Corporation Tax

Corporation Rates
Standard Rate on Trading Income 12.5% from 1 January 2003
Investment/Rental Income 25%
Company Residence Finance Bill 2014 will amend Ireland’s company tax residence rules to provide that all companies that are incorporated in Ireland will be tax resident here, unless regarded as resident in a territory other than the State for the purposes of a tax treaty. The change will come into effect for new companies from 1 January 2015 while a transition period will apply until the end of 2020 for existing companies. This change will bring Ireland’s rules into line with the rest of the OECD.
Intangible Assets The current regime for intangible assets provides capital allowances for expenditure incurred on the provision of certain intangible assets for use in an Irish trade. This measure is being enhanced:

  • The use of such allowances in any accounting period is currently restricted to a maximum of 80% of the income from the relevant trade in which the acquired assets are used with any excess carried forward for offset against trading income in subsequent accounting periods. Any related interest expense deduction which may be allowed for borrowings incurred on such an acquisition is similarly restricted. This restriction on aggregate allowances (and related interest) will be removed.
  • The definition of ‘specified intangible asset’ contained in this provision will also be amended to include customer lists.

Further details will follow in the Finance Bill.

Accelerated Capital Allowances for Energy-efficient Equipment This is a measure to incentivise companies to invest in energy-efficient equipment. It allows them to deduct 100% of capital expenditure incurred on eligible equipment (that meets specified energy-efficiency criteria) from trading profits in the year of purchase rather than over the usual 8 year period for plant and machinery. This measure was due to expire at the end of 2014 and following a review by the Department of Communications, Energy and Natural Resources is being extended to the end of 2017.
Payment – Small Companies With effect from 6 December 2007 a small company is a company with a corporation tax liability of less than €200,000 in the preceding year. Preliminary tax of at least 90% of the liability for the period or 100% of previous year’s liability is due one month (by the 21st day of that month) before the end of the accounting period. New or start up companies with a Corporation Tax liability of less than €200,000 in their first accounting period will not be required to pay Preliminary Corporation tax. The liability is paid when the return is filed.
Payment – Other Companies

  • Finance (No.2) Act 2008 provides for revised arrangements for the payment of preliminary tax by large companies with a tax liability of more than €200,000 (in their previous accounting period).
  • The new arrangements provides for payment of preliminary tax by large companies in two instalments.
  • The first instalment will be payable in the 6th month of the accounting period (i.e. 21st/23rd June for a company with calendar year accounts) and the amount payable will be 50% of the corporation tax liability for the preceding accounting period or 45% of the corporation tax liability for the current accounting period.
  • The second instalment will be payable (as before) in the 11th month of the accounting period i.e. 21st/23rd November for a company with calendar year accounts) and the amount payable will bring the total preliminary tax paid to 90% of the corporation tax liability for the current accounting period.
  • The revised arrangements apply generally where the accounting period is more than 7 months in length (for shorter accounting periods, preliminary tax of 90% of tax liability is payable in one instalment as before)
Start-Up Companies – 3 Year Tax Exemption The scheme which provides relief from corporation tax on the trading income and certain gains of new start-up companies in the This scheme provides relief from corporation tax on trading income (and certain capital gains) for new start-up companies in the first 3 years of trading. This scheme is being enhanced to allow any unused relief arising in the first 3 years of trading due to insufficiency of profits to be carried forward for use in subsequent years. This is subject to the maximum amount of relief in any one year not exceeding the eligible amount of Employers’ PRSI in that year.
Research and Development (R & D) Tax Credit The R&D Tax Credit regime provides for a 25% tax credit for incremental expenditure on certain research and development (R&D) activities over such expenditure in a base year (2003). Finance Act 2012 provided that the first €100,000 of qualifying R&D expenditure would benefit from the tax credit without reference to the 2003 threshold. The amount of expenditure so allowed on a volume basis was increased to €200,000 in Finance Act 2013 and is now being increased again to €300,000. The limit on the amount of qualifying research and development expenditure that can be outsourced to another company is also being increased from 10% to 15%.
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