O’GRADYS
SOLICITORS
TAX FACTS - 2014
REPUBLIC OF IRELAND
TAX FACTS 2014 – REPUBLIC OF IRELAND
Contents
1. Personal Taxes
2. Employment Taxes
3. Pension Matters
4. Business Tax
5. Financial Services
6. Property and Construction
7. Value Added Tax
8. Capital Taxes
9. Research and Development
10. Revenue Powers
11. Stamp Duty
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TAX FACTS 2014 – REPUBLIC OF IRELAND
1. Personal Taxes
Personal Tax Credits
Personal Circumstances
2013
2014
Single Person
Married Person or Civil
Partner
Widowed Person or Surviving
Civil Partner - qualifying for
One Parent Family Tax Credit
(2013)
Widowed Person or Surviving
Civil Partner - qualifying for
Single Person Child Carer
Credit (2014)
Widowed Person or Surviving
Civil Partner without qualifying
children
Widowed Person or Surviving
Civil Partner in year of
bereavement
One-Parent Family Tax Credit
( 2013)
Single Person Child Carer
Credit ( 2014)
Widowed Person or Surviving
Civil Partner Tax Credit (with
qualifying child) - Bereaved in
2013
Widowed Person or Surviving
Civil Partner Tax Credit (with
qualifying child) - Bereaved in
2012
Widowed Person or Surviving
Civil Partner Tax Credit (with
qualifying child) - Bereaved in
2011
Widowed Person or Surviving
Civil Partner Tax Credit (with
qualifying child) - Bereaved in
2010
Widowed Person or Surviving
Civil Partner Tax Credit (with
qualifying child) - Bereaved in
2009
Widowed Person or Surviving
Civil Partner Tax Credit (with
qualifying child) - Bereaved in
2008
Home Carer Tax Credit (max.)
€1,650
€1,650
€3,300
€3,300
€1,650
n/a
n/a
€1,650
€2,190
€2,190
€3,300
€3,300
€1,650
n/a
n/a
€1,650
n/a
€3,600
€3,600
€3,150
€3,150
€2,700
€2,700
€2,250
€2,250
€1,800
€1,800
€810
n/a
€810
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TAX FACTS 2014 – REPUBLIC OF IRELAND
PAYE Tax Credit
Age Tax Credit if Single,
Widowed or Surviving Civil
Partner
Age Tax Credit if Married or in
a Civil Partnership
Incapacitated Child Tax Credit
Dependent Relative Tax
Credit
Blind Person's Tax Credit Single Person*
Blind Person's Tax Credit One Spouse or Civil Partner
Blind*
Blind Person's Tax Credit Both Spouses or Civil Partners
Blind*
Incapacitated Person - Relief
for Employing a Carer**
€1,650
€1,650
€245
€245
€490
€3,300
€490
€3,300
€70
€70
€1,650*
€1,650*
€1,650*
€1,650*
€3,300*
€3,300*
€50,000**max €50,000**max
* Relief in respect of the cost of maintaining a guide dog (max €825) may be claimed under
the heading of Health Expenses.
** Relief for Employing a Carer (2013 and 2014) is allowable at the individual's highest rate
of tax, i.e. 20% or 41%.
Exemption Limits
Personal Circumstances
2013
2014
Single, Widowed or a Surviving Civil
Partner 65 years of age or over
€18,000
€18,000
Married or in a Civil Partnership 65
years of age or over
€36,000
€36,000
Single, Widowed, a Surviving Civil
Partner, Married or in a Civil
Partnership 65 years of age or over
- Additional for 1st and 2nd qualifying
child
€575
€575
Single, Widowed, a Surviving Civil
Partner, Married or in a Civil
Partnership 65 years of age or over
- Additional for each subsequent
qualifying child
€830
€830
Marginal Relief Tax Rate*
40%
40%
*The Marginal Relief Tax Rate only applies to persons 65 years of age or over.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Tax Rates and Tax Bands
Personal Circumstances
2013
2014
Single, Widowed or a
Surviving Civil Partner
without qualifying children
€32,800 @
20%, Balance
@ 41%
€32,800 @
20%, Balance
@ 41%
Single, Widowed or a
Surviving Civil Partner
qualifying for One Parent
Family Tax Credit (2013)
€36,800 @
20%, Balance
@ 41%
n/a
Single, Widowed or a
Surviving Civil Partner
qualifying for Single Person
Child Carer Credit (2014)
n/a
€36,800 @
20%, Balance
@ 41%
Married or in a Civil
Partnership - one Spouse or
Civil Partner with income
€41,800 @
20%, Balance
@ 41%
€41,800 @
20%, Balance
@ 41%
Married or in a Civil
Partnership - both Spouses
or Civil Partners with income
€41,800 @
20% (with an
increase of
€23,800 max),
Balance @
41%
€41,800 @
20% (with an
increase of
€23,800
max),
Balance @
41%
Note: The increase in the standard rate tax band is restricted to the lower of €23,800 in
years 2013 and in 2014 or the amount of the income of the Spouse or Civil Partner with the
lower income. The increase is not transferable between Spouses or Civil Partners.
Deposit Interest Retention Tax:

