IDA Ireland, Guide to Tax in Ireland 2012

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Transcript of IDA Ireland, Guide to Tax in Ireland 2012

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    head office

    IDA IRELAND

    WILTON PARK HOUSE

    WILTON PLACE

    DUBLIN 2

    IRELAND

    T +353 (0) 1 603 4000

    F +353 (0) 1 603 4040

    E idaireland@ida.ie

    @IDAIRELAND

    www.linkedin.com/company/ida-Ireland

    W www.idaireland.com

    01

    INTRODUCTION 04WHY IRELAND 05CORPORATE TAX IN IRELAND 08TAX RELIEF AVAILABLE 10RESEARCH & DEVELOPMENT (R&D) TAX CREDIT 12INTANGIBLE ASSETS & INTELLECTUAL PROPERTY (IP) IN IRELAND 14INTERNATIONALISATION 16TAXES ON CAPITAL 20TAX ADMINISTRATION 22OTHER BUSINESS TAXES 24PERSONAL TAXATION 26FURTHER INFORMATION 30

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    IRELAND: A WINNING LOCATION FOR GLOBAL BUSINESSFig 3: Ease of paying business taxes. Source: PricewaterhouseCoopers, 2012

    150

    140

    130

    120

    110

    100

    90

    80

    70

    60

    50

    40

    30

    20

    10

    0

    SIN

    GA

    PORE

    04

    IREL

    AN

    D 05

    LUX

    EMB

    OU

    RG 14

    SWIT

    ZERL

    AN

    D 16

    UK

    18

    NET

    HER

    LAN

    DS

    34

    FRA

    NC

    E 55

    USA

    69

    BEL

    GIU

    M 73

    GER

    MA

    NY

    86

    RUSS

    IA 102

    JAPA

    N 119

    CH

    INA

    121

    IND

    IA 147

    BRA

    ZIL

    150

    40

    35

    30

    25

    20

    15

    10

    5

    0

    Fig 2: % Increase in profit required to achieve same distributable income available in Ireland. Source: PricewaterhouseCoopers, 2012

    40

    35

    30

    25

    20

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    Fig 1: % Corporate Tax Headline Rates. Source: PricewaterhouseCoopers, 2012

    * The marginal federal corporate income tax rate on the highest income bracket of corporations (for 2011, USD 18,333,333 and above) is 35%.** Berlin rate used for illustrative purposes. Corporation tax rate varies depending on location.*** This tax rate illustrates the effective tax rate for the Tokyo area where a company has paid-in capital of more than JPY 100 million. Corporation tax rate varies depending on location.

    IREL

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    RUSS

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    21.1

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    CH

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    UK

    26

    %

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    RG

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    .8%

    ** G

    ERM

    AN

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    0.2

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    IND

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    FRA

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    BEL

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    M 3

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    BR

    AZI

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    * USA

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    *** J

    APA

    N 3

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    SIN

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    RUSS

    IA 9

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    SWIT

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    .67%

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    UK

    18

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    MA

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    25.

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    IA 2

    9.5

    1%

    FRA

    NC

    E 3

    1.24

    %

    BEL

    GIU

    M 3

    2.56

    %

    BRA

    ZIL

    32.

    58%

    USA

    34

    .62%

    JAPA

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    1.15%

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  • why ireland?Companies are attracted to Ireland for a variety of reasons, THESE INCLUDE:

    introduction

    Ireland continues to attract companies from a variety of sectors including Information and Communications Technology (ICT), Life Sciences, Financial Services, Engineering, Digital Media, Games and Social Media. While the pace of Irelands economic recovery remains modest for now, this countrys Foreign Direct Investment (FDI) performance has remained buoyant. Despite a myriad of challenges, Irelands unique attributes as an investment location remain intact. The years 2011 & 2012 have both seen strong performance in the level of FDI won by Ireland.

