Tax in Ireland

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Reasons for establishing a company in Ireland

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

  • the availability of a 12.5% corporate 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)
  • stamp duty exemption on intellectual property transfers;
  • an extensive double-tax-treaty network;
  • industry standard transfer pricing rules;
  • no withholding tax on interest payments to EU/treaty countries;
  • no withholding tax on dividends to EU/treaty countries;
  • moderate income tax rates;
  • tax reliefs for workers assigned from abroad to take up a position in Ireland.

 

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Tax incentives available for companies

  • CGT exemptions on share disposals
  • Research and development credit
  • Extensive double-tax-treaty network

 

See the brochure for details of all of the above

Ireland has double-tax treaties with the following countries:

  • Albania
  • Armenia (signed 14 July 2011 – not yet in effect)
  • Australia
  • Austria
  • Bahrain
  • Belarus
  • Belgium
  • Bosnia & Herzegovina (signed 3 November 2009 – not yet in effect)
  • Bulgaria
  • Canada
  • Chile
  • China
  • Croatia
  • Cyprus
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • France
  • Georgia
  • Germany
  • Greece
  • Hong Kong
  • Hungary
  • Iceland
  • India
  • Israel
  • Italy
  • Japan
  • Korea
  • Kuwait (signed 23 November 2010 – not yet in effect)
  • Latvia
  • Lithuania
  • Luxembourg
  • Macedonia
  • Malaysia
  • Malta
  • Mexico
  • Moldova
  • Montenegro
  • Morocco  (signed 22 June 2010 – not yet in effect)
  • Netherlands
  • New Zealand
  • Norway
  • Pakistan
  • Panama (signed 28 November 2011 – not yet in effect)
  • Poland
  • Portugal
  • Romania
  • Russia
  • Saudi Arabia (signed 19 October 2011– not yet in effect)
  • Serbia
  • Singapore
  • Slovak Republic
  • Slovenia
  • South Africa
  • Spain
  • Sweden
  • Switzerland
  • The Republic of Turkey
  • United Arab Emirates
  • United Kingdom
  • United States
  • Vietnam
  • Zambia

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These agreements cover direct taxes, which in the case of Ireland are income tax, corporation tax and capital gains tax. 

Ireland’s double-taxation agreements contain the following important mechanisms for avoiding double taxation:

  • the elimination or reduction of withholding taxes;
  • the reduction in territorial scope of taxation of certain forms of income and gains from taxation, in particular by reference to permanent establishments;
  • credit for taxes;
  • residence tie-breaker clauses;
  • procedures for the resolution of disputes between two competing claims of tax authorities, typically in transfer pricing situations;
  • non-discrimination provisions.

Where a double-taxation agreement is not in place with a particular country, domestic Irish tax law provides for unilateral relief against double taxation in respect of certain types of income. 

 

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How individuals are taxed

 Tax type

Income tax

Income tax is payable on Irish-source income and on income for services performed in Ireland.

Social security (PRSI) and universal social charge

 

Employed persons are compulsorily insured under a State-administered scheme of pay-related social insurance (PRSI). Contributions are made by both the employee and the employer on all employment income, including benefits in kind. 

Taxation of foreign workers in Ireland

 

A foreign executive coming to work in Ireland will be tax resident in Ireland if he/she spends 183 days in Ireland in a tax year or 280 days over two tax years (ignoring a tax year where he spends less than 30 days in the State). 

Special Assignment Relief Programme

 

SARP applies under specific conditions. Relief operates by providing an exemption from income on 30% of salary between €75,000 and €500,000 for the first five years of an individual’s residency in Ireland. 

 

See the brochure for details of all of the above 

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Other taxes

 Tax type  

Capital gains tax

CGT is chargeable on gains arising on the disposal of assets. 

Stamp duty

Stamp duty is payable on the transfer of most forms of property where such a transfer is executed under a legal document.  The transfer of commercial property is subject to stamp duty of 2%. Transfers of stocks and shares are subject to stamp duty of 1%. 

