Advantages when buying an Irish business.
Tax aspects are of high importance when buying a business. Tax advantages exist in Ireland. However, there are a number of other advantages to buy a company in Ireland:
- Corporation tax is low compared to other European countries (12,5%)
- A favourable holding regime
- Research & Development (R&D) tax credit
- Other corporate tax reliefs
- Good infrastructure
Advantage number 1 of buying a company in Ireland: low corporation Tax
- Current corporation tax on trading profits is 12.5 per cent
- Tax credit on R&D expenditure of 25% on yearly incremental expenditure
- Capital Allowances for expenditure on intangible assets and intellectual property
- Exemption to tax on receipt of patent royalty income
Advantage number 2 of buying a company in Ireland: a favourable Holding Company Regime
Ireland can serve as an interesting holding company location. Legislation has put Ireland in a position to compete with established European holding company locations. An Irish company can now act as a European/ Regional holding or Intermediate holding company.
The favourable aspects are:
- An exemption from capital gains tax on the disposal of shares in subsidiaries
- 12.5% tax rate on foreign dividends out of trading profits of companies that are resident for tax purposes in EU Member States (‘EU’) or in countries with which Ireland has a tax treaty (‘DTA’)
- Interest deduction is available to Irish companies borrowing funds which are used to acquire shares in trading subsidiaries or to make loans to such subsidiaries
- Ireland has signed comprehensive double taxation agreements with 60 countries, of which 49 are in effect. The agreements cover direct taxes, which in the case of Ireland are income tax, corporation tax and capital gains tax.
The extent of a company’s liability to Irish corporation tax depends on its tax residency. Irish resident companies are liable to corporation tax on their worldwide income and capital gains. A company is considered to be tax resident in Ireland if it’s central management and control are located in Ireland.
Advantage number 3 of buying a company in Ireland: Grants
Ireland's inward investment promotion agency, IDA Ireland partners with foreign investors, helping them to set up and develop their business in Ireland. This includes Research and development, employment and training grants.
Advantage number 4 of buying a company in Ireland: Research & Development (R&D) tax credit
Ireland has a 25% R&D Tax Credit scheme (in addition to a tax deduction at 12.5% for R&D expenditure in Ireland). Its purpose is to encourage both foreign and indigenous companies to undertake new and/or additional R&D activity in Ireland. In order to qualify for the tax credit, it is necessary to seek to achieve scientific or technical advancement and involve the resolution of scientific or technological uncertainty.
Advantage number 5 of buying a company in Ireland: other corporate tax reliefs
There are a number of other corporate tax reliefs available to Irish companies. Losses can be offset against other non trading income in the year the loss occurred. They can also be offset back against the trading profits of the previous accounting period or forward against future trading profits. .
Advantage number 6 of buying a company in Ireland: Labour
Favourable demographics and consistent investment in education ensure a plentiful supply of highly qualified workers with excellent technical, language and customer service capabilities, as well as a reputation for flexibility and innovation. The collaboration between the academic sector and industry is good. The population is young and still growing.
Advantage number 7 of buying a company in Ireland: a good infrastructure
Ireland has a high quality telecom and transport infrastructure. The telecom networks have been developed and road improvements as well as infrastructural works have led to a strong economy that is a good reason to buy a company in Ireland.