The key features of Ireland’s Tax Regime
- Corporate tax rate of 12.5% for active business.
- 25% Research & Development (R&D) Tax Credit
- An Intellectual Property (IP) regime which provides a tax write-off for broadly defined IP acquisitions.
Ireland’s Tax Regime also offers:
- an attractive holding company regime, including participation exemption for gains on disposals
- of most shares;
- An effective zero tax rate for foreign dividends (12.5% tax rate on qualifying foreign dividends, with flexible onshore pooling of foreign tax credits).
- An EU-approved stable tax regime, with access to extensive treaty network and EU Directives.
- Generous domestic law withholding tax exemptions.
These features all go to make Ireland one of the top global investment locations.
Ireland's Research and Development Tax Credit
Ireland has had an R&D Tax Credit scheme since 2004. Qualifying R&D expenditure will generate a 25% tax credit for offset against corporate taxes in addition to a tax deduction at 12.5%. Its purpose is to encourage both foreign and indigenous companies to undertake new and/or additional R&D activity in Ireland
Holding Companies
Thanks to its attractive tax, regulatory and legal regime, combined with its open and accommodating business environment, Ireland’s status as a world-class location for international business is well established.
In recent years Ireland has increasingly emerged as a favoured onshore location for MNCs establishing regional or global headquarters to manage the profits, functions,and shareholdings associated with their international businesses.
Ireland’s main tax advantages for holding companies are:
- Capital gains tax participation exemption on disposal of qualifying shareholdings;
- Effective exemption for foreign dividends via 12.5% tax rate for qualifying foreign dividends and a flexible foreign tax credit system;
- Double tax relief available for tax suffered on foreign branch profits and pooling provisions for unused credits;
- No withholding tax on dividends paid to treaty countries (or intermediate non-treaty subsidiaries);
- Access to double taxation agreements to minimise withholding tax on inbound royalties and interest, and additional domestic provisions to minimise withholding tax on outbound payments;
- Extensive double taxation agreement network and access to EU directives