About Corporation Tax (CT)
Corporation Tax is the main direct tax levied on the profit of a company in Ireland.
Companies may also be subject to income tax, capital gains tax (CGT) and Stamp Duty.
Corporation tax is assessed on the profits of a company for an accounting period. An accounting period cannot exceed twelve months.
Determining a company’s liability to corporation tax in Ireland has become an extremely topical subject in recent years. Also, the international tax climate has thrown a number of variables into the equation including US tax reform (Corporation Tax reduction from 35% to 21%), Brexit, the EU push for a common corporate tax base (CCCTB) and the OECD BEPS programme.
Ireland taxes the Worldwide profits of Irish incorporated companies and normally gives credit against Irish tax, for any foreign corporate tax incurred. This means that an Irish company which has a branch located in another country e.g. Germany, is likely to be subject to tax on its profits in Germany. The Irish company when completing its corporate tax return will include the foreign branch profits as taxable profits. Although tax will already have been paid on these branch profits in Germany, Irish tax will apply, with a credit available for the tax paid in Germany.
A company which is incorporated in Ireland after 1st January 2015, is deemed to be tax resident in Ireland and therefore liable to corporation tax. This change in legislation closed a loophole in the Irish tax code which received much adverse publicity.
A company not incorporated in Ireland may still be deemed registered in Ireland if the organisation core management and control functions are performed in Ireland.
This is a complex area on which the merits of each case must be considered fully prior to making a determination on tax residency.
The main body of legislation governing the taxation of companies in Ireland is the Tax Consolidation Act 1997 (TCA’97).