If you are a business owner from the USA or UK and doing business internationally or maybe considering it and you are interested in growing your business, then you may be considering Ireland as a favourable destination for European business. Outlined below are some potential income tax saving tips for owners of an Irish Limited Company. These can save you thousands of Euro if planned properly.
Review tax credit claims and ensure full tax credits being utilised especially between spouses where one spouse’s income might be significantly lower. Significant tax credits such as earned income tax credit, PAYE credit, health & medical expenses credit, home renovation incentive scheme & Tuition fees credit are all worthy of a once a year review.Tax credits are also available for non-residents even if they have overseas income.
Ensure the standard rate tax band of 20% is being used for each spouse as this is a tax efficient rate.
For self-employed & company directors consider either paying a salary to your spouse with the lower income and/or wages to children.
Consider providing tax efficient benefits;
- Such as once off small annual benefit of € 500 per director.
- Electric cars are exempt from benefit in kind tax charges
Review the balance between taking salary versus dividends. If you are a non-resident owner of an Irish Limited Company then consider paying dividends as these can be be exempted from Irish withholding taxes. If you are tax resident then there is cashflow benefit of taking dividends over salary.
Establish your domicile status. For non-domiciled taxpayers you do not have to pay Irish tax on foreign earned Income unless it is remitted to Ireland.
If you have more than one trade and one is loss making, maybe because it is a start-up then the losses can be offset against your profitable trade on a current year basis
If you are an artist then establish tax exemption on your work and income can be earned tax free up to € 50,000 per annum. Exemption must be granted in advance.
If you are renting out a room in your main residence then you can earn up to € 14,000 per annum before expenses tax free. If you are letting out a property the first € 5,000 incurred on a vacant premises in the 12 months prior to letting is allowed if the property is let between 25/12/2017 and 31/12/2021.
Consider EIIS scheme investments, these can be tax relieved at 30% in year one and 10% in year 2 on investments made up to € 150,000 per annum
Start up relief for entrepreneurs (SURE relief) provides tax relief on PAYE paid during the 6 years prior to becoming self employed
Consider making company pension scheme payments as they are the most tax efficient