Corporation Tax Ireland 

Corporation Tax Ireland is a tax on the profits of companies, and all companies that are tax resident in Ireland must pay Corporation Tax on their worldwide profits. However, the tax rules in Ireland can vary depending on the nature of the company, its activities, and where it is considered to be tax resident.

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Key Criteria for Companies That Must Pay Corporation Tax in Ireland

Companies Resident in Ireland:

    • Irish Resident Companies: A company is considered tax resident in Ireland if it is incorporated in Ireland or if its central management and control is exercised in Ireland. Most companies incorporated in Ireland are tax resident here, unless they are effectively managed and controlled from another country.
    • Taxable Profits: Irish resident companies are subject to Corporation Tax on their worldwide income, including income from trading, investments, and capital gains.

Non-Resident Companies with Irish Income:

      • Non-Irish Resident Companies: Companies that are not incorporated in Ireland but have a branch or permanent establishment (PE) in Ireland are considered to have Irish income and are liable to pay Corporation Tax on their Irish-sourced profits.
      • Profits from Irish Activities: This includes income from trade, business, or investments in Ireland. For example, a foreign company with a branch or PE in Ireland must pay Corporation Tax on the profits generated by that Irish branch or PE.

Types of Companies That Pay Corporation Tax:

Trading Companies:

Companies engaged in commercial activities, such as manufacturing, sales, or providing services, are liable for Corporation Tax on their trading profits.

Investment Companies:

Companies involved in holding investments (such as stocks, bonds, or real estate) may also pay Corporation Tax on any profits generated from these investments.

Holding Companies:

Holding companies that manage subsidiaries or investments are subject to Corporation Tax on the income they receive, such as dividends or capital gains from the sale of shares.

Property Companies:

Companies that generate income from property rental or property development will pay Corporation Tax on the profits earned from such activities.

Financial Institutions:

Banks, insurance companies, and other financial institutions also fall under the scope of Corporation Tax on their profits.

corporation tax ireland

Corporation Tax Rates in Ireland

Ireland has a competitive Corporation Tax system, with two key rates:

  • 12.5%: The standard rate of Corporation Tax applies to trading income (profits derived from active business operations).
  • 25%: A higher rate applies to non-trading income, such as rental income, investment income (e.g., interest and dividends), and certain other types of passive income.

Additionally, there is a 6.25% rate for companies involved in research and development (R&D) and a 25% rate for oil and gas exploration companies. This is part of Ireland’s incentives to encourage innovation and investment in the country.

Exemptions and Special Cases:

  • Start-Up Relief: New companies may be eligible for reliefs that can reduce their Corporation Tax liabilities, such as Startup Relief for Entrepreneurs (SURE) or Knowledge Development Box (KDB) relief, which applies to certain intellectual property income.
  • Holding Company Exemption (Participation Exemption): Ireland has provisions that allow companies to avoid paying Corporation Tax on profits arising from the sale of shares in certain subsidiaries, subject to specific conditions.
  • Intangible Assets Relief: Ireland also offers tax relief on income derived from the exploitation of intellectual property assets (e.g., patents, copyrights) through the Knowledge Development Box (KDB).
  • Non-resident Companies: As mentioned earlier, non-resident companies are only liable to Corporation Tax in Ireland on income sourced within the country, typically via a branch or permanent establishment.

When Must a Company Pay Corporation Tax in Ireland?

Tax Filing and Payment Deadlines:

    • Companies must file an annual Corporation Tax Return (Form 1), detailing their taxable income and the amount of tax due.
    • The due date for the Corporation Tax Return is typically 9 months after the end of the accounting period (financial year), but payments for Corporation Tax are due in two installments:
      • First installment: 6 months after the beginning of the accounting period.
      • Second installment: The balance of the tax due must be paid by the 9-month deadline.

Note: The dates can vary depending on the company’s accounting period and when it ends, so it’s crucial for companies to keep track of their filing deadlines.

Corporation Tax Services in Ireland

In Ireland, all companies that are tax resident in the country must pay Corporation Tax on their profits, including trading profits, investment income, and gains. Foreign companies with a branch or permanent establishment in Ireland are also subject to Corporation Tax on the income generated from those activities. Ireland’s competitive tax rates and various reliefs make it an attractive jurisdiction for businesses. Companies should ensure they are aware of their filing and payment obligations to remain compliant with Irish tax law.

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