Corporation Tax in Ireland
Corporate Tax Rates
Ireland’s 12.5% corporate tax rate on trading income is one of the lowest ‘onshore’
rates in the world. ‘Trading profits’ include a broad range of commercial activities
including Intellectual Property (IP) and Supply Chain Management.
The Irish Government is committed to retaining the 12.5% corporate tax rate on
trading income until at least 2025.
A tax rate of 25% applies to non-trading income (passive income) such as
investment income, foreign dividends, rental income, net profits from foreign
trades, and income from certain land dealings and oil, gas and mineral exploitations.
The Irish Corporate Tax System
A company’s liability to corporation tax in Ireland depends on its residency. Irish
resident companies are liable to corporation tax on all their worldwide income and
capital gains. A company is considered to be tax resident in Ireland if its central
management and control are located in the State. The location where major
policy decisions of a company are taken is often where the company’s central
management and control are situated.
Companies not resident in Ireland but with an Irish branch are liable to corporation
tax on (i) profits connected with the business of that branch and (ii) any capital
gains from the disposal of assets used for the purposes of the branch in the State.
Companies not resident in Ireland and who do not have any Irish branch are liable
to (i) income tax on any Irish-sourced income and (ii) capital gains tax on gains from
the disposal of specified Irish assets.
Calculating Tax Liability
In Ireland, companies are liable to corporation tax on their total profits, including
trading income, passive income and capital gains. Subject to tax free deductions, tax reliefs and credits, of which there are many.
Irish resident company is liable to corporation tax on worldwide income
Irish branch or agency is liable to corporation tax on Irish branch income
Non Irish resident with no branch is liable to Irish tax on Irish source income