Taxation in Dublin, Ireland
What are the tax rates in Dublin, Ireland? How are corporations taxed? Here’s Teleports overview of personal, corporate and other taxation topics in Dublin, Ireland.
Personal taxation in Dublin
Effective personal income tax rate
| Annual income | $25,000 | $40,000 | $80,000 | $125,000 | $200,000 |
|---|---|---|---|---|---|
| Rate | 20% | 20% | 30% | 34% | 36% |
Teleport city rankings for personal income tax
Personal taxation puts Dublin in position 137 of all Teleport Cities.
Basis
Irish residents are taxed on their worldwide income and capital gains, as are individuals who are not resident, but who are “ordinarily resident” (as defined). Nonresidents are taxed on Irish- source income and gains from immovable property in Ireland.
Residence
An individual is resident in Ireland if he/she spends more than six months of the tax year in Ireland, or has a combined presence of at least 280 days in Ireland over that tax year and the preceding tax year. An individual is considered ordinarily resident if he/she was resident in Ireland during the previous three tax years. A day is counted for residence purposes if the individual is present in the state at any time during the day.
Filing status
Married couples and civil partners living together may opt for joint or separate assessment.
Rates
Progressive rates are imposed up to 40%; a universal social charge applies where the annual income exceeds EUR 13,000. The rate of the charge is 1% on gross income up to EUR 12,012; 3% on gross income between EUR 12,013 and EUR 18,668; 5.5% on gross income between EUR 18,669 and EUR 70,044; and 8% on gross income in excess of EUR 70,044.
Deductions and allowances
Subject to certain restrictions, deductions are granted for medical expenses and insurance, retirement annuities, mortgage interest, etc. Medical expense relief is available at the standard rate of tax (20%) against the lesser of the premium paid or EUR 1,000 per adult and EUR 500 per child. Personal allowances are available to the taxpayer and his/her spouse/civil partner, children and dependents.
Taxable income
Income is taxed under a scheduler system. Employment income, including most benefits, is taxable. Profits derived by an individual carrying on a trade or profession are taxed in the same manner as profits derived by companies. Investment income in the form of dividends is subject to 20% tax at source.
Capital gains
Capital gains tax at 33% is charged on gains derived from the disposal of assets.
Other taxes on individuals
Real property tax
The municipal authorities levy a real estate tax, known as “rates,” on the occupation of commercial real property. Residential real estate is subject to an annual tax at 0.18% on values
Social security
Employed and self-employed individuals are required to make PRSI contributions, with the amount based on the individual’s salary.
Stamp duty
Stamp duty at rates of 1%-2% is levied on the transfer of property. The top rate of stamp duty for nonresidential property is 2%.
Compliance for individuals
Penalties
Various penalties apply for failure to comply with the filing and payment requirements.
Filing and payment
Tax on employment income is withheld by the employer under the PAYE system and remitted to the tax authorities. Income not subject to PAYE is self-assessed; the individual must file a tax return by 31 October in the year following the year of assessment and make a prepayment of at least 90% of the final tax due by 31 October in the year of assessment. Individuals who file and pay using the Irish Revenue’s online service system are granted an additional period (approximately 14 days, but this is determined by Irish Revenue on an annual basis) to meet the above obligations.
Corporate taxation in Dublin
Teleport city rankings for corporate income tax
Corporate taxation puts Dublin in position 27 of all Teleport Cities.
Basis
Residents are taxed on worldwide profits; nonresidents are taxed only on Irish-source income. Foreign-source income derived by residents is subject to corporation tax in the same way as Irish-source income. Foreign branch income is charged to tax as foreign investment income or trading income, as appropriate.
Taxation of dividends
Dividends received by an Irish-resident company from another Irish company generally are exempt from corporation tax. Dividends received from a foreign company are subject to corporation tax in the period the dividends are payable, but a credit for underlying corporate and withholding tax generally is available for foreign tax paid. Dividends received from a company resident in an EU member state may qualify for an enhanced credit up to the rate of tax on profits in that country.
Residence
A corporation is resident in Ireland if it is managed and controlled in Ireland or, in certain circumstances, if it is Irish- incorporated. Specifically, companies incorporated in Ireland after 1 January 2015 are deemed to be tax resident in Ireland, while companies incorporated before 1 January 2015 will be deemed to be resident in Ireland from 1 January 2021. However, these incorporation-based residence rules will not apply to Irish- incorporated companies that are currently tax resident in a treaty country by virtue of management and control, nor will they apply to non-Irish incorporated companies that are resident in Ireland by virtue of management and control.
Losses
Trading losses may be carried back to the immediately preceding period of equal length, or carried forward indefinitely.
Incentives
Expenditure on revenue items, royalties, certain buildings and plant and machinery related to R&D may benefit from a credit of 25% on a volume basis, which may be set off against a company’s corporate tax liability in the year in which the expenditure is incurred. Companies in receipt of this credit also have the option to use a portion of the credit to reward key employees who have been involved in the development of R&D.
