax resident in Ireland, it is applicable to income tax on Irish-source income and capital gains tax in respect of specified assets (i.e., land and buildings located in Ireland or shares deriving the greater part of their value from such assets). Alternatively, where a foreign company operates an Irish branch, it is subject to Irish corporation tax on profits and gains attributable to the branch.

Taxable income - Corporation 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

Rate - The corporation tax rate is 12.5% for trading income and 25% for nontrading income. Certain dividends from EU and tax treaty jurisdictions are taxed at the 12.5% rate

* A company will lose its audit exemption if it misses an annual return or its turnover exceeds €6 million.