Posts Tagged ‘Non-Domiciled’

Ireland as a Holding Company Location

Monday, May 30th, 2011

Introduction to the Irish Holding Company Regime

 

Due to changes in Irish government fiscal policy over several years, Ireland has become a favoured location for holding companies for many US & UK international trading corporations.  Our low corporate tax rate has gained many news headlines in Europe, particularly during Ireland’s IMF/EU financial structuring deal. However, our low corporate tax rate is only one of many reasons to locate your corporation here.

Key Benefits of Locating Holding Company in Ireland

  1. Low corporate tax rate of 12.5% on trading profits, without limit.
  2. Finance Act 2011 introduced an extension to 0% corporate tax rate for new start-up companies for the first three years of trading. The tax benefit has been capped to the amount of employers PRSI paid on the employees’ salaries, to aid job creation.
  3. No dividend withholding tax (DWT) on payments made to individual shareholders resident in either an EU or double tax treaty country.
  4. No DWT applies where they are paid to a non-resident company shareholder where that company is not controlled (50% or more shareholding) by Irish residents
  5. Dividends received by an Irish holding company from trading profits of a subsidiary are generally taxed at 12.5% corporation tax.
  6. Limited transfer pricing legislation which only applies to large companies with a turnover of  more than €50M, employees of more than 250 and, assets over € 43m
  7. Capital Gains tax exemption for disposal of shares in a subsidiary company. There is a minimum share holding requirement of 5% and shareholding period of 1 year, plus other conditions.
  8. Double tax treaty network with 55 countries in effect and 7 more waiting to be implemented which simplify the distribution of profits internationally and provides some clarity to our direct tax system and how it applies in conjunction with an EU or DTT country.
  9. Membership of the EU and Euro currency gives Ireland an advantage when trading with fellow EU countries
  10. The ability to combine trading activities with its holding company function i.e. charging fees for managing a foreign subsidiary would be deemed to be an economic trading activity and the profits of such an activity would attract low corporation tax.
  11. No ‘Controlled Foreign Company (CFC)’ or ‘Thin Capitalization rules’ are currently in force in Ireland
  12. There is a favourable approach by the Irish Government to foreign owned holding companies
  13. Low capital start up costs for investing in an Irish limited company
  14. Remittance taxation system available for non-domiciled Irish resident individuals provides a tax incentive to foreign individuals re-locating to Ireland
  15. Abolition of employers PRSI on share based remuneration in Finance Act 2011 significantly reduces employers costs and is a significant benefit in deciding on whether to locate in Ireland.

If you are considering locating a holding company in Ireland and require further advice on these issues please see O’Mahony Donnelly Contact details

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Non-Domiciled in Ireland – Implications of becoming Tax Resident in Ireland

Thursday, March 4th, 2010

If you are considering moving to Ireland from the UK, USA or other foreign country then you will need to consider the tax implications of such a move. We have many clients who we advise on such matters and are fully conversant with the Irish tax issues involved. The timing of such a move is crucial in ensuring you do not overpay Irish taxes and minimise your potential Irish taxation exposure. There are also other issues you would need to be aware of surrounding potential capital taxes on capital assets you may hold abroad. If you would like to discuss with us how we can help you make the move with minimum of tax worries please contact me. Contact page at O’ Mahony Donnelly, Chartered Certified Accountants.

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Ireland’s ‘Non-Domiciled’ Rules to Benefit UK Expats

Thursday, December 17th, 2009

Two major Irish and UK financial events of the year occurred last Wednesday 9th December…..In Ireland the budget report was presented by Minister Brian Lenihane …..while UK Chancellor Alastair Darling announced the UK’s  final pre-budget report.  Whilst both countries have similar economic problems, albeit on a different scale….Ireland made € 4bn cuts to public service spending with the aim of reducing our deficit to below 3% of GDP by 2014…this will be achieved over a succession of budgets….the UK’s government borrowing is expected to fall from £ 178bn (12.6% of GDP) this year to £82bn (5.5% of GDP) by 2014.

