Taxation in Ireland

In Ireland all corporate trading profits benefit from an EU-approved low corporation tax of 12.5%. There are no restrictions on repatriation of earnings, capital or royalties. Companies have access to an extensive tax treaty network with 63 countries including all the main trading nations. Ireland has emerged as the pre-eminent jurisdiction for multinational companies to locate their intellectual property and the management and development activities associated with it. There is a generous 25% R&D tax credit to encourage new research.

PwC and the World Bank found that Ireland was the easiest place in Europe for paying business taxes.

Company Taxation

Subject to certain exemptions and reliefs, every company that is tax resident in Ireland is liable to pay corporation tax in Ireland charged on total profits wherever arising. In addition, non-tax resident companies are also are liable to pay corporation tax on total profits insofar as such profits are attributable to an Irish branch or agency.

A company is deemed to be tax resident in Ireland if it is incorporated in Ireland or if a company’s central management and control are situated in Ireland (i.e. location where major policy decisions are taken).

The applicable rate of corporation tax depends largely on the category of income to which the tax is to be applied. The standard rate of corporation tax of 12.5% is applied in respect of all trading income. A higher rate of 25% is applied in respect of non-trading income and certain activities including working minerals, petroleum activities and dealing in or developing land.

There are no provincial, municipal or local taxes on the profits of companies.

Under Irish tax law, a tax credit is available to companies in relation to certain expenditure on research and development (R&D) activities. The key feature of the credit is a 25% credit for qualifying expenditure on R&D. The credit is granted in addition to the regular tax deduction available for R&D expenditure.

A report from PwC and the World Bank has found that Ireland is the easiest country in Europe to deal with for businesses in terms of paying tax. It covers 183 countries worldwide and looks at all taxes paid by businesses. It measures the ease of paying taxes by assessing the administrative burden for companies, and by calculating companies’ total tax liability as a percentage of pre-tax profits.

 

 

Publication on taxation in Ireland