Ireland

Tax rates 2012 Ireland

Corporate tax

Rate

The corporate tax rate of Ireland is 12.5% for trading income and 25% for non trading income. Specific dividends from EU or if there is a tax treaty with that country, then the tax rate is 12.5%.

Residents are taxed on their world wide income, whereas nonresidents are taxed only on their Irish-source income. Company profits consists of business and trading income, passive income and capital gains. Certain business expenses incurred from acquiring income may be deducted.

Taxation of dividends

Dividends received from another Irish company to an Irish-resident company are exempt from corporation taxation. Dividends received from a foreign company are subject to the corporation tax rate , though there is often a credit for the underlying corporate and withholding tax.

Capital gains

Capital gains are taxed at flat rates of 30% and 40%. Capital gains from the sale of substantial shareholdings in companies resident within a EU member state, or if there is a tax treaty in hand are exempt, but only if certain conditions are satisfied.

Losses

Losses can be carried forward indefinitely. Carrybacks are only allowed immediately for the preceding period, of equal length.

Withholding tax

Dividends paid to another Irish company are exempt from withholding tax. Dividends paid to nonresident companies and individuals(resident or nonresident) are taxed at a rate of 20%, unless it’s reduced under a EU parent-subsidiary directive or tax treaty.

Interest tax is a flat rate of 20% unless it’s reduced under a EU parent-subsidiary directive or tax treaty.

A 20% withholding tax for patent royalties apply. All other royalties are exempt.

 

Individual tax

General

Individuals living or regularly residing in Ireland is considered a resident for tax purpose. Individuals is taxed on their worldwide income. Nonresidents are just taxed on their income from Ireland sourced work. Effectively this means that if an individual spends more than 6 months he or she is considered a resident, or is present for more than 280 days in total, in that tax year and the preceding year.

Taxable income

Taxable income for an individual is considered to conclude employment derived from employment income and most benefits. An individual who derive its profits from trade or profession is taxed in the same principal were profits are derived by companies. Income from dividends are subject to a flat rate of 20%.

Rates

Ireland personal income tax rates are progressively up to 41%. Certain exempt may apply for low income and social welfare recipients. Additionally, an

income levy applies at a rate of:

2% to gross income up to EUR 75,036 per year,

4% to gross income exceeding EUR 75,036 up to EUR 174,980

6% to income exceeding EUR 174,980.

Tax rates and bands for individuals:

Single or widowed without dependent children: €36,400 at 20%, balance at 41%

Single or widowed qualifying for one parent family tax credit: €40,400 at 20%,

balance at 41%

Married with one spouse earning income: €45,400 a 20%, balance at 41%

Married with both spouses earning income: €45,400 a 20% (with a maximum increase of

€27,400), balance at 41%

The increase in the standard rate tax band is restricted to the lower of €27,400 in 2009 and 2010 or the amount of the income of the spouse with the lower income. The increase is not transferable between spouses.

With effect from 1 January 2009 additional income tax levies apply on an individual’s gross income, before deduction of pension contributions and capital allowances. For individuals with aggregate income for the tax year exceeding €18,304. The rates are:

2% on income up to €75,036

4% on income exceeding €75,036 up to €174,980

6% on income exceeding €174,980.

Capital Gains

Individuals are tax at a flat rate of 3% for capital gains.

Deductions

Expenses necessary for the purpose of acquiring income may be deducted from the tax base, certain medical and insurance expenses may also be deducted. Medical deduction is available only at a flat rate of 20%.

Real Estate

Individuals are subject to a municipal tax rate in which the real estate is located. Owners are also required to pay an annual property charge of EUR 100.

Net Worth Tax

There exist no net worth tax in Ireland.

Inheritance Tax

Capital Acquisitions Tax applies to gifts and inheritances. The tax arises when the property is situated in Ireland. Whenever an individual is non-domiciled, he or she is not taxed, unless the residency has been for five consecutive years.

A flat rate of 22% is levied on capital for the Capital Acquisitions Tax.

Social Security

Employed individuals contributes to the social security. The individuals employer contributes to the PRSI, where the amount is based on the individual’s salary.

VAT

VAT applies to all sales of goods, services and imports. The VAT is 23%. Lower rates exists of 13.5 % and 9%.

 

Other

Tax year. Calendar year.

Tax treaties. Ireland currently has 59 treaties.

Filing requirements. VAT returns and payments are required every 2 months.

Registration (for VAT purpose). Registration for VAT purposes is only needed for turnovers exceeding EUR 75,000 per year for companies on supply of goods, other cases a limit of EUR 37,500 is applied. Nonresidents that make taxable supply of goods or services in Ireland must register.

 

Links

Tax authorities. Office of the Revenue Commissioners.

Consulate

Local Tax Resources

Chamber of commerce

(Online realtor/stock exchange)