Corporation tax rates

Start-up companies

If you are a start-up company, and you are not a service company or a company whose income is taxed at 25% (see below), you can get a three year exemption which reduces your corporation tax charge (up to €40,000 per annum) to nil.

You can get marginal relief if the charge is between €40,000 and €60,000. In theory, this means a start-up company can earn annual net profits of €320,000 (€40,000 divided by 12.5%) and pay no tax.

From 1 January 2011, the relief is linked to the amount of employer’s PRSI paid by a company, subject to a maximum of €5,000 per employee, and an overall limit of €40,000. The relief does not apply to trades carried on by associated companies.

Standard rate

The standard rate of corporation tax (s 21) is 12.5%.

Foreign dividends paid from trading profits are taxed at 12.5% (previously 25%). If the dividend is not paid from trading profits, it is taxed at 12.5% provided:

(a) 75% or more of the paying company’s profits are trading profits, or derived from trading profits arising in EU States or treaty countries.

(b) 75% or more of the recipient’s assets, on a consolidated basis, must consist of trading assets.

Where the recipient company owns not more than 5% of a paying company based in an EU State or treaty country, the dividend is also taxed at 12.5%.

Excess foreign tax credits in respect of dividends taxed at 12.5% are not available for set-off against dividends taxed at 25% (but not vice versa).

Higher rates

The following types of income are taxed at 25% (s 21A):

(a) untaxed interest and income from foreign property (Case III income),

(b) miscellaneous income not taxed under any other heading (Case IV income),

(d) income from mining activities, petroleum activities, and dealing in land.