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12.5% Irish Corporation Tax Rate - or is it 25%?

05 December 2016 By Ann Donnelly



iStock_000002051690Small.jpgWhile there is much talk about the low 12.5% corporation tax rate in Ireland, it's important to know that this is only for trading income in Ireland. Non-trading (passive) income is taxed at the higher 25% rate.

"Non-trading" income includes investment income; rental income; and income from mining activities, petroleum activities, and dealing in land.

How can you structure your business effectively to make the most of the lower 12.5% Irish Corporation Tax rate and ensure your company is tax resident in Ireland?

Successfully demonstrate the presence of the following in Ireland:

  1. trading activity
  2. physical premises
  3. employees
  4. central management and control 
To demonstrate central management and control in Ireland you must locate the following in the country:
  • "head office"
  • key personnel
  • board meetings
  • key trading partners
  • negotiation of important contracts
  • decisions on important company policy

Additional Benefits -- 
If you can demonstrate these things, you will more easily -- and more swiftly -- obtain VAT registration and a bank account.

For many years companies were able to set up in Ireland and only able to demonstrate a few, if any, of these things; but we have seen the Revenue become much more stringent in reviewing tax registration documents -- and requiring more and more information and documentation -- from companies with non-resident directors, especially.

Existing Irish Companies --
If you cannot strongly demonstrate tax residency and appropriate activity in Ireland you are more likely to be selected for a Revenue Audit and/or may have your tax registration revoked.


To read more about Irish Tax Incentives for Businesses, download our Infographic:

Click here to Download Our "Quick Look at Irish Tax Incentives"

Tagged With: Advice, International Business, Frequently Asked Questions, Setting Up a Business in Ireland