The Deposit Interest Retention Tax (DIRT) rate in 2013 was; 33% for ordinary
deposit accounts, exit tax on life assurance policies and investment funds. The DIRT
rate for long term deposit accounts was 36%.

The DIRT rate is now 41% in respect of interest paid on all accounts with effect from
1st January, 2014.
Home Renovation Scheme:

Homeowners are entitled to a tax credit for qualifying expenditure incurred on their
principal private residence to include; repair, renovation or improvement per the
following conditions:
o Work must be carried out between 25th, October 2013 and on or before the
31December, 2015.
o Expenditure must be greater than €5,000 (including VAT at 13.5%) and relief
can be claimed up to a maximum of €30,000 (before VAT).

The tax credit will be 13.5% of the cost of the works (before VAT).
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Home Renovation Incentive:

A tax credit can be claimed for; repair, renovation or improvement work carried out
on a principal private residence for work carried out on or after 25th October, 2013
and or before 31st December, 2015. Qualifying work must cost a minimum of €5,000
(including VAT at 13.5%) subject to a maximum relief of €30,000 (before VAT).
Medical Insurance Premiums:

Tax relief in respect of medical insurance premiums entered into or renewed on or
after 16th of October, 2013 is restricted to; the premium paid up to a maximum of
€1,000 per adult and €500 per child covered by a policy.
Mortgage Interest:

Interest paid on qualifying home loans taken out after 1st January, 2004 and on or
before 31st December, 2012 will qualify for tax relief.
First Time Buyers
Years 1 & 2
25%
Years 3 – 5
22.5%
Years 6 – 7
20%
Limits on relievable interest for First Time Buyers
Single
€10,000
Married, in a Civil
Partnership, Widowed
or a Surviving Civil
€20,000
Partner
Note: After year seven, the rates and thresholds for relief are as for non-first time buyers.
Non first time buyers:
 The tax relief on interest payable on qualifying home loans is 15%.
Limits on relievable interest for Non - First Time Buyers
Single
€3,000
Married, in a Civil
Partnership, Widowed
or a Surviving Civil
€6,000
Partner
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Exception 1 (30% rate of relief):

For individuals who purchased their first principal private residence (or second or
subsequent principal private residence but only where the first principal private
residence was purchased on or after 1 January 2004), on or after 1 January 2004
and on or before 31 December 2008, the rate of tax relief on the interest paid on the
loan to purchase that property will, for the tax years 2012 to 2017 inclusive, be 30%,
subject to appropriate first time buyers and non-first time buyers threshold.
Exception 2 (certain loans taken out in 2012 and 2013):

Mortgage interest relief is available, in certain circumstances, for the tax years 2013
to 2017, in respect of:
o Interest paid on a loan taken out in 2013 to construct a home on a site, but
only where such site was bought by way of a loan taken out in 2012,
and
o

Interest paid on a loan to repair, develop or improve a home but only where
loan approval was in place in 2012 and part of the loan was used in 2012 and
the balance used in 2013 on such repair, development or improvement.
In both instances above, in order to qualify for relief, any necessary planning
permission must have been in place on or before 31 December 2012.
Loans taken out prior to 1 January 2004:

