Accountancy in the Republic of Ireland

>> Taxation the Republic of Ireland

Corporation Tax

Companies are subject to Corporation Tax on their total taxable profits. The very low Corporation Tax rate on trading income of 12.5% in Ireland makes it an attractive market to do business.

The tax year for Irish companies follows the company’s accounting period. At present, a company must make either one or two preliminary tax payments, depending on its corporation tax liability in the previous accounting period.

Companies, whose corporation tax liability was less than €200,000 in the previous accounting year, must make only one payment of preliminary corporation tax one month before the accounting year-end.

All other companies must pay preliminary corporation tax in two instalments: the first in the sixth month of the accounting period and the second one month before the accounting year-end.

Group taxation in Ireland

Group Relief allows members of a group of companies to transfer certain Corporation Tax (CT) losses to other members of the group. Two companies are considered to be group members if either: • Company A is a 75% subsidiary of Company B; or • Company A and B are both 75% subsidiaries of a third company.

Group Relief is generally available between Irish resident companies and branches of foreign companies within the charge to Irish tax. In certain limited circumstances,

Corporation Tax

Companies are subject to Corporation Tax on their total taxable profits. The very low Corporation Tax rate on trading income of 12.5% in Ireland makes it an attractive market to do business.

The tax year for Irish companies follows the company’s accounting period. At present a company must make either one or two preliminary tax payments, depending on its corporation tax liability in the previous accounting period.

Companies, whose corporation tax liability was less than €200,000 in the previous accounting year, must make only one payment of preliminary corporation tax one month before the accounting year-end.

All other companies must pay preliminary corporation tax in two instalments: the first in the sixth month of the accounting period and the second one month before the accounting year-end.

Group taxation in Ireland

Group Relief allows members of a group of companies to transfer certain Corporation Tax (CT) losses to other members of the group. Two companies are considered to be group members if either: • Company A is a 75% subsidiary of Company B; or • Company A and B are both 75% subsidiaries of a third company.

Group Relief is generally available between Irish resident companies and branches of foreign companies within the charge to Irish tax. In certain limited circumstances,

An individual’s liability to income tax is based on their tax residence and domicile. A statutory test applies for determining the residence status of individuals.

An individual is resident in Ireland if he/she is in Ireland for a total of:

  • 183 days or more in a tax year; or
  • 280 days or more in a tax year plus the previous tax year taken together, with a minimum of 30 days in each year.

For these tests, a “day” means any part of a day.

An individual who has been resident in Ireland for three consecutive tax years, becomes ordinarily resident from the beginning of the fourth tax year.

An individual who is resident and domiciled in Ireland is liable to Irish income tax on worldwide income.

An individual who non-resident in Ireland for tax purposes, is chargeable to tax in Ireland on:

  • Irish-source income, including income from an Irish public office; and
  • Irish employment income and foreign employment income where the duties of the employment are carried out in Ireland.

An individual who is non-resident in Ireland for tax purposes but is ordinarily resident is chargeable to tax in Ireland on worldwide income except:

  • Income from a trade or profession, no part of which is carried out in Ireland;
  • Income from an office or employment where all the duties are carried out outside Ireland; and
  • Other foreign income if it is €3,810 or less (if it is more than €3,810, the full amount is taxable).

The remittance basis applies to a non-domiciled individual regardless of residence/ordinary residence status.

Personal tax is self-assessed by reference to the tax year ending on 31st December each year and taxpayers are obliged to submit an annual tax return to The Revenue Commissioners.

Capital Gains Tax

Capital Gains Tax is payable on chargeable gains arising on the disposal of assets. A disposal takes place whenever the ownership of an asset changes and includes a part disposal. The computation of chargeable gains and allowable losses is made by comparing the proceeds of disposal with the original cost of the asset. Relief is granted by allowing the cost and, if applicable, additional expenditure on the asset to be adjusted by multiplying it by an amount specified in Irish tax legislation. The multiplier is designed to negate the effects of inflation. This indexation relief does not apply to the disposal of assets which were purchased after 2002.

The rate of capital gains tax is 33% for assets sold on/after 6th December 2012. Capital gains of companies are chargeable to Corporation Tax. Certain reliefs are available which include individuals retiring from business, disposals of assets within a group of companies or a new entrepreneur relief that reduces the rate of capital gains tax to 10% subject to certain conditions being met.

Income Tax

An employer is responsible for deducting Income Tax from the earnings of each employee and paying this over to the Revenue Commissioners. He must follow the procedures for the deduction at source of employees’ Income Tax. They are known as:

  • Pay As You Earn (PAYE)
  • Pay Related Social Insurance (PRSI)
  • Universal Social Charge (USC)

The Irish tax year runs from 1 January. The standard rate of income tax is 20% and the marginal rate is 40%.

Income tax on gains from sales of financial assets and private real estate

Capital Gains Tax (CGT) is payable on capital gains made on the disposal of chargeable assets. Disposal takes place whenever the ownership of an asset changes and includes a part-disposal. Gains and losses are computed by comparing the disposal proceeds with the cost of the asset plus any qualifying expenditure incurred on enhancing the asset. Where the parties are connected, market value is substituted for any actual consideration paid.

Capital losses can generally only be set off against capital gains.

An Irish resident/ordinarily resident and domiciled individual is subject to Irish CGT on worldwide gains on the disposal of chargeable assets.

A non-domiciled individual who is resident or ordinarily resident in Ireland is liable to CGT on the disposal of Irish chargeable assets, as well as gains realised on the disposal of non-Irish assets to the extent that these gains are remitted to Ireland. A non-resident individual is liable to CGT on the sale of Irish specified assets (primarily land and buildings in Ireland).

The standard rate of CGT is 33%. Certain disposals by individuals of businesses, business assets or shares in a trading company may qualify for a CGT rate of 10% under the entrepreneurs’ relief provisions, provided certain conditions are met.

Land Tax

Ireland imposes Local Property Tax (LPT) on residential property. LPT is based on the value of the property on the valuation date and the rates are 0.18% for property up to value of €1,000,000 and 0.25% on the excess over €1,000,000.

Value Added Tax

VAT is a turnover tax that is levied at every stage of the sale and purchase of goods and services within Ireland and the EU. It is payable to the Revenue Commissioners. Businesses with an annual turnover of €75,000 from the supply of goods must register for VAT. Businesses with an annual turnover of €37,500 from the supply of services must register for VAT. The current rates of VAT range from 0% to 23%.

VAT registered businesses can reclaim VAT paid when purchasing goods and services; they must charge VAT on goods and services they provide to customers. VAT charged to customers must be collected by the business and paid to the Revenue Commissioners.

VAT registered businesses must complete and submit a regular VAT return form. The return is used to calculate the difference between VAT reclaimed from the Revenue Commissioners and VAT to be paid to the Revenue Commissioners. The difference results either in a credit or a payment to be made. Should a payment to the Revenue Commissioners be required, this must accompany the VAT return.

Tax treaties / avoidance of double taxation

There exist around 72 tax agreements, see appendix 1 for list of countries.


Latest version updated 5th April 2019

Country Breakdown

4.773

Million

Population

Euro

Currency

$ 294.1

Billion

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70,273

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