Ireland is an advantageous location for holding companies, due to:
- Favourable tax treatment of dividend income;
- No Withholding Tax on dividends from Irish Holding Company to EU / tax treaty countries;
- No Capital Gains Tax on disposal of shareholdings in subsidiaries;
- Favourable tax regime for R&D / intangibles;
- Tax deductions for interest on borrowings;
- Favourable Withholding Tax regime for interest and royalty payments
- & more...
2. ü Extensive tax treaty network;
ü Favourable tax treatment of dividend income;
ü No Withholding Tax (‘WHT’) on dividends from Irish
Holding Company to EU / tax treaty countries;
The Benefits of Ireland as Holding Company Location
The Benefits of Ireland as Holding
Company Location
3. ü No Capital Gains Tax on disposal of
shareholdings in subsidiaries;
ü Favourable tax regime for R&D/intangibles;
ü Tax deductions for interest on qualifying borrowings; &
ü No WHT on qualifying interest and royalty payments.
The Benefits of Ireland as Holding
Company Location
4. Irish legislation gives credit for
foreign taxation already paid by its
underlying subsidiary by way of:
• Unilateral relief; or
• The EU Parent-Subsidiary Directive; or
• The provisions of a Double Tax Treaty
entered into between Ireland and the
jurisdiction of the subsidiary.
Foreign Tax Credit
5. An exemption from DWT can be claimed where:
• Dividends are paid to companies entitled to the
benefit of the EU Parent-Subsidiary Directive; or
• Dividends are paid to companies resident in a
treaty country or another E.U. Member State,
and that are not under the control of Irish
residents; or
Irish Dividend Witholding Tax Exemptions
6. • Dividends are paid to companies in any
jurisdiction and ultimately controlled by
residents of tax treaty countries or other EU
member states; or
• Dividends are paid to individuals who are
residents of a treaty country or another EU
Member State.
Irish Dividend Witholding Tax Exemptions
7. Capital Gains Tax Exemption
• The Irish holding company has held at least 5% of the shares in the subsidiary
for a continuous period of 12 months in the previous 24 months; &
• The subsidiary company is tax resident in the EU or in a country with which a
Double Tax Treaty is in force with Ireland at the time of the disposal; &
• The subsidiary itself carries on a trade or is part of a trading group.
• The shares in the subsidiary company do not derive their value from specified
Irish assets (Irish land, buildings, mineral or mining rights).
8. Tax Relief for Capital Expenditure on IP
There is 100% tax relief on the capital cost
of acquiring Intellectual Property.
9. Tax Relief for Capital Expenditure on IP
The type of expenditure that qualifies for the relief
is quite broad and includes capital expenditure on:
ü patents,
ü trademarks,
ü licences,
ü copyrights,
ü brands,
ü industrial know-how,
ü and goodwill directly attributable to any of
these intangible assets.
10. R&D Tax Credit
• The 25% tax credit on qualifying R&D;
• The Tax Authorities will give a refund over 3
accounting periods if a company’s tax
liability is insufficient to claim the credit;
• Available on “qualifying buildings” (buildings
with a minimum R&D usage of 35% over a
defined 4 years period); &
11. R&D Tax Credit
• R&D work sub-contracted to unconnected
parties, up to a maximum of 15% of the
company’s qualifying R&D expenditure in any
one year and in addition, up to 5% of R&D
expenditure can be outsourced to European
universities.
12. Stamp Duty on Intellectual Property
Stamp duty does not apply to the sale, transfer or other disposition of IP in Ireland
14. Irish Tax Residence - Management and Control
Central management and control typically
means the highest level of control of the
business of the company, i.e.:
• Where the directors' meetings are held
• Where key questions of company policy are determined
• Where the majority of directors reside
• Where the shareholders’ meetings are held
• Where the negotiation of major contracts is undertaken
• Where the head office of the company is located
• Where the books of account are kept, the accounts
prepared and examined, the accounts audited, minute
book, company seal and share register kept
15. Other Considerations
ü 1% stamp duty
ü Closely held companies
ü No Controlled Foreign Company legislation
ü No transfer pricing for SMEs
ü No thin capitalisation rules
ü No capital duty
ü Group relief for losses
ü Sale of shares in an Irish company
