| Ireland Corporate Tax rates There are three rates of Corporation Tax in the Republic of Ireland:
- 12.5% for trading income
- 25% for non-trading income
Corporate tax of 10% is applied to companies keeping certain conditions in July 1998, which will remain until 2010.
Residents are taxed on worldwide income; nonresidents are taxed on Irish-source income.
Tax rate for foreign companies: Corporate tax is charged on the company's profits. It includes both income and chargeable gains. The corporation tax in Ireland is quite low, and is often cited as an example of tax competition, as it is used as an incentive for foreign companies to invest in the Irish Republic.
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.
Losses
- Trading losses can be offset against (i) future income from the same trade, or (ii) trade income from the preceding accounting period. The reduction in tax payable depends on the tax rate which would have applied if a gain had arisen, i.e. 10%, 12.5% or 25%.
- Excess losses can be carried forward indefinitely against future trading income.
- Capital losses can typically be offset against other gains, either within the same period or in future periods (subject to some exceptions).
Ireland Income Tax Rates for an IndividualTax base / Tax %
EUR 0 - 36,400: 20%
EUR 36,401 and over: 41% on base exceeding 36,400
An individual is liable for tax on his income as an employee and on income as a self-employed person. Tax will be payable on income earned in Ireland and overseas by an individual who meets the test of a "permanent resident" of Ireland. A foreign resident who is employed in Ireland pays tax only on income earned in Ireland.
Within the OECD, Ireland has the fourth lowest tax wedge. Income tax is chargeable on all income arising in the State to individuals, partnerships and unincorporated bodies.
The most common form of income tax is PAYE (Pay As You Earn) which is deducted by employers from an employee's pay.
Persons who are self-employed or receive income from non PAYE sources use the self-assessment system.
Personal income tax rates depend on marital status. The 2009 rates for a single person are as follows:
- Earnings up to €36,400 are taxed at 20%; and,
- Earnings in excess of this amount are taxed at 41%.
In addition an income levy is payable at the following rates:
Income Levels / Rate of Income Levels
€0 - €75,036: 2%
€75,037 - €174,980: 4%
Over €174,980: 6%
Personal Tax Credits
Personal income Tax rates
Taxpayer / At 20% / At 41%
Single person / €36,400 / Balance
Married couple (one income) / €45,400 / Balance
Married couple (two incomes) / €72,800 / Balance
One parent/widowed parent / €40,400 / Balance
Taxable income can be reduced by personal tax credits depending on each individual's situation. They are available to each individual and married couple.
The principal tax credits for 2009 are:
- Single person €1,830; and,
- Married couple €3,660
In addition a PAYE credit is available for individuals paying tax under the Pay As You Earn system.
Other deductions are also available including:
- Rent;
- Service charges;
- Single parent payment;
- Widowed persons' payment; and,
- Trade Union subscriptions.
The tax credits are at the standard (20%) rate of tax. Mortgage interest and health insurance relief are dealt with at source.
Value Added Tax in IrelandVAT in Ireland is 21% beginning 2010.
Value Added Tax is a consumption tax and is charged on goods and services supplied in the course of business. Credit is given for VAT paid to registered traders, thus this tax is ultimately borne by the final consumer.
VAT rates range from zero to 21% depending on the type of product or service, with most attracting a charge of 21%. There are detailed rules applying to VAT on property.
Export VAT Exemption
Supplies of goods within the European Union are exempt from VAT (except when supplied to unregistered persons in the EU). Imports from non-EU countries are liable to VAT.
An EU-wide computerized VAT Information Exchange System (V.I.E.S.) allows for the flow of data across countries and enables companies to rapidly obtain confirmation of the VAT numbers of their trading partners.
In addition, companies that export 75% or more of their output from Ireland can apply to the Revenue Commissioners for VAT exemption on almost all of their goods and services from both Irish and foreign suppliers. This reduces administration and the need to get a refund of VAT consumption tax.
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