    Over 1,000 Multinational Corporations (MNCs) have chosen Ireland as their strategic European base, attracted by our pro-business, low corporate tax environment, track record of success and a young, highly skilled talent pool. Many of these MNCs have gone on to expand their facilities in Ireland because of the positive, adaptable attitude of the workforce and the ready availability of highly educated and experienced managers. MNC management teams in Ireland take a forward-thinking, partnership approach to business, anticipating market developments and coming up with great ideas to seize new opportunities. Thats why so many have moved up their value chain to take on higher value, knowledge-intensive activities.

    Irelands FDI strategy has continually evolved by scanning the horizons of enterprise and focusing on and securing FDI in new technologies, innovative business models and new markets.

    Talent Young, flexible, adaptable, mobile workforce. The median age of the population is 35,

    the lowest in the EU;

    Technology Ireland has a rich history of achievements in science and technology and continues

    to invest in research and technological capabilities;

    Track Record Over 1,000 multinational corporations have chosen Ireland as their strategic

    European base. Many of these companies have gone on to expand their facilities due to the

    profitability and success of the Irish operation;

    Tax Corporate tax rate of 12.5%;

    European Market Barrier-free access to over 500 million consumers in Europe;

    English Speaking Ireland is an English speaking member of the Eurozone;

    Education A highly skilled and educated workforce. According to the EIU, Benchmarking Global

    City Competitiveness report 2012, Dublin ranks as the best city in the world for human capital.

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  • world leaders choose ireland because:

    Competition for inward investment has never been

    stronger, but Irelands national determination to make

    the country one of the best places in the world to do

    business is undiminished. On a global scale, Ireland scores

    extremely well in many of the key areas of importance to

    investors, helping drive FDI.

    The IMD World Competitiveness Yearbook 2012 ranks Ireland 1st in the world for availability

    of skilled labour, flexibility and adaptability of workforce and attitudes towards globalisation.

    The same report also ranks Ireland 2nd in the world for adaptability and efficiency of companies

    and large corporations by international standards, 2nd in the world for business legislation

    (openness to foreign investors) and 4th for corporate tax rate on profit and real corporate taxes.

    On a global scale hiring activity is least likely to be affected by talent shortages in Ireland, new

    rankings by Manpowers 2012 talent shortage survey shows.

    According to the EIU, Benchmarking Global City Competitiveness report 2012, Dublin ranks

    as the best city in the world for human capital.

    A study carried out by the Heritage Foundation has found that Ireland has currently the freest

    economy in the whole of the euro-zone.

    The 2011 IBM Global Location Trends Report highlights that Ireland is ranked 1st in the world

    for inward investment by quality and value and 2nd globally for the number of inward investment

    jobs per capita.

    In 2012 a Foreign Direct Investment Report from Foreign Direct Intelligence stated that Irish

    performance far outweighed the average for Europe in 2011.

    Ireland makes top 10 of easiest places in world to do business - Ireland ranked particularly well

    in regards starting a new business, ease of getting credit, and protecting investors according to

    the World Bank Doing Business 2012 report.

    Ireland retains its spot in the top 10 of European destinations for FDI. During the past three years

    Irelands competitiveness has improved significantly, with a striking reduction in business costs,

    including those for payroll, energy, office rents and services according to the Ernst&Young

    European Attractiveness Survey 2012.

    Ireland has favourable demographics, Ireland still has the highest birth rate in the European Union

    according to an ESRI report in June 2012.159 BILLION

    GDP 2011

    IRELAND: A WINNING LOCATION FOR GLOBAL BUSINESS

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  • Corporate Tax in Ireland

    The key features of Irelands tax regime that make it one of

    the most attractive global investment locations include:

    a 12.5% corporate tax rate for active business;

    a 25% Research & Development (R&D) tax credit;

    an intellectual property (IP) regime which provides a tax write-off for broadly defined IP acquisitions;

    an attractive holding company regime, including participation exemption for gains on disposals of most shares;

    an effective zero tax rate for foreign dividends (12.5% tax rate on qualifying foreign dividends, with flexible onshore pooling