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CORPORATE TAX – RESIDENCE & REGISTRATION

Registration

If you intend to set up a new company in Ireland in 2017, please be aware that you must register with the Irish Revenue Authorities within thirty days of incorporation. This can be done by completing the relevant sections of a TR2 Form:

http://www.revenue.ie/en/tax/vat/forms/formtr2.pdf

http://www.revenue.ie/en/tax/vat/forms/formtr2-nonresident.pdf

 

The information required to register includes:

1. Your CRO Number – For further information you should contact the Companies Registration Office https://www.cro.ie
2. The company’s year-end.
3. The company’s trading activities.
4. The name of the company, its registered office address and the address of its principal place of business.
5. The name of the Company Secretary.
6. Details of Directors and the main shareholders of the company including their Personal Public Service (PPS) numbers.

 

Every company which is incorporated in Ireland regardless of its residency or which is a foreign incorporated company commencing to carry on a trade or profession in Ireland is also advised to file a Form 11F CRO (www.revenue.ie/en/tax/it/forms/11fcro.pdf) with the Irish Revenue Commissioners within thirty days of commencing to trade.

 

Under Section 882(2) TCA 1997 where the company is incorporated but not tax resident in Ireland, the following additional information is required:

1. The country in which the company is resident;
2. The name and address of the company which is trading in Ireland if the Trading Exemption in Section 23A(3) applies.
3. The names and addresses of the beneficial shareholders if the Treaty Exemption under Section 23A(2) applies. If, however, the company is controlled by a company whose shares are traded on a stock exchange in an EU or DTA country then the registered office of that company will be required.

 

If your company is deemed to be tax resident in Ireland then it will be liable to tax on its worldwide income/profits in Ireland and not just the profits generated in Ireland. If it is not deemed to be Irish tax resident, then it will only be liable to Irish tax on Irish source or generated income/profits.

 

Residence

The first question to ask yourself is how to determine the residence of the company?

 

The 2014 Finance Act, which came into effect on 1st January 2015, amended the corporate tax residence rules contained in Section 23A TCA 1997 to address concerns about the “double Irish” structure.

 

Here is a brief summary of the legislation as follows:

  • A company incorporated in Ireland will be deemed to be Irish tax resident.
  • However, to ensure it complies with how company residence is dealt with in the Double Taxation Agreements, there is an exception to this rule.
  • The exception states that if, under the provisions of a Double Taxation Agreement, the Irish incorporated company is deemed to be tax resident in another jurisdiction then that company will not, in fact, be considered to be Irish tax resident.
  • A company which was not incorporated in Ireland but is managed and controlled in Ireland will not be prevented from being taxed as an Irish tax resident company according to the amendments to Finance Act 2014.

 

There are specific rules for companies incorporated in Ireland before 1st January 2015.

The new provisions apply only from the earlier of the following dates:

a) 1st January 2021 or
b) The date of “change” which takes place after 1stJanuary 2015. By “change” we mean where there is both (a) a change in ownership of the company and (b) a major change in the nature or conduct of the business activities of the company. The timespan for this “change” to have taken place is within one year before the date of the change or on 1st January 2015, whichever is the later date, and ending five years after that date.

 

What does this really mean?

It means that companies incorporated in Ireland before 1st January 2015 can use the previous company tax residence legislation until 31st December 2020.

It is essential that up to 31st December 2020, all corporate groups take into consideration the impact of the new legislative provisions on any proposed reorganisations, mergers or acquisitions where there would be (a) a change in the ownership and (b) a change in the nature/conduct of the business in relation to non-resident companies which were incorporated in Ireland.

 

Tax Rates in Ireland

• Trading Income is taxed at 12½%

• Investment Income including Deposit Interest, Interest on Securities and Rental Income is taxed at 25%.

• Dividends or distributions paid by one Irish resident company to another Irish resident company are known as Franked Investment Income and are not liable to Irish Corporation Tax in the hands of the recipient.

• Foreign Dividends received by Irish resident companies will be subject to Irish corporation tax at 25% in most cases. However, tax at the 12½% rate will apply on dividends received from EU subsidiaries where certain conditions are met under 21B TCA 1997.

• Companies are subject to Corporation Tax on their chargeable gains. The relevant rate of Capital Gains Tax is 33% which is applied to the gain which is then adjusted to an amount which would give the same tax liability using the 12½% Corporation Tax rate. The tax adjusted chargeable gain is the figure to be included in your Corporation Tax calculation.

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