All companies resident in the republic of Ireland and all non-resident companies which carry on a trade in Ireland through a branch or agency, subject to specific exemptions, are liable to corporation tax.

A company which commences to trade is obliged to register with Revenue within 30 days of its commencement.

Corporation tax is charged for each financial year.

Assessments are made by reference to an accounting period, and where an accounting period straddles two financial years, the profit is apportioned accordingly, to be charged at the appropriate rates.

Corporation Tax Rates

Start-up Companies

A start-up trading company can get a three year exemption which reduces its corporation tax charge (up to €40,000 per annum) to nil.

There is 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.

However, the relief is linked to the amount of employer’s PRSI paid by the claimant 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 Corporation Tax

The standard rate of corporation tax is 12.5%.

Foreign dividends paid from trading profits are taxed at 12.5%. 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.

Higher Rate Corporation Tax

The following types of income are taxed at 25%:

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

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

(c) rental income (Case V income), and

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

Tax Reliefs

CT Losses

Losses carried Back

A trading loss can be offset against profits of any kind in the current accounting period. If not so used, a trading loss can be offset against profits of a preceding accounting period of equal length. A claim must be made within two years of the end of the accounting period in which the loss occurs.

A loss in the final year of trading (a terminal loss) can be offset against profits of the three immediately preceding years. This may give rise to a repayment of tax.

Losses carried Forward

An unused trading loss may be carried forward for offset against trading profits of the next and later accounting periods.

A Case III loss can be offset against Case III income of the current period. If not so used, any excess can be carried forward for offset against Case III income of the next and later accounting periods. The same treatment applies to Case IV losses.

CT Value Bases Relief

A 12.5% trading loss may be offset against a 25%-taxed profit, but only on a value basis.

Rental Losses for CT

A Case V loss can be offset against Case V income of the current period. If not so used, any excess can be carried forward for offset against Case V income of the next and later accounting periods.

Capital Losses for CT

A capital loss can be offset against chargeable gains of the current period. If not so used, any excess can be carried forward for offset against chargeable gains of the next and later accounting periods.

Group Relief

A company must file a corporation tax return on or before the return filing date, i.e., the last day of the ninth month after the end of the accounting period.

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