Company incorporation Ireland is an attractive proposition due to low corporation tax rates (12.5%) and a current 3-year tax exempt period for new companies. For foreign investors considering setting up business in Ireland and existing organizations seeking a more tax efficient corporate base, the benefits of Irish company formation should be given serious consideration.
Ireland as a Holding Company Location
As the international pressure against the use of tax haven locations intensifies, Ireland is attracting considerable attention as a holding company location of choice. The key drivers behind such moves are as follows:
• The Irish tax regime provides a platform for multi-nationals to own shares in subsidiaries through Ireland without attracting an incidence of Irish tax liabilities on dividends or capital gains;
• Irish holding companies are not exempt to Irish corporation tax. They can obtain the benefit of Ireland’s network of double tax treaties. Holding companies resident in tax havens have limited access to a network of treaties to reduce or eliminate withholding taxes.
• In accordance with the Treaty of Rome, Ireland’s tax regime only seeks to tax corporates in respect of activities carried on in the State. It does not seek to tax profits of companies resident in other jurisdictions. Accordingly, unlike other EU Member States, Ireland does not have a controlled foreign companies regime.
• Stamp duty at 1% on transfer of shares in a company tax resident in Ireland may be avoided by either incorporating the holding company outside of Ireland, but maintaining central management and control in Ireland, or using an Irish incorporated company with American Depository Receipts or the equivalent.
Start Up Companies Exemption
Ireland offers an incentive for new company start-ups. Certain start-up companies which commenced to trade on or after 1 January 2009 and whose final corporation tax liability for each tax year does not exceed 40,000, are exempt from corporation tax (including capital gains tax) in each of the first three tax years. Finance Act 2011 extended this incentive for qualifying companies which commenced to trade in 2011.