Doing Business & Investing In...
Contact: John Byrne Partner | Tax
Tel: +353 1 448 2200 Email:
john.byrne@
crowehorwath.ie
for multinationals wishing to establish a holding company as either their EU headquarters, or for the purposes of holding shares in subsidiaries and managing other investments.
Some of the key attractive features of the Irish tax regime are as follows:
• A low statutory corporation tax rate for trading companies of 12.5%.
• A corporate tax exemption for the first three years of trading subject to certain limits.
• Irish capital gains tax exemption for disposals of qualifying subsidiaries by an Irish holding company. The Irish holding company must hold at least 5% of the subsidiary, which must be resident in an EU or treaty jurisdiction (such as the US, UK and China) and pass a trading test.
• 12.5% rate for dividends sourced from trading activities. A generous system of foreign tax credits (including onshore pooling) can further reduce or eliminate any Irish tax.
• Domestic exemptions from Irish withholding taxes on payments of dividends, interest and royalties to persons resident in tax treaty partner countries (and additionally, in the case of dividend payments, to companies controlled by persons resident in tax treaty partner countries).
• An R&D tax credit for 25% of qualifying expenditure which, when combined with the 12.5% trading deduction, results in an effective tax deduction of 37.5%.
• Tax relief for interest on qualifying debt to fund qualifying share acquisitions or to fund connected companies.
• No specific thin capitalisation rules. An Irish holding company may consequently be financed largely by way of debt.
• An extensive double taxation treaty network with treaties signed with 70 countries to date including all EU member states as well as Australia, Canada, China, India, Japan, Russia and the United States.
• A tax deduction in respect of capital expenditure incurred on most forms of intellectual property. The deduction can be taken in line with the accounting depreciation on the intellectual property or alternatively, over a maximum 15 year period, whichever is the lesser. The tax deduction can be used to achieve an effective tax rate of 2.5% on profits from exploitation of the IP purchased.
Q
How does Ireland tax individuals coming to work in Ireland from abroad?
Non Irish domiciled individuals who are resident in Ireland are taxable in Ireland on Irish source income (including foreign employment income referable to duties exercised in Ireland) and foreign investment income where that income is remitted to Ireland. Therefore, income and gains earned from sources outside of Ireland may be free of Irish tax if the proceeds are not remitted to Ireland.
There are a number of other relieving provisions available to employees coming to work in Ireland. Relocation expenses such as storage, travel expenses, temporary subsistence while looking for new accommodation and other associated costs may be reimbursed tax free.
In 2011, the Irish Government introduced the Special Assignee Relief Programme (SARP) to encourage individuals abroad to take positions in the Irish based operations of their organisation. Under this programme, employees assigned to work in Ireland on a permanent basis are exempt from income tax on 30% of their employment income. The exemption
applies to employment income between €75,000 and €500,000.
present and it is anticipated that it will be amended to enhance its attractiveness.
Q
What are the main considerations that a company (foreign and/or domestic)
should make when looking to invest or sustain investment in Ireland? How can they operate strategically?
A good first step would be to contact IDA Ireland. IDA Ireland is the government agency responsible for the development of foreign industry and enterprise in Ireland.
incentives, including funding and grants, to those considering investing in Ireland.
The agency continues to work with investors once in Ireland to encourage and assist in expanding and developing their businesses and this long term view has been very successful for all involved.
In the initial stages, they can assist companies in many ways by:
• Providing information and statistics on key business sectors and locations within Ireland.
• Assisting in the practicalities of establishing a business in Ireland.
• Introducing potential investors to local industry in Ireland,
research institutions. government, service providers and
This relief is currently under review at
They provide a range of services and
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