Irish Tax & Duties

Irish Tax

Capital Acquisitions Tax in Ireland

Capital Acquisitions Tax comprises Gift Tax, Inheritance Tax, Discretionary Trust Tax and Probate Tax.

Irish Gift Tax and Inheritance Tax Gift tax is charged on taxable gifts taken on or after 28 February, 1974, and Inheritance Tax is charged on taxable inheritances taken on or after 1 April, 1975. An inheritance is a gratuitous benefit taken on a death and a gift is a gratuitous benefit taken otherwise than on a death. The tax is charged on the taxable value of the gift or inheritance. The taxable value is arrived at by deducting from the market value of the property comprised in the gift or inheritance permissible debts and incumbrances and any consideration paid by the beneficiary. Once the taxable value of the gift or inheritance has been determined the amount of tax payable will depend on whether the appropriate tax-free threshold has been exceeded.

Irish Discretionary Trust Tax - A once-off Inheritance Tax applies to property subject to a discretionary trust on 25 January, 1984, or becoming subject to a discretionary trust on or after that date. The current rate of tax is 6%. In certain cases the 6% rate can be reduced to 3%. An annual Inheritance Tax at the rate of 1% applies to property subject to a discretionary trust on 5 April in each year commencing with the year 1986.

Irish Probate Tax is charged at the rate of 2% on the estates of persons dying after 17 June 1993. Foreign property is not liable to Probate Tax unless the deceased died domiciled in Ireland. Assets passing otherwise than under the will or intestacy are excluded. Funeral expenses and debts owing by the deceased at the time of death are allowable in arriving at the taxable value. Exemptions include estates below €50,790 in 2000, property passing absolutely to a surviving spouse, the principal private residence (where there is a surviving spouse or where certain dependent children or relatives succeed), property passing to a charity, heritage property, superannuation benefits, certain government securities, unit trusts and policies taken by foreigners, qualifying insurance policies (to the extent that they are utilised in the payment of probate tax or inheritance tax) and property which has already within one year prior to the death borne probate tax on the death of a predeceased spouse (or within 5 years where there is a dependent child).

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Capital Gains Tax Ireland

Irish Capital Gains Tax (CGT) is chargeable on gains arising on the disposal of assets, other than that part of a gain which arose in the period prior to 6 April 1974. Any form of property (other than Irish currency) including an interest in property (as, for example, a lease) is an asset for CGT purposes.

The first €1,270 of net gains i.e., gains after allowable prior year and current year capital losses, by an individual in a tax year are exempt. In the case of married couples this exemption is available to each spouse but is not transferable.

A gain on the disposal of a principal private residence including grounds of up to one acre is exempt, provided the house had been occupied by the individual as his/her only or main residence during the individual's period of ownership.

This exemption is restricted where the house was part let or part used for business or the individual did not reside there for long periods (with the exception of the Rent a Room Scheme introduced in Finance Act 2000) or where the house or gardens are sold for development purposes.

The standard rate of Capital Gains Tax in Ireland is 20%.
Disposals of Development Land on or after 1st December 1999 are liable at 20%.
Disposals of Development Land in the period 3rd December 1997 to 30th November 1999 were liable at 40% with some exceptions.

Corporation Tax Ireland

Subject to certain exemptions and reliefs, Corporation Tax in Ireland is charged on all profits, wherever arising, of companies resident in the State, and profits of non-resident companies in so far as those profits are attributable to an Irish branch or agency.

The standard rate of Irish Corporation Tax is as follows for the financial year:
12.5%
25%for non-trading income
10% rate for Manufacturing, IFSC and Shannon companies
For the financial year 2000 and subsequent years a 25 % rate is chargeable on certain income of companies.

It applies to income chargeable under
Case III (e.g. discounts, foreign income, interest on government securities),
Case IV (e.g. royalties, miscellaneous income),
Case V (rental income from land and building in the State).

It also applies to income from activities which consist of working minerals, petroleum activities and dealing in or developing land, other than construction operations. Where income of a trade is partly attributable to such activities and partly to other activities, the income is to be apportioned to determine the amount to be charged at each rate.

However, except in the case of residential development land in the year 2000, such apportionment is not required between land-dealing and construction activities in circumstances where a company deals in land which it has fully developed. In such circumstances, income of the company from dealing in the land will be taxed at the standard rate of Corporation Tax.

Visit our page on Corporation Tax for more information.

Dividend Withholding Tax Ireland

Withholding tax at the standard rate of income tax applies to dividend payments and other distributions made by an Irish resident company (with some exceptions).

Irish individual shareholders are taxable on the gross dividend at their marginal rate, but are entitled to a credit for the tax withheld by the company paying the dividend. Repayments are made where the shareholder's tax liability is less than the tax withheld.

Exemptions Where the person beneficially entitled to the dividend or distribution is:

• an Irish resident company,
• an Irish resident pension fund or charity,
• a person, other than a company, resident for tax purposes in another EU Member State or in a territory with which Ireland has a tax treaty, or
• a company resident in another EU Member State or a country with which Ireland has a tax treaty and which is not controlled by Irish residents,
• a company which is ultimately controlled by persons who are resident in another EU Member State or in a country with which Ireland has a tax treaty,
• a company the principal class of the shares of which (or of a company of which it is a 75% subsidiary) is substantially and regularly traded on one or more recognised stock exchanges in another EU Member State or in a country with which Ireland has a tax treaty, or
• a company which is wholly owned by two or more companies each of whose principal class of shares is substantially and regularly traded on one or more recognised stock exchanges in another EU Member State or a country with which Ireland has a tax treaty.

Where a dividend payment or other distribution is made directly to an exempt shareholder by the company or by an authorised withholding agent, the shareholder is required to provide evidence of entitlement to the exemption to the company or the authorised withholding agent. If the dividend payment or other distribution is made through a qualifying intermediary, the evidence of entitlement to an exemption must be given to the intermediary.

Non-residence & exemption In the case of those non-resident individuals who are eligible for exemption from the withholding tax, entitlement to the exemption is established by the making of a declaration of non-residence which must be supported by a certification procedure (i.e. a certificate of tax residence from the tax authorities of the country in which the individual is resident for tax purposes).

In the case of qualifying non-resident companies, entitlement to the exemption is also established by means of a declaration which must be supported by a certificate from the company's auditors of the company's status and in certain cases by a certificate of residence from the tax authorities of the country in which the company is resident for tax purposes.

Income Tax Ireland

Subject to certain exceptions and exemptions, income tax in Ireland is chargeable on all income arising in the State to individuals, partnerships and unincorporated bodies.

Rates of Income Tax in Ireland

• Single/Widowed without dependent children
  €28,000 @ 20%
  Balance @ 42%
• Single/Widowed qualifying for One-Parent Family Tax Credit
  €32,000 @ 20% Balance @ 42%
• Married Couple (one spouse with income)
  €37,000 @ 20%
  Balance @ 42%
• Married Couple (both spouses with income)
  €37,000 @ 20% (on the first income)
  €19,000 @ 20% (on the second income)
  Balance @ 42%

Visit our page on Personal Tax for more information.

Relevant Contracts Tax Ireland

Relevant Contracts Tax (RCT) is a tax deduction system in Ireland whereby a principal contractor:

• Deducts tax at 35% from payments to sub-contractors for whom he/she does not hold a relevant payments card, on which the principal contractor records payments made without deduction of RCT, and
• Maintains a record of payments to all sub-contractors regardless of whether he/she holds a relevant payments card for them.

Relevevant Contracts Tax applies to the following industries:
Construction operations
Forestry operations
Meat processing operations

Visit our page on Relevant Contracts Tax for more information.