Capital acquisitions tax

Capital acquisitions tax (CAT) is a tax payable by the recipient of gifts and inheritances at a rate of 30% of the value of the benefit received. Tax-free thresholds are available to reduce the tax payable and these depend on the relationship between the donor and the recipient. 

Value-added tax

Value-added tax (VAT) is a tax on consumer spending. It is collected by VAT-registered traders on their supplies of goods and services within the State to their customers.

See the brochure for details of all of the above

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Funding and incentives

IDA Ireland

IDA Ireland LogoIDA Ireland is Ireland’s inward investment promotion agency. The agency works with foreign companies to secure new investment.  It also collaborates with existing foreign investors in Ireland to help expand and develop their businesses.

A range of services and incentives, including funding and grants, are available to those considering FDI to Ireland. IDA Ireland continues to work with investors once they are in Ireland to encourage and assist them to expand and develop their businesses.

IDA Ireland services include:

  • the provision of information and statistics on key business sectors and locations within Ireland;
  • assistance in setting up a business in Ireland;
  • an introduction to potential investors to local industry, government, service providers, and research and educational institutions;
  • advice on property solutions for international investors.

IDA Ireland works in collaboration with other State agencies such as Science Foundation Ireland (SFI), Sustainable Energy Ireland (SEI) and Enterprise Ireland (EI) to coordinate FDI developments.

A comprehensive range of RD&I programmes are also available:

  • IDA Ireland has an RD&I programme of grant aid for RD&I projects, including grants for RD&I feasibility studies and training.
  • IDA Ireland/EI competence centres finance industry-led collaborative research on commonly identified industry problems.
  • EI’s Innovation Partnership Programme funds small-scale industry/academic research that provides fast pay back to companies.
  • SFI centres for science, engineering and technology (CSETs) fund major university-based centres of collaborative research with industry.
  • SFI also funds strategic research centres (SRCs) to do collaborative research in selected research themes deemed important for Ireland’s future economic growth.

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Government supports through Enterprise Ireland

Enterprise Ireland LogoEI offers a comprehensive range of supports to high-potential, export-focused entrepreneurs and companies to make it as easy as possible to start a business in Ireland and to grow into global markets.

The supports include:

  • funding business;
  • advice, mentoring and introductions;
  • practical help to enter overseas markets.

A key programme for funding investment in business is the €10m fund.  The fund invests equity in ambitious, innovative start-ups, led by strong teams and focused on international markets. Launched in October 2011, this investment fund has been ring-fenced to attract entrepreneurs to relocate or establish their start-ups in Ireland.

A strong and growing network of local business angels, seed funds and venture capitalists is in place in Ireland. On a per-capita basis, the level of money available is high by international standards.

Ireland has a network of both State and privately owned start-up accelerator programmes.  An independent study from Techcocktail.com has shown that Ireland has three of the top eight such programmes in Europe, despite accounting for less than 1% of the European population. Almost all of these provide some form of funding to participants in addition to mentoring, incubation space, workshops and more.

The potential to raise money from these sources is in addition to any funding secured from EI.

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Connect Ireland

Connecting IrelandConnectIreland offers everybody in Ireland and in the wider Irish diaspora an opportunity to contribute to Ireland's economic growth.

ConnectIreland was appointed by IDA Ireland to deliver a new Government jobs initiative, Succeed in Ireland. This new initiative seeks to extend the marketing reach of IDA Ireland, in a new and novel way, to the small and medium enterprises sector. It aims to encourage and mobilise the broad Irish community, living at home or abroad, to use its connections to introduce companies to Ireland that are considering international expansion.

If a company introduced to ConnectIreland goes on to establish a qualifying business in Ireland, ConnectIreland will reward the introducer (or 'connector') with a finder's fee of at least €1,500 per job created, subject to certain terms and conditions (which can be found on http://www.connectireland.com/).

This programme aims to attract small to medium companies, which would not typically be the focus of economic development agencies or their advisors, to establish operations in Ireland serving international markets. In this way, ConnectIreland complements the work of IDA Ireland with which it works closely.

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