Tax Regime

A key aspect of Government support for industry and R&D is an attractive and continually enhanced tax system:

-  IDA Tax Brochure 2009 - PDF

Corporate Tax Rate - A corporate tax rate of 12.5% applies to all corporate trading profits

Double Taxation Agreements

- An extensive double taxation treaty network ensures the elimination or mitigation of double taxation with 50 countries 

To facilitate international business, Ireland has signed comprehensive double taxation agreements with 50 countries (as of May 2009), of which 46 are in force which provide for the elimination or mitigation of double taxation with the following countries: Australia, Austria, Belgium, Bulgaria, Canada, Chile China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia Germany, Greece, Hungary, Iceland, India, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Macedonia, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Romania, Russia, Slovak, Republic Slovenia, South Africa, Spain, Sweden, Switzerland, The Republic of Turkey, United Kingdom, United States, Vietnam and Zambia.

Ireland is continuingly expanding this agreement network: Eight new tax agreements have been concluded. (Albania, Azerbaijan, Bosnia Herzegovina, Kuwait, Moldova, Morocco, Serbia and Thailand)

Six new agreements are in the pipeline. (Argentina, Armenia, Belarus, Egypt, Singapore, Tunisia, Ukraine)

Other countries have also been identified by Ireland as having potential for double tax agreements. (Brazil, Hong Kong, Iran, and the Philippines).

A tax cooperation agreement has been signed with the Isle of Man.

In addition, where a double tax agreement does not exist with a particular country, unilateral provisions within the Irish Taxes Acts allow credit relief against Irish tax for foreign tax paid in respect of certain types of income.

Holding Company Regime

- A favourable Holding Company regime allows an Irish company to act as a European/Regional holding or intermediate holding company
Holding Companies

Until recently, investment in Ireland was likely to be routed through a holding company in another European location such as the Netherlands or Luxembourg. Recent legislation has put Ireland in a position to compete with these established European holding company locations.
Thanks to these changes, an Irish company can now act as a European/Regional holding or Intermediate holding company. The changes relate to the treatment of capital gains and foreign dividends:

Foreign Dividend Income

Although foreign dividend income is liable to tax in Ireland it is possible to gain relief so that no further Irish tax will arise.

Companies may use a system of:

1. Foreign tax credit pooling.
2. The EU Parent – Subsidiary Directive.
3. Double taxation agreements.

R&D Tax Credit
 

•  A 25% tax credit can be claimed against qualifying R&D expenditure by Irish tax-resident companies within the European Economic Area (EEA).
•  Flexibility in the R&D tax credit system grants companies whose corporation tax liability is insufficient to claim the credit via a refund by the revenue commissioners over three accounting periods.
•  The R&D tax credit is claimable against “qualifying buildings” which are defined as buildings with a minimum R&D usage of 35% over a defined 4 years period
•  R&D work sub-contracted to unconnected parties also qualifies for the credit, up to a maximum of 10% of the company’s qualifying R&D expenditure in any one year
•  Up to 5% of R&D expenditure can be outsourced to European universities.

- Link for further information on the R&D Tax Credit in the Research Development and Innovation section on this site