Loans taken out prior to 1 January 2004 are no longer eligible for mortgage interest
relief. However, top up loans/equity release loans taken out since 1 January 2004 on
these pre-2004 loans may be eligible for mortgage interest relief, provided they
adhere to the eligibility criteria set out above.
Rent-a Room-Relief:

Where an individual rents a room in their main residence as residential
accommodation, income may be exempt from income tax where the aggregate of the
gross rents and any sums for meals or other services received is below €10,000 for
2013 and 2014.
Top Slicing Relief:

Top Slicing Relief which was an additional relief granted in respect of the tax payable
on a lump sum payment was abolished for all ex-gratia payments with effect from 1st
January, 2014.
Domicile Levy:

Citizenship has been removed as a requirement for the payment of the domicile levy.
The domicile levy will be payable by Irish domiciled individuals:
o Whose qualifying Irish assets exceed €5m;
o Whose worldwide income exceeds €1m; and
o Whose liability to income tax for the relevant year is less than €200,000.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Tax relief for charitable donations:

Rate of tax relief on charitable donations of ‘around 30%’ will replace existing higher
and standard rates. The benefit will go to the charity. PAYE and self-assessed
taxpayers will no longer be distinguished. Currently a charity is only entitled to this
refund for donations by PAYE taxpayers. Self- assessed taxpayers must claim a
deduction on their personal tax returns for qualifying donations. An annual limit of
€1,000,000 per individual can be taxed relieved.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
2. Employment Taxes
Universal Social Charge:

The Universal Social Charge (USC) is a tax payable on gross income, including
notional pay, after any relief for applicable capital allowances, but before pension
contributions.
Standard Rates and Thresholds of USC are as follows
2013
Rate
Income up to
€10,036.00
2%
Income from
€10,036.01 to
€16,016.00
4%
Income above
€16,016.00
7%
2014
Income up
to
€10,036.00
Income from
€10,036.01
to
€16,016.00
Income
above
€16,016.00
Rate
2%
4%
7%
Reduced Rates and Thresholds of USC are as follows
2013
Individuals aged 70
years or over whose
aggregate income for
the year is €60,000 or
less.
Individuals (aged under
70) who hold a full
medical card whose
aggregate income for
the year is €60,000 or
less.
2% - Income up to
€10,036.00
2014
Individuals aged 70
years or over whose
aggregate income for
the year is €60,000 or
less.
Individuals (aged under
70) who hold a full
medical card whose
aggregate income for
the year is €60,000 or
less.
2% - Income up to
€10,036.00
4% - Income above
€10,036.00
4% - Income above
€10,036.00
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Categories exempt from USC
2013
Where an individual's
total income for a year
does not exceed
€10,036
2014
Where an individual's
total income for a year
does not exceed
€10,036
All Department of Social
Protection payments
and payments similar in
nature to such
payments paid by other
Government bodies
All Department of Social
Protection payments
and payments similar in
nature to such
payments paid by other
Government bodies
Income already
subjected to DIRT
Income already
subjected to DIRT
Pay Related Social Insurance:

A Pay Related Social Insurance (PRSI) contribution is payable in respect of full-time
employees and part-time employees and consists of an employer's and, where due,
an employee's share of PRSI.

PRSI contributions are paid both by employers and self-employed and are used to
pay for Social Welfare benefits and pensions.

The weekly PRSI exemption of €127 was abolished from 1st January, 2013.

Self–assessed taxpayers will be liable to PRSI on unearned income with effect from
1st January, 2014 under Class K at 4%.

Self-employed persons are liable in respect of income from a trade, profession or
from investment income after deductions of capital allowances.

Self-employed persons earning less than €5,000 from all sources are not liable for
PRSI.

Directors who own or control 50% or more of the shares are deemed to be selfemployed and liable to pay PRSI at Class S.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
PRSI rates payable
Employer
Employee
Class A employees earning:
Less than €352 per week
4.25%
4%
Greater than €352 per week
10.75%
4%
N/A
4%
Class S employees, self –
employed
Special Assignment Relief Programme:

The Special Assignment Relief Programme (SARP) is an incentive for individuals
coming to work in Ireland for the first time and applies for employees who come to
Ireland between 1st January 2012 and 31st December, 2014 and who are in
employment for a minimum of 12 months.

Employees can benefit from an income tax deduction of 30% for earnings greater
than €75,000 up to a maximum of €500,000.

