Business Taxes in the Republic of Ireland You Need to Be Aware of And May Apply to Your Business

This page contains an abbreviated summary of the taxes that apply to companies in the Republic of Ireland. This is a simplified abstract for your information and does not replace and in-depth consultancy process.

Corporation Tax

This tax is charged on the company’s profits which include both income and chargeable gains. The corporation tax in Ireland is quite low, and is often cited as an example of tax competition, as it is used as an incentive for foreign companies to invest in Ireland.

There are three rates of Corporation Tax in the Republic of Ireland:

• 12.5% for trading income
• 25% for non-trading income such as interest gains, foreign sourced income and profits, and rental income.
• The rate for Manufacturing, IFSC and Shannon Free Zone companies at 10% ended on 31 December 2005.

PAYE

As of January 2009, a 1% Tax levy on all incomes will be introduced up to €100,000 with a 2% levy on the balance above that amount.

• The PAYE system covers all employees.
• Each individual qualifies for tax credits based on their own circumstances.
• After applying for the tax credits, a form will be sent to the employer setting out the applicable cut-off points and rates applicable to the person in question.
• The employer deducts tax directly from the employee according to these instructions, each pay period, and remit the tax directly to the Revenue Commissioners.
• Standard income tax rate 20% on the first €34000 of taxable single person's income (2007).
• The higher rate payable on the balance is 41% (2007).
  

PRSI

In addition to PAYE, another tax called Pay-Related Social Insurance (PRSI) is also payable, which is similar to National Insurance in the United Kingdom.

• The first €127 earned in a week is exempt.
• Annual earnings up to €46,600 incur a 4% Social Insurance payment.
• Annual earnings up to €46,600 incur a 2% Health Contribution.
• Employer pays 10.75% contribution of the employee's gross income.
• Special rates: lower earners (reduction), self-employed people (3%), civil servants employed since before April 1995 (0.9%) and other.
  

Capital Gains Tax

Capital gains tax is charged at the same rate as the standard rate on the difference between the sale and purchase prices of most capital assets.

Indexation relief was allowed up until 2003, whereby the purchase price is multiplied by a fixed inflation factor derived from the Consumer Price Index.

Direct costs of purchase and sale can also be deducted, and losses on one asset can be offset against gains on another.
There are a few exemptions available, including:

• The first €1,270 of a gain per person every year is exempt.
• Transfers between spouses are totally exempt.
• Transfers on death are exempt, although they are subject to Capital Acquisitions Tax.