There has been  pressure for Ireland to make significant changes to our system following the commission  on taxation report recently… to provide further equity in our tax system….which they did in some key areas such as the new minimum tax on certain non Irish resident, Irish domiciled individuals.

However, Ireland continues to favour the remittance basis of taxation for Irish resident, non- domiciled individuals…a key difference between Ireland and the UK, who have a minimum tax on their UK resident non domiciled individuals of £ 30,000  per annum. This has resulted in several UK expatriates to re-locate to Ireland making substantial savings in personal income tax.

If their tax affairs and finances are structured in the correct way many can benefit to the tune of several thousands of pounds.

Further proposed increases in UK Income tax from 06/04/2010…an additional tax rate of 50% on Income over £ 150,000 may act as the ’straw that broke the camel’s back’ for many…and will increase the gap between the UK and Ireland’s personal taxation of non-domiciled individuals, re-affirming Ireland’s position as a location of choice .

With the UK’s minimum tax charge of £ 30,000 per annum coupled with a marginal tax rate of 50% on UK earnings over £ 150,000, it is easy to see why UK resident non domiciled individuals may be looking to head west for a solution to their mounting UK tax burden.

We advise several Irish resident non-domiciled clients on how these issues work in practice and would be delighted to assist with any queries or issues you have.

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Budget 2010 Highlights

Wednesday, December 9th, 2009

Minsiter Brian Lenihan introduced his eagerly awaited budget speech this evening at 3.45pm presented as one with Ireland ‘on the road to economic recovery’, ’signalling to the world that we are willing to put our house in order’ and ‘difficult measures taken by Ireland this year to date have ben commended by international economic interests’.  In this light and with a 4billion correction in spending required for 2010 and a target of reducing our deficit below 3% of GDP by 2014 here our the ‘highlights’.

  • 6-9 months timeframe expected to see positive growth in Irish economy
  • need to compete internationally with export lead growth
  • income tax system considered to be ‘imbalanced’ and need to simplify and broaden the tax base
  • from 2011 a new system of social welfare contributions will replace health, prsi and income levies
  • a new property tax is being planned following recommendations of commission on taxation report
  • domestic water rates to be introduced
  • those taxpayers availing of tax incentive schemes the tax free amount is being reduced from € 250,000 to € 125,000 and any excess over this will be taxed at 30% rather than 20% in addition to the normal levies that also apply. (MOM- This will therefore affect clients who avail of artist exemption scheme)
  • our non- resident tax is considered to be in line with world economies
  • New tax of € 200,000 per annum on Irish domiciled individuals i.e. those with income greater than € 1million pa and Irish capital assets of € 5 million plus. (This appears to affect non-resident Irish domiciled individuals….therefore for non-domiciled Irish residents there appears to be no changes to remittance basis of taxation……..)
  • Public servants pay to be reduced between 5 and 15%
  • cost of living has reduced by 6.5% during last 12 months
  • child benefit to be reduced by € 16 per child
  • Employers PRSI exemption will be available to encourage employers to hire unemployed people
  • Excise duties to be reduced on drink (as a measure to stop cross border trade, which account for 44% of all cross border trade)
  • VAT rate reduction from 21.5% to 21%
  • Car scrappage scheme for cars 10 years old in 2010
  • New credit review system for SME’s making credit applications…with independant review body to oversee and appeals on applications can be made
  • Agriculture…a new 5 year agri-environment scheme to be introduced (MOM- presumably this to replace the REPS scheme which was discontinued for new enterants after May 2009)
  • Corporation tax …no change to the 12.5% rate which firmly remains.
  • Corporation tax …The 0% rate introduced in 2009 to be extended to new companies who begin trading in 2010 (MOM- This is a welcome incentive to business to encourage new start-ups both domestic and international, which can have a spin off effect to the economy in relation to creation of new jobs etc)

I will have more information once the detail unfolds over the coming days and will be happy to update you and answer any questions you may have….O’Mahony Donnelly Chartered Certified Accountants Contact Details

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