Comparative Guides
Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.
Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.
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Results: 4 Answers
Corporate Tax
1.
Basic framework
1.1
Is there a single tax regime or is the regime multi-level (eg, federal, state, city)?
 
Ireland
Ireland has a single corporate tax code, operated and maintained by the Irish Revenue Commissioners (known as ‘the Revenue’), which applies on a national level equally to all companies.

One exception to this is the rate charge. This is payable by owners of property to their local council and is based on a formula which depends on the annual rental value of the property and the funds required to meet the council’s budgeted expenditure.

For more information about this answer please contact: Andrew Quinn from Maples Group
1.2
What taxes (and rates) apply to corporate entities which are tax resident in your jurisdiction?
 
Ireland
Ireland has three rates of corporation tax: a 12.5% rate, a 25% rate and a 33% rate.

The 12.5% rate applies to the trading profits of a company which carries on a trade in Ireland. There is no precise definition of what constitutes a ‘trade’ for this purpose. As a general rule, it requires people on the ground in Ireland carrying out real economic activity on a regular or habitual basis, and normally with a view to realising a profit.

The corporation tax rate of 25% applies in respect of passive income, profits arising from a possession outside of Ireland (ie, foreign trade) and profits of certain trades such as dealing in or developing land.

Irish-resident companies are liable to corporation tax on ‘chargeable gains’ arising on the worldwide disposal of assets; the gain is taxable at the capital gains tax rate of 33%.

For more information about this answer please contact: Andrew Quinn from Maples Group
1.3
Is taxation based on revenue, profits, specific trade income, deemed profits or some other tax base?
 
Ireland
A company’s profits for tax purposes will follow its accounts, provided that they are prepared in accordance with generally accepted accounting principles, subject to specific adjustments required by Irish tax legislation.

Some of the main adjustments required by legislation include revenue expenses which are not incurred wholly and exclusively for the purposes of the trade, which are not deductible from the company’s taxable profits.

While accounting-based depreciation of assets is not generally deductible, tax-based depreciation can be taken into account for ‘plant and machinery’ and ‘industrial buildings’, subject to meeting certain conditions.

For more information about this answer please contact: Andrew Quinn from Maples Group
1.4
Is there a different treatment based on the nature of the taxable income (eg, gains on assets as opposed to trading income or dividend income)?
 
Ireland
Yes, different treatment applies depending on the nature of the taxable income, as follows:

  • A rate of 12.5% applies to the trading profits of a company which carries on a trade in Ireland.
  • A rate of 25% applies in respect of passive income, profits arising from certain possessions outside of Ireland (ie, foreign trade) and profits of certain trades such as dealing in or developing land.
  • A rate of 33% applies to Irish-resident companies on the worldwide disposal of assets and to non-resident companies on disposals of ‘specified assets’ (for further detail please see question 4.3).

While dividends received by Irish companies from abroad are subject to tax at the rates set out above, dividends received from other Irish companies are not subject to tax, as they are considered to be franked investment income.

For more information about this answer please contact: Andrew Quinn from Maples Group
1.5
Is the regime a worldwide or territorial regime, or a mixture?
 
Ireland
Corporation tax is charged on the total or worldwide profits of Irish resident companies. Profits constitute income from all sources, with the addition of chargeable gains.

Companies that are not resident in Ireland but are carrying on a trade in Ireland through a branch or agency are subject to corporation tax in respect of the trading profits of the branch or agency, in addition to chargeable gains from the disposal of ‘specified assets’ (outlined in further detail in question 4.3) and Irish-based assets used for the purpose of the Irish branch/agency.

For more information about this answer please contact: Andrew Quinn from Maples Group
1.6
Can losses be utilised and/or carried forward for tax purposes, and must these all be intra-jurisdiction (ie, foreign losses cannot be utilised domestically and vice versa)?
 
Ireland
If a company sustains trading losses in an accounting period, they can be offset against other trading income in the same accounting period or the immediately preceding accounting period.

Any unused trading losses may be offset against non-trading income, including chargeable gains, on a value basis.

The unused trading losses can be carried forward indefinitely against trading income in succeeding accounting periods; however, the losses must be utilised at the first available opportunity.

Trading losses incurred by a foreign branch of an Irish resident company can be included in the company’s tax computation in the same way as domestic trading losses, as an Irish company is chargeable to tax on its worldwide income.

Group relief is also available for surrender between members of the same group. A group for these purposes broadly encompasses 75% subsidiaries and can include companies resident in an EU state or a jurisdiction with which Ireland has concluded a double tax agreement. However, the ability for a foreign subsidiary to surrender group relief to an Irish company is subject to strict conditions, such as the following:

  • The surrendering state is an EU/European Economic Area member state;
  • The loss is deemed to be a ‘trapped loss’ (ie, it is not available for use in any prior or subsequent accounting period by the overseas subsidiary); and
  • The loss could be available for surrender by means of group relief if the company were resident in Ireland.
For more information about this answer please contact: Andrew Quinn from Maples Group
1.7
Is there a concept of beneficial ownership of taxable income or is it only the named or legal owner of the income that is taxed?
 
Ireland
This means, for example, that the beneficiary of a bare trust will be the beneficial owner of the income from that trust.

Apart from the particular case of bare trusts and nominees, the person legally entitled to income should also be regarded as the beneficial owner of that income, regardless of any other legal arrangements the legal owner has entered into or any use to which it puts the income it receives. In this regard, Irish law has not adopted the ‘international fiscal meaning’ of beneficial ownership contained in the English Court of Appeal decision in Indofood International Finance Ltd v JP Morgan Chase Bank NA London Branch [2006] STC 1195. In that case the court considered that for a company to meet the typical beneficial ownership condition of a double tax treaty, it must have ‘the full privilege to directly benefit from the income’. This concept is not currently a feature of Irish law.

For more information about this answer please contact: Andrew Quinn from Maples Group
1.8
Do the rates change depending on the income or balance-sheet size of the taxpayer?
 
Ireland
No, a corporate taxpayer will be subject to the rates set out in question 1 irrespective of income or balance-sheet size.

For more information about this answer please contact: Andrew Quinn from Maples Group
1.9
Are entities other than companies subject to corporate taxes (eg, partnerships or trusts)?
 
Ireland
A partnership is not a separate legal entity distinct from its members and therefore the partnership itself does not pay taxes. However, the partnership is treated as a separate entity for the purposes of computing the partnership’s taxable profits, capital allowances and charges. Once calculated, they are apportioned among the partners in accordance with the partnership agreement. If no such partnership agreement exists, profits and losses are apportioned among the partners equally.

Similarly, a trust is itself not subject to taxes, but the trustees are treated as a ‘body of persons’ for tax purposes and are therefore liable to account for tax on trust profits, file tax returns, pay preliminary tax and so on.

For more information about this answer please contact: Andrew Quinn from Maples Group