Ireland is renowned as an attractive location for groups/companies looking to set up holding company structures due to its competitive tax regime and favourable business environment. Ireland is usually the location of choice for businesses seeking to minimise their tax liability while setting up or expanding their operations in Europe. This has become even more prevalent post Brexit.
We set out below the main benefits of setting up such a structure and operating in Ireland.
- Low headline corporate tax rate of 12.5%.
- An interest deduction that is available to Irish companies borrowing funds to
- purchase shares in trading subsidiaries or
- lend on to such trading subsidiaries
- Given the extensive tax treaty network Ireland has, many advantages when it comes to withholding taxes on dividends, interest, royalties, etc. https://www.revenue.ie/en/tax-professionals/tax-agreements/double-taxation-treaties/index.aspx
- Dividends received by Irish resident companies from Irish resident companies are exempt from taxes – withholding and corporate.
- Foreign dividend income received by Irish resident companies from trading subsidiaries in either an EU member state or a country with which Ireland has concluded a double tax treaty, and where that dividend has been paid out of trading profits, is taxed at the 12.5% trading rate of corporation tax.
- A system of foreign tax credits exist so that, with appropriate planning, it may be possible to ensure that no Irish tax arises on foreign dividends received.
- Favourable tax and capital allowances regimes relating to Research & Development and intellectual property.
- Group structure benefits – transfer of assets within an EU Group, surrender and claims of losses, where relevant, cross charges, among others.
- Access to a skilled workforce/manpower.
- Stable economic climate as well as transparent legal and regulatory frameworks.
- CGT exemption (Participation relief) on qualifying subsidiary disposals (domestic and foreign). The exemption will apply to the disposal of shares in trading companies where the companies are resident in an EU member state or in countries with which Ireland has concluded a double taxation agreement – see above.
The above features, coupled with Ireland’s investment friendly policies make it an ideal location for companies seeking to enhance their financial efficiency and presence in the EU.
Our team can provide you with comprehensive advice on the establishment of a holding company in Ireland, including tax implications, regulatory compliance, and other legal requirements.