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Business Taxation for Expats in Ireland

Submitted: October 2014

The authority responsible for Irish tax is the Office of the Revenue Commissioners (Irish: Oifig na gCoimisinéirí Ioncaim), generally known as simply ‘Revenue’. Their website is here.

 

Registration

For expats, a common form of business structure in Ireland is the private limited company (PLC), which is essentially the same as a limited liability company. A private limited company offers the advantages of:

The maximum number of shareholders a PLC can have is 99. If the PLC has only one shareholder, it is known as a single member company. Forming a private limited company means that your liability is limited to your equity in the company. The business income is taxed at the corporate tax rate.

Companies must be registered with the Companies Registration Office (CRO), their website is here. Form A1, which is available here, must be completed giving details of the directors and secretary of the company, together with the company name and address and also the names and addresses of the shareholders. The company address cannot be a PO Box, and must be located in Ireland. In addition a declaration must be completed giving details of the company’s proposed principle activity, and confirming that the company will be active in Ireland. The completed A1 form must be sent to the CRO and must be accompanied by the Memorandum and Articles of Association. The CRO will then register the company and allocate it a CRO Number, and the company can begin trading.

 

Corporate Income Tax

The Irish tax year for companies runs from 1 January to 31 December. If a company’s accounting year is different to the tax year, its tax return period must be based on the accounting year. Irish resident companies are liable for corporate income tax on their worldwide income.

The corporate tax rate is 12.5% for corporate trading income. The following forms of income are subject to a higher rate of 25%.

Companies must pay a social security contribution of 9% of net profit, which is increased to 15% for financial institutions.

Capital gains are generally taxed at a higher rate of 33%. The first €1,270 of gains (net of losses) is exempt. For property in Ireland purchased between 7 December 2011 and 31 December 2014, no capital gains tax is payable on any gain accruing over the first seven years of ownership, provided the property is held for at least seven years, and was originally purchased at market value.

Companies paying dividends to shareholders are required to apply a withholding tax of 20% unless the shareholder is entitled to an exemption. Dividends received from other Irish companies are tax free.  

Companies can pay corporate tax on either a quarterly or annual basis. If quarterly, it can be paid on an actual or an estimated basis (subject to certain conditions).

Companies must have made preliminary payment/payments of tax, representing in total 90% of the actual tax payable for the year, no later than one month before the end of the accounting period. If the company’s tax liability is less than €200,000, the payment may be based on 100% of the tax paid during the previous year. Companies must make a final payment of the actual balance of tax due when the final return is due.

Companies must file their Irish corporate income tax returns electronically by the 23rd day of the ninth month of the accounting period following the period year in which the income was generated.

 

 

 




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