While 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:
- trading activity
- physical premises
- central management and control
- "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.