Taxation Services

Ireland has for many years had a flat 12.5% corporate tax rate applicable to Irish trading profits. This has been augmented by the introduction of a 0% rate for new trading companies for the first three years of trading subject to certain conditions. There is a higher rate of corporation tax of 25% for non-trading income such as rent.

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, unless certain exemptions and reliefs can be availed of.

Ireland's taxation system contains many incentives used in attracting overseas Investment to Ireland some of which make it easier to do business here. A common reason cited for locating business in Ireland has often been Ireland's favorable corporate tax rate.

Clearly Ireland continues to be committed to its favorable corporation tax regime. The standard rate applies to trading profits without limit, which has led to many multinational corporations locating here. It has also shown its commitment to low corporation tax by extending the 3 year start up exemption

A new Special Assignee Relief Programme (SARP) was introduced in Finance Act 2012 is to assist multinational and Irish companies in attracting key high income talent into Ireland by reducing their level of taxable employment income over €75,000.

As part of a measure to develop and promote Irish exports, recent Finance Acts have introduced an income tax relief called the Foreign Earnings Deduction (FED). The FED will apply to Irish tax resident individuals working in certain countries. The relief operates by granting a tax deduction against the individual's income tax liability where certain conditions are met.

CGT is a tax on a capital gain arising on the disposal of assets owned by you. At its simplest, deducting the price you paid for an asset when you acquired it from the sale proceeds when you dispose of it gives you the chargeable capital gain. All forms of property are regarded as assets for Capital Gains Tax purposes whether situated in or outside the State. Examples of assets are:

• Land
• Shares
• Goodwill
• Currency, other than Irish currency

There are a number of exemptions from CGT such as:

• Gains from the disposal of Government Stocks and Securities.
• Gains from the disposal of tangible movable property, where the amount or value of the consideration does not exceed €2,540.
• Gains from the disposal of wasting assets, i.e. assets with a predictable life of less than 50 years, for example, a private motorcar, livestock etc.
• Gains from the disposal of your principal private residence.
• Prize Bond, Lottery and Gaming winnings.

In calculating the amount of tax payable, deductions are allowable for incidental costs of acquisition, such as solicitor's fees, stamp duty etc. and incidental costs of disposal such as, solicitors/auctioneers fees etc. In addition, where an asset was acquired before 2003, inflation relief may be available, effectively adjusting the cost in line with a published inflation factor.

The first €1,270 of taxable gains by an individual in a tax year are exempt. In the case of a married couple this exemption is available to each spouse but is not transferable.

An individual's exposure to Irish capital gains tax depends on their tax residence and domicile status. Note Irish specified assets (i.e. assets located in Ireland) are always subject to Irish CGT.

In the current market, our Capital Gains Tax planning services may be of particular interest to those considering disposing of assets. We will calculate your Capital Gains Tax liability, advise on ways of reducing it including the utilization of tax losses, and identify the relevant payment dates.

Capital Acquisitions Tax (CAT) arises on the gift or inheritance of an asset. The amount of CAT to be paid varies depending on the relationship between the beneficiary (person receiving the gift or inheritance) and the person who provided the gift or inheritance (disponer). The gift/inheritance is valued for CAT purposes on the date the beneficiary becomes entitled to it. The total amount of the gift/inheritance taxable is the market value minus allowable deductions for example funeral expenses (in the case of an inheritance), legal costs or any debts which must be paid by law.

The level of CAT owed to the revenue will depend on the relationship between the disponer and the beneficiary. Any gift or inheritance received that exceeds the beneficiary's group tax exemption threshold is taxed at the rate of CAT which is now 33%. The tax exemption thresholds are as follows:

Group
Post 10.10.18 Threshold
Group A - Son/Daughter (including step child or adopted child), Parents, in cases of inheritance of disponer.
€320,000

Group B - Brother/Sister, Niece/Nephew, Parent, Grandchild/Great Grand Child of disponer.
€32,500

Group C - Any relationship to disponer not included in Group A or Group B €16,250

The beneficiary of the gift/inheritance is responsible for ensuring that any CAT owed is paid and returned to Revenue by a specified date. If you are non-resident then you must appoint a third party, such as a solicitor or accountant to take responsibility for the payment of CAT to the Revenue.

It is worth noting that if the total value of gifts and inheritances exceeds 80% of the relevant group threshold received by a beneficiary, the beneficiary must file a CAT return (Form IT38). This obligation applies even though there is no CAT liability arising.

Subject to certain conditions, there are a number of exemptions from CAT as follows:

• Gifts or inheritances between spouses.
• The first €3,000 of taxable gifts from one individual to another in a calendar year.
• Payments for damages or compensation.
• Inheritance of a dwelling house which is your main residence subject to certain conditions.
• Benefits received for charitable purposes.
• Business Relief -applies to gift or inheritance of business property.
• Agricultural Relief - applies to gift or inheritance which consists of agricultural property such as land or machinery.

Our firm specializes in the area of VAT consultancy. We have wide-ranging experience of dealings with both domestic VAT issues and the international aspects of VAT on goods and services.

VAT is a consumption tax assessed on the value added to a product or service. It is an EU-wide tax, being operated with only minor variations by all countries within the EU. Knowledge of how VAT operates on transactions in other member states and outside of the EU is of growing importance to businesses in an increasingly global market place.

