Ireland has long been an attractive location for the establishment of international holding companies. Why? It is a low Corporate Tax environment, has an extensive tax treaty network and a general ability to pay dividends free of withholding taxes.
At FMB, our team has worked closely with overseas clients to set up operations in Ireland, or to establish holding companies. We do our very best to make the process easy – whether you are an established part of Ireland’s business community, or whether this is your first time doing business in Ireland. Ireland is an attractive location to set up a business for many reasons. Firstly, the 12.5% Corporate Tax rate on domestic trading income is hugely significant for our clients. Also:
There is a Capital Gains Tax exemption on the disposal of subsidiaries in Ireland, the EU or treaty countries. That includes countries with which Ireland has signed but not yet ratified a tax treaty. Foreign taxes can be relieved on dividends received by Irish companies. This occurs under unilateral provisions in Irish law, in accordance with the EU Parent Subsidiary Directive and under bilateral treaty provisions. Foreign dividends which have emanated from trading profits are also taxed at the 12.5% trading rate.
This is also the case where the dividends have been paid out of dividends received from lower tier companies engaged in trading activities. In most cases the low tax rate, coupled with the double tax relief, ensures that no further liability to Irish tax arises on the receipt of such dividends. In cases where the foreign tax exceeds the Irish tax on a specific dividend the excess may be offset against Irish tax on the remaining foreign dividends on a ‘like for like’ basis. This on-shore pooling also ensures that unused tax credits may be carried forward indefinitely. There is the potential for intermediate holding companies to migrate from Ireland without incurring a tax charge.
And finally, there are tax-free and withholding tax-free capital distributions available to non-resident individuals on liquidations in most cases. These technicalities may seem dry and unexciting, but added together they’re what makes Ireland a superb base for international holding companies. At FMB, our team has the experience and know-how to bring your company to low-tax Ireland.
To speak to John, you can book a consultation today and find out more on the attractions of investing in Ireland.
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