Rate
The corporation tax rate is 12.5% for trading income and 25% for nontrading income. Certain dividends from EU and tax treaty territories are taxed at the 12.5% rate.
Participation exemption
A participation exemption may apply to capital gains derived by an Irish-resident holding company on the disposition of a substantial shareholding in a company located in Ireland, another EU member state or a country that has concluded a tax treaty with Ireland. To qualify for the exemption, the Irish company must hold a participation of at least 5%; the investee must be a trading company or a member of a “trading group”; and the interest must have been held for a continuous 12-month period ending within the two years before the date of disposal.
Foreign tax credit
Foreign tax paid generally may be credited against Irish tax on the same profits, but the credit is limited to the amount of Irish tax payable on the foreign income. Dividends received from a company resident in an EU member state may qualify for an enhanced credit up to the rate of tax on profits in that country. The pooling of credits for foreign dividend income is available. Any surplus double tax credits attributable to foreign dividends taxable at the 12.5% rate are not available against tax on foreign dividends subject to the 25% rate. The pooling of credits for foreign branches also is available.
Taxable income
Corporate tax is imposed on a company’s profits, which consist of business/trading income, passive income and capital gains. Normal business expenses incurred in a trade may be deducted in computing taxable income.
Capital gains
Capital gains are taxed at 33% and 40%. Gains on the sale of substantial shareholdings in companies resident in EU member states or a tax treaty country are exempt if certain conditions are satisfied.
Holding company regime
See “Participation exemption,” above.
Other taxes on corporations
Real property tax
The municipal authorities levy “rates” on the occupation of commercial real property (which are deductible in calculating corporation tax liability). Residential real estate is subject to an annual tax at 0.18% on values up to EUR 1 million, and at 0.25% on values over EUR 1 million. In certain situations, reduced rates will apply.
Social security
Employers are required to make pay-related social insurance (PRSI) contributions by deducting up to 10.75% from the salary of employees.
Stamp duty
Stamp duty at rates of 1%-2% is levied on the transfer of property. The top rate of stamp duty for nonresidential property is 2%.
Other taxation in Dublin
Value added tax
Filing and payment
VAT returns and payments are required every two months.
Rates
The standard VAT rate is 23%, with reduced rates of 13.5% and 9%.
Taxable transactions
VAT is levied on the sale of goods and the provision of services.
Registration
The registration threshold for VAT purposes is EUR 75,000 per annum where 90% of turnover is from the supply of goods, and EUR 37,500 in most other cases.
Anti-avoidance rules
Penalties
Various penalties apply for failure to comply with the filing and payment requirements.
Thin capitalization
There is no specific thin capitalization legislation, but interest paid by a nontrading company to a nonresident parent company that is not resident in a tax treaty country and that owns at least 75% of the Irish payer generally is reclassified as a dividend.
Rulings
Irish tax legislation includes a number of specific provisions for which advance statutory clearance may be sought.
Filing requirements
Ireland operates a self-assessment regime. A preliminary corporate tax payment is payable during the accounting period, amounting to 100% of the corporate tax liability. To avoid an interest charge arising on underpayment, the amount to be paid as preliminary tax must be no less than 90% of the current-year tax liability, with the balance payable upon filing the return. The tax return, together with iXBRL tagged financial statements, must be filed within nine months of the accounting year end, but no later than within eight months and 21 days of the company’s year end.
Consolidated returns
Consolidated returns are not permitted; each company is required to file a separate return. However, losses may be group-relieved between group members resident in the EU. Companies are considered part of a group if one is a 75% subsidiary of another, or both are 75% subsidiaries of the same parent.
Other
There is a statutory general anti-avoidance rule. Compliance for corporations:
Tax year
The tax year is the shorter of 12 months or the period for which accounts are prepared. The tax accounting period may not exceed 12 months in total.
Disclosure requirements
Certain tax arrangements that result in an Irish tax advantage and fall within certain limited prescribed hallmarks must be disclosed to the Irish tax authorities, and the user must note the use of such arrangements on the tax return.
Investment basics
Foreign exchange control
None, and no restrictions are imposed on the import or export of capital. Repatriation payments may be made in any currency. Both residents and nonresidents may hold bank accounts in any currency.
Accounting principles/financial statements
IAS/IFRS/Irish GAAP. Financial statements must be prepared annually.
Principal business entities
These are the public and private limited liability company, partnership, sole proprietorship and branch of a foreign corporation.
Withholding tax
Dividends
Dividends paid to another Irish company are exempt from withholding tax. Dividends paid to a nonresident company or an individual (whether resident or nonresident) are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty or the dividends are exempt from withholding tax under the EU parent- subsidiary directive or under a specific exemption under domestic legislation.
Interest
The withholding tax on yearly interest paid to a nonresident is 20%, unless the rate is reduced under a tax treaty or the interest is exempt from withholding under the EU interest and royalties directive or under a specific exemption under domestic legislation.
Royalties
The withholding tax is 20% on patent royalties. All other royalties are exempt. The rate may be reduced under a tax treaty or the payment may be exempt from withholding under the EU interest and royalties directive or under a specific exemption under domestic legislation.
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