The relief applies to both Irish domiciled and non-Irish domiciled employees.

The employer must be incorporated and tax resident in Ireland or a country where
Ireland has a double tax treaty or a tax information exchange agreement.

The relief does not extend to USC or PRSI.
Foreign Earnings Deduction:

The Foreign Earnings Deduction (FED) is available for employees and is aimed at
assisting companies who are expanding into qualifying countries; Brazil, Russia,
India, China and South Africa.

An employee must work at least sixty days over a twelve month period in a qualifying
country and trips must be for at least 10 days duration to benefit from the tax
deduction.
Research and Development – Key Employees:

Employers can allocate all or part of tax credits to, ‘key employees’.

The following criteria must be met to be considered a key employee, the employee
must:
o Not be a director.
o Have less than a 5% shareholding in the company.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
and
o Perform 75% or more of their duties relating to R&D.
Unapproved Employee share schemes:

Income tax arises on the exercise of an unapproved share option schemes being the
excess of the market value of the share over the option price.

Free or discounted share schemes are liable to tax to the value equal to the fair
market value of the shares at the date of beneficial ownership less the employees
purchase price.

Employees who receive restricted or forfeitable shares can abate the shares once
the prohibition on disposal is for genuine commercial reasons subject to a maximum
of 60% for a period greater than five years.

All share based remunerations are now liable to an employee PRSI and USC
charges.
Revenue Commissioners approved employee share schemes:

Employees are exempt from income tax on approved profit share schemes up to a
value of €12,700 per annum. Shares held in trust for greater than three years do not
attract an income tax liability but may lead to a capital gains tax liability.

Approved Save As You Earn (SAYE) approved share option schemes permits
options to be granted at a price discounted by up to 25% of the market value of the
share. This is contingent on employees contributing to a regular savings plan over a
defined period. Gains do not attract income tax but are subject to PRSI and USC and
may lead to a capital gains tax liability.
Share-based remuneration:

There are a number of measures designed to clarify the application of PAYE, USC,
and PRSI withholdings to share-based remuneration. These include the following:
o The repayment of the income levy and Universal Social Charge (USC) where
shares are forfeited.
o Removal of the technical double charge to USC on the grant and exercise of
SAYE options and former Revenue-approached share options.
o Confirmation that gains made on the exercise, release, or assignment of a
share option are not charged to USC at the additional 3% rate (maximum
10%) where relevant income exceeds €100,000.
o Where an individual exercises a share option they must pay income tax within
30 days of the date of exercise.
o Where an individual is due to pay income tax on exercise at the marginal rate
of 41%, they must also pay USC at the 7% rate.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
o
The current position around the application of tax and PRSI to share-based
rewards can be summarised in the following table:
Scheme Type
Share awards
Share option gains
Approved Profit
Sharing Scheme
(APSS)
Save As You Earn
(SAYE) share option
scheme
Income tax
(41%)
Liable under PAYE
Liable under selfassessment within
30 days of exercise
USC (7%)
None
Liable under PAYE
Employee social
security/PRSI (4%)
Liable under PAYE
Liable under PAYE,
unless no longer in
employment in which
case selfassessment applies
Liable under PAYE
None
Liable under PAYE,
unless no longer in
employment in which
case selfassessment applies
Liable under PAYE,
unless no longer in
employment in which
case selfassessment applies
Liable under PAYE
Liable under selfassessment within
30 days of exercise
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TAX FACTS 2014 – REPUBLIC OF IRELAND
3. Pension Matters
Individuals – Employer pension plans:

Individuals can make contributions to approved pension plans subject to a maximum
of €115,000 per annum which qualify for tax relief.
o Personal contributions to approved pension plans are subject to PRSI and
USC taxes.

The maximum tax relief allowed for any individual pension plan is capped at
€2,000,000 with effect from 1 January, 2014. The cap can be increased to
€2,300,000 on agreement with the Revenue Commissioners.
o The excess of pension plans who exceed the individual cap are taxed at 41%
with possible further tax implications dependant on the structure and value of
the pension plan.

