Overview of Company Incorporation In Ireland :
Companies resident in Ireland must pay Corporation Tax on their worldwide profits. These profits include both income and capital gains.
Non-resident companies that trade through a branch or agency in Ireland must also pay CT.
The CT that a company pays is charged according to Income Tax rules. Chargeable gains are calculated in accordance to Capital Gains Tax (CGT) rules.
A company must use the Revenue Online Service (ROS) to file its return and pay any tax due under Mandatory filing and repayment.
Basis of charge :
There are two rates of Corporation Tax (CT):
· – 12.5% for trading income
· – 25% for income from an excepted trade (as defined in part 2 of the Taxes Consolidation Act)
· – 25% for non-trading income, for example rental and investment income.
CT is charged on the profits in a company’s accounting period. This period cannot be longer than 12 months.
If the tax rate changes in the accounting period, profits will be apportioned on a time basis and taxed accordingly.
Rules for companies that are incorporated in Ireland :
Different residency rules may apply to a company, depending on whether it was incorporated in Ireland before or after 1 January 2015.
A company is deemed to be tax resident here if it was incorporated in Ireland on or after 1 January 2015.
This will apply unless it is treated as a tax resident company in another country under a Double Taxation Agreement.
If a company was incorporated before 1 January 2015, there is a transition period up to 31 December 2020.
From this date, a company will be deemed to be tax resident unless it is tax resident in another country under a Double Taxation Agreement.
Rules for companies that incorporated in Ireland :
The central management and control test.
Revenue will consider the highest level of control to decide where central management and control exists.
Certain critical questions are included in this assessment to discover where:
· company policy is decided
· registered office and administration
· investment decisions are made
· Board meetings and Resolutions carried out
· major contracts are defined
· the company’s head office is located
· beneficial ownership
· employees and substance
· the majority of directors live.
Cessation of residency :
When a company is no longer tax resident its assets will be deemed to be disposed of at market value.
The company must pay tax on any capital gains received from the disposal, except where:
· the assets continue to be used in Ireland by a branch or agency of the company
· the company is controlled by residents of a European Union (EU) or tax treaty country.