It applies to most goods and services that are bought or sold in the EU. Goods and services that are exported are normally not subject to VAT. However to keep the system fair for EU producers, VAT normally applies to the importation of goods and services. The taxable person is obliged to charge and account for VAT on a periodic basis, normally bi-monthly, to the revenue commissioners. They can deduct VAT suffered on purchase of goods and services which have been used to make their own taxable supplies. VAT is charged at different rates depending on the type of business you are running, where the supply is made and whether the buyer of the good or service is a private individual or another business.

The current rates of vat and vat registration thresholds in Ireland are as follows:

23% is the standard rate of VAT and all goods and services that do not fall into the reduced rate categories are charged at this rate.13.5% is a reduced rate of VAT for certain specified services such as electricity, building and building services, agricultural contracting services, short-term car hire, cleaning and maintenance services.4.8% is a reduced rate of VAT specifically for agriculture. It applies to livestock (excluding chickens), greyhounds and the hire of horses.0% (Zero) VAT rating includes all exports, tea, coffee, milk, bread, books, children’s clothes and shoes, oral medicine for humans and animals, vegetable seeds and fruit trees, fertilisers, large animal feed, disability aids such as wheelchairs, crutches and hearing aids.Exempt from VAT

The supply of most financial, medical or educational services are exempt from VAT. You may also not pay VAT for certain live theatrical and musical performances (except those where food or drink is served during all or part of the performance). However you are not entitled to register for VAT in respect of your supply of exempt goods and services, unless you also make taxable supplies. If you make an exempt supply of goods or services, you are not entitled to reclaim VAT incurred on expenditure in connection with the exempt supply.

Difference between exemption and zero-rating
If a business person supplies taxable goods or services, including zero-rated ones, they can claim VAT back from the government on their taxable business purchases. However, if someone only supplies exempt goods or services, they cannot reclaim VAT.

Should you require clarification on the applicable rate to any specific supply of good or service in the Republic of Ireland please contact our office as we have prepared an extensive listing of VAT ratings in Ireland which we can provide to you

REGISTRATION
Registration is obligatory if turnover exceeds the following limits:
Business supplying services
€37,500 per annum
Business supplying goods
€75,000 per annum
Intra community acquisitions
€41,000 in a 12 month period

Also certain foreign traders supplying taxable services in Ireland or selling goods from stocks held in Ireland must register for Irish VAT regardless of the volume of sales.

There are also specific rules for distance sales to Ireland and for premises providers who allow non-established vendors to operate from their premises.

VAT ON PROPERTY
One of the most complicated areas in VAT legislation, and Irish tax legislation as a whole, is the operation of VAT on property transactions. We can advise you on the VAT issues regarding any property transaction such as:

• Determining if VAT applies to your property transaction(s).
• Advice on and calculation of your liability to VAT when selling property or granting leases.
• Advice on surrendering or assigning/selling leases.
• How VAT is operated on subsequent leases (granted following the early surrender of a previous lease).
• Advice on all Revenue concessions and anti-avoidance measures that apply to property transactions.
• How VAT on property applies in a VAT Group situation
• The steps which should be taken in structuring property deals.

We have significant experience in representing clients, both corporate and personal, in Revenue audits and investigations. The importance of planning for Revenue audits cannot be overstated due to the strict compliance approach taken by Revenue in the way they conduct audits and the low monetary threshold after which publication of default can arise.

Should you be selected for enquiry by the Revenue Commissioners our firm can be of assistance as follows:

• We can meet with you to discuss areas which the auditor is likely to focus on and help you to prepare for issues which are likely to be queried.
• Explain the scope and limits of Revenue enquiries, and what is reasonable
• We will inform you of the possible penalties which could arise if irregularities are uncovered and the advantages of making a voluntary disclosure of any irregularities prior to commencement of the audit in order to mitigate any penalties.
• We can assist you in taking the best strategy to mitigate the effects of the audit and conclude matters to the satisfaction of both you and the Revenue Commissioners.
• We can represent you at all stages during the course of the audit and negotiate on your behalf directly with the Revenue Commissioners.
• Where necessary negotiating an extension to a deadline where information has been requested
• Providing guidance should an agreement fail to be reached with the Inspector

It is important to be aware that Revenue's methods for selecting which businesses and taxpayers to audit are becoming increasingly sophisticated. With better use of IT systems, Revenue are gathering more and more data and also finding increasingly efficient ways of processing this data to their advantage.

Also, with Government expenditure well in excess of tax revenues, Revenue are coming under increasing pressure to identify errors and omissions in tax returns which will lead to higher returns on their audit investigations. Being mindful of this, ensuring a good compliance record and being pro-active in communications with Revenue over unusual transactions or trading histories will take you a step closer to minimizing your chance of becoming the subject of an audit.

We work with clients to ensure important future transactions are properly planned from a tax efficiency perspective on a range of areas such as deciding on buying or selling property, making investments, retiring from or selling a business, making a gift to an individual or family member. All of these events usually trigger a tax liability which can be minimized or avoided in a tax compliant manner in certain circumstances by proper advance tax planning. Some other areas we have significant expertise in include:

• Tax efficient retirement planning
• Transfer of a business to a company
• Succession planning
• Estate Planning

Non-Residents, Expatriates & Non-Domiciliaries>

We work with overseas individuals to help mitigate their overall tax burden, including foreign taxes. In particular, we focus on devising strategies which minimize our client's exposure to income tax and capital gains tax.

Non-residents, Expatriates and non-Domiciliaries are subject to specific tax rules in Ireland which can assist them in tax planning for their future such as the remittance basis of tax. Ireland also has an extensive tax treaty network and frequently, expats and non-domiciliaries have to take account of the interaction between treaty countries and the implications it has for their tax affairs.