Corporate Tax 2010 - BMR Advisors

McCann FitzGerald
Ireland
Ireland
3.7 Are there any restrictions on tax relief for interest
payments by a local company to a non-resident in addition
to any thin capitalisation rules mentioned in questions
3.4-3.6 above
No. Relief is available in respect of interest incurred exclusively for
the purposes of the trade and for some other qualifying purposes
irrespective of where the lender is based.
3.8 Does Ireland have transfer pricing rules
will be allowed deductions for certain expenses and capital
allowances will be available in respect of certain types of capital
expenditure. Losses incurred in the current accounting period and
losses forward from previous periods may be taken into account in
computing taxable income.
4.4 If it otherwise differs from the profit shown in commercial
accounts, what are the main other differences
Please see answer to question 4.3 above.
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Ireland does not have transfer pricing rules.
4 Tax on Business Operations: General
4.1 What is the headline rate of tax on corporate profits
The standard corporation tax rate applicable to trading profits of an
Irish tax resident company is 12.5%. Non-trading profits earned by
a company, such as investment income, and the trading profits
derived from certain types of activities, are generally taxed at a rate
of 25%. Companies are also subject to tax on chargeable gains at a
rate of 25% as set out at question 5.2 below.
4.2 When is that tax generally payable
A company is obliged to file its tax return within nine months of the
end of the tax year. In general, companies are obliged to pay
preliminary tax amounting to 90% of the tax liability for the year on
the 21st day of the 11th month of its accounting period. The
balance of the company’s tax liability, and the company’s
corporation tax return is due by the 21st day of the 9th month after
the end of the accounting period. Thus, a company which prepares
accounts to 31 December 2008 will pay 90% of its corporation tax
liability on 21 November 2008, and the balance of its tax liability
on 21 September 2009. Finance (No.2) Act 2008 provides for
revised arrangements for large companies with a tax liability in
excess of €200,000 in the preceeding accounting period. The new
arrangements provide for the payment of corporation tax in three
instalments. The first instalment will be payable in the 6th month
of the accounting period (i.e. 21st June for a company with calendar
year accounts) and the amount payable will be 50% of the
corporation tax liability for the preceding accounting period or 45%
of the corporation tax liability for the current accounting period.
The second instalment will be payable (as before) in the 11th month
of the accounting period i.e. 21st November for a company with
calendar year accounts) and the amount payable will bring the total
preliminary tax paid to 90% of the corporation tax liability for the
current accounting period with the balance paid when the
companies tax return is to be filed. The revised arrangements apply
generally where the accounting period is more than 7 months in
length (for shorter accounting periods, preliminary tax of 90% of
tax liability is payable in one instalment as before).
4.3 What is the tax base for that tax (profits pursuant to
commercial accounts subject to adjustments; other tax
base)
Corporation tax is charged on a company’s income by reference to
its commercial accounts prepared in accordance with generally
accepted accounting principles for its accounting period. In
computing its taxable income liable to corporation tax, a company
4.5 Are there any tax grouping rules Do these allow for relief
in Ireland for losses of overseas subsidiaries
There are extensive tax grouping rules in Ireland which allow the
offset of losses incurred by a company against the profits of another
group company in certain circumstances. The tax grouping rules
also allow the payment of interest and charges to a group company
without an obligation to deduct tax, the transfer of assets between
group companies without triggering a liability to capital gains tax
and the payment of dividends to a group company without an
obligation to deduct tax.
An Irish resident company may claim relief for the losses of 75%
subsidiaries resident in an E.U. Member State or an EEA Member
State with which Ireland has a double taxation agreement that is in
effect, in certain limited circumstances. The loss must correspond
to a loss that would generally be available for offset under the Irish
rules, and must not be attributable to an Irish branch. In addition,
the loss must not be available for offset in the current year, a prior
year or a future year by the company making the loss, nor available
for offset in another company in another E.U. Member State.
4.6 Is tax imposed at a different rate upon distributed, as
opposed to retained, profits
In general, the same tax rate applies to distributed and retained
profits. However, a company which is a close company (a company
that is controlled by five or fewer participators or by participators
who are directors (however many)), may be liable to pay a close
company surcharge of 20% in respect of its undistributed estate and
investment income to the extent it is not distributed within eighteen
months of the end of the accounting period to which it relates.
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
Income tax is payable by individuals and other non-corporate persons
resident for tax purposes in Ireland. In general, income tax is charged
at a rate of 20% on income up to the standard rate band, which is
currently €36,400. Income in excess of this is taxed at the marginal
rate of 41%. In addition, since 1 January 2009 there has been an
additional income levy, from 1 January 2009 to 30 April 2009, this
was a rate of 1% for income below €100,100, 2% for income between
€100,101 and €250,120 per annum, and 3% for income above
€250,120 per annum. Since 1 May 2009, the rates have been 2% on
income between €15,028 and €75,036 per annum, 4% on income
between €75,036 and €174,980 per annum, and 6% on income above
€174,980 per annum. There is an exemption for certain low earners.
Individuals are also liable to capital gains tax on chargeable gains
arising on the disposal of assets at a rate of 25% in respect of
disposals made since 7 April 2009, the rate on the disposal of assets
prior to this and since 14 October 2008 is 22%. Individuals are
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