All companies, including private companies, operating a branch in the State are required to register the branch with the Registrar of Companies at the Companies Office. When registering, you must send the following documents:
On an annual basis, you must file a return together with the following accounting documents:
On termination of the branch you must notify the Companies Office within 14 days of the termination, that the branch is terminated.
All private limited companies must have at least one shareholder with a minimum issued capital of one share. The main document required for the formation of a company constitution.
All companies incorporated in the State must have 1 director and one company secretary. The director does not have to be resident in the State, but at least one director must be resident in a member state of the European Economic Area (EEA).
On an annual basis, the company must file a return together with abridged accounts. The company’s annual return must be delivered to the Companies Office not later than 28 days after the company’s Annual Return Date.
A non-resident company trading through an Irish branch is subject to corporation tax on the profits connected with that branch and is liable to capital gains tax on any capital gains arising on the disposal of assets used for the purposes of the branch.
An Irish resident company is subject to corporation tax on its worldwide income and is subject to capital gains tax on its worldwide chargeable gains.
A company is resident in Ireland if it is managed and controlled here. A company incorporated in Ireland is resident in Ireland for tax purposes unless it falls within one of the following exemptions:
If the company is non-resident and does not trade through a branch in Ireland, it will be liable to income tax on any Irish-source income and to capital gains tax on gains arising on the disposal of certain Irish assets subject to any treaty relief that may be available.
Unused relief arising in the first three years of trading, due to losses or insufficient profits, may be carried forward for use in subsequent years.
Rates of Corporation Tax and Capital Gains Tax
Corporation tax is charged at the rate of 12.5% on trading profits of an Irish resident company and at 12.5% on trading profits of a branch operating in Ireland.
Corporation tax is charged at 25% on foreign business profits and non-trading income.
There is a close company surcharge on undistributed passive income of a close company – this surcharge does not apply to trading profits. The surcharge is charged at 20% on any undistributed passive income.
Capital Gains Tax is charged at the rate of 33% on chargeable gains arising in the 2019 tax year
3-year relief for start-up companies
A start-up company commencing a new trade may qualify for relief from corporation tax for the first three years. The relief is available where the total amount of corporation tax payable by the company for an accounting period falling within the 3-year start up period does not exceed €40,000. Marginal relief is granted on a tapering basis where the total amount of corporation tax liability for the accounting period is between €40,000 and €60,000. To ensure that the measure is focused on job-creation, the amount of tax relief is based on the companies’ employers’ social security contributions in respect of its employees, subject to a limit of €5,000 per employee and an aggregate limit of €40,000 in any one period.
Any unused relief arising in the first three years of trading, due to losses or insufficient profits, may be carried forward for use in subsequent years.
Research and development tax credits
Subject to meeting certain conditions an Irish company carrying on qualifying research and development (R&D) activities in Ireland may qualify for a tax credit of up to 25% of qualifying expenditure.
Year of assessment/ tax year
The tax year in Ireland is the calendar year.
Pay & File requirements
Corporation tax operates on a self-assessment basis. A “small” company must pay preliminary tax one month prior to the end of its accounting period. The preliminary tax is calculated at 100% of the preceding period’s liability. The company must file a tax return and pay any balance of tax before the 21st Day of the ninth month after its accounting year end. Failure to file by the due date will result in a surcharge penalty of up to 10% and may also result in restriction of tax relief for losses. Where returns and payments are made electronically, the return filing and payment deadlines are extended to the 23rd of the relevant month. Companies are now generally required to pay and file online.
A small company is a company whose Corporation Tax Liability in the preceding accounting period does not exceed €200,000.
New companies with a corporation tax liability of €200,000 or less for their first accounting period will not be required to pay preliminary tax in respect of that first accounting period and will instead be required to pay their final corporation tax liability for that accounting period at the same time they are required to submit their corporation tax return.
If a company fails to submit a return on time, a surcharge will be imposed.
For tax purposes an accounting period cannot exceed 12 months.
Working for a foreign employer and the duties of the employment are carried out in the State.
Income from a non-Irish sourced employment, attributable to the performance in the State of the duties of that employment, is chargeable to Irish income tax and is within the scope of the Pay As You Earn (PAYE) system of deductions at source.
In certain circumstances where an employee/director comes to Ireland on assignment from a country with which Ireland has a double taxation treaty, they can remain outside the charge to Irish tax provided certain conditions are met. Where this applies, the company can obtain an exemption from the obligation to operate withholding tax.
The conditions are:
The application for exemption from the obligation to operate withholding tax from salary must be made within 21 days from when the employee has taken up duties in the State.
Irish Limited Company/ Irish Branch
All employees working in Ireland will be subject to income tax, social security and universal social charge. The employer is required to deduct the payroll taxes at source from all salary payments and benefits-in-kind under the Pay As You Earn (PAYE) system.
It is the employer’s responsibility to ensure that the PAYE system is operated correctly.
Split year residence
Split year residence can in certain circumstances exempt from taxation in Ireland employment income earned prior to arrival in Ireland and employment income earned following departure from Ireland.
Tax rates and credits for 2019
Income tax is charged at 20% on income up to €35,300 (for a single person) and 40% thereafter.
Universal social charge
0.5% On Income up to €12,012
2% On income from €12.012.01 - €19,874
4.75% On income from €19,874.01 - €70,044
8% Income above €70,044
There is a surcharge of 3% on individuals who have income from self-employment that exceeds €100,000 in a year.
Employee’s Social security is charged at 4% on income without limit. Employer’s social security is charged at the rate of 11.05% on income without limit (the employer’s rate is 8.8% for employees earning up to €386 per week).
The single person’s tax credit is €1,650 and the employee tax credit is €1,650.
Only individuals who are resident in Ireland for a tax year are entitled to individual personal tax credits and the employee tax credit.
Taxation of married couples
One spouse resident
Where only one spouse is resident in the State, that spouse is treated for tax purposes as if unmarried. However, where Revenue are satisfied that the non-resident spouse has no income, the couple may be taxed as a married couple (this will afford them higher personal tax credits and higher standard rate tax band).
Both spouses resident
Where both spouses are resident here for tax purposes, the couple may elect to be taxed as single individuals or they may be assessed jointly (where one spouse is assessable on the income of both spouses).
All individuals working in Ireland and their employers are required to contribute to the Irish social security system, unless:
Value Added Tax (VAT) payable in Ireland
All taxable businesses are required to register for VAT where their turnover from the supply of taxable goods or services exceeds or is likely to exceed a certain limited in any twelve-month period. A taxable VAT business is one that is established in Ireland. Before the Revenue will register your company for VAT, they must be satisfied that your business is established here. If your company is not established in Ireland, the Revenue will not register your company for VAT here. They will request proof of trading such as:
Copy of a lease/rental agreement
Evidence of trade such as copy of a contract/service agreement, a sales’ invoice or a couple of purchase invoices relating to the carrying out of your trade.
For the 2019 tax year, the registration threshold is €75,000 where the turnover is at least 90% from the sale of goods and €37,500 where the turnover is from the supply of a service
VAT will be charged at the standard rate of 23% on the goods and services that your company will be providing.
Input tax is recoverable where it relates to taxable supplies.
For more information please contact Imelda Prendergast, OSK Brexit Support for UK Businesses t: 00353 1 439 4206
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