In general, any excess tax due for private sector employees and the self-employed is
deducted before the payment of any net benefits.
o If the pension plan discharges the tax liability burden due on an individual’s
pension fund, this may lead to a recalculation by the Revenue Commissioners
prior to the individual receiving the proceeds of their plan.

Public sector employees can generally offset their tax liability by accepting a reduced
pension lump sum or arrange to settle any taxes due.
o Public sector employees with separate private pension plans related to
private sector employment can settle their tax liability independently of their
public sector pension plan and they will not be aggregated for the pension
lifetime limits.

Employees can take a tax free lump sum of up to 1.5 times their final remuneration
for both defined pension schemes and defined contribution schemes capped at
€200,000.

Employees who own more than 5% of a company are entitled to a tax free lump sum
capped at 25% of the value of the pension fund for both defined pension schemes
and defined contribution schemes where it is an Approved Retirement Fund (ARF)
capped at €200,000.

Where a lump sum exceeds €200,000 but is less than €500,000, the excess is taxed
at the standard rate of income tax, currently 20% but is not liable for PRSI or USC
charges.

Lump sum payments which exceed €500,000 are taxed at the individual’s marginal
tax rate and are liable to a USC charge.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Maximum permitted contribution of salary to approved pension plans per annum
Maximum %
Age
permitted
Under
30
15
30-39
years
20
40- 49
years
25
50-54
years
30
55-59
years
35
60 and
over
40
Additional Voluntary Contributions:

Employees can withdraw up to 30% of their Additional Voluntary Contributions
(AVC’s) up to March 2016. They are taxed at the individual’s marginal tax rate but will
not be liable to PRSI or USC charges.
o This option does not apply to individuals who have bought notional added
years in a Defined Benefit pension plan.
Individuals – Personal Retirement Savings Account:

Self-employed and those not members of an occupational pension plan with their
employers can set up a Personal Retirement Savings Account (PRSA). A PRSA is a
flexible long-term personal retirement account and is set up independently of an
employer by an employee with the following rules:
o Individuals are entitled to a tax free lump of 25% of the value of the pension
fund capped at €200,000.
o Where a lump sum exceeds €200,000 but is less than €500,000, the excess
is taxed at the standard rate of income tax, currently 20% but is not liable for
PRSI or USC charges.
o Lump sum payments which exceed €500,000 are taxed at the individual’s
marginal tax rate and are liable to a USC charge.
Approved Retirement Funds:

Approved Retirement Funds (ARF’s) allow an individual the opportunity to generate
income when they retire.

Any surplus generated at death can be passed to beneficiaries.
o There is no tax between spouses/civil partners.
o A tax rate of 30% applies to children over the age of 21 who inherit by way of
an ARF.
o Other beneficiaries will be taxed according to their relationship to the donor.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Deemed Distribution Fund:

Tax is payable on ARF funds which are not drawn down. The amount of deemed
distribution from an ARF is 6% in respect of ARFs held by individuals with asset
values over €2,000,000 in a tax year.
Payments and transfers:

Any payment from an ARF is regarded as a distribution and is therefore taxable as
such. The event of the death of an ARF holder is regarded as a distribution. The tax
rate that applies on an ARF transfer to a child over 21 years of age is 30%.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
4. Business Tax

Ireland has signed double tax treaties with seventy countries which cover; income
tax, corporation tax and capital gains tax.
Group relief for tax losses:

A loss group will now include companies which are tax-resident in an EU or tax treaty
country as well as any company which has its principal class of shares substantially
and regularly traded on a recognised stock exchange.
Corporation Tax:

Corporation Tax is charged on all profits of Irish tax resident companies and certain
profits of the Irish branch of a non-resident company. Profits are defined as income
and certain capital gains.

Income includes:
o Business or trading income comprising active income.
and
o
Investment income comprising passive income.

Trading losses incurred in an accounting period may be offset against the following:
o Trading income to include certain foreign dividends taxable at 12.5% during
the same period.
o Trading income of the immediately preceding period.
o Trading income of subsequent periods.

Irish branches of foreign companies are liable to pay corporation tax as they apply to
Irish resident companies.
Corporation Tax Rates
Rate %
Trading income to include
qualifying foreign dividends
paid out of trading profits
12.5
All other income to include
non trading income and
non-qualifying foreign
dividends
25
Capital Gains
33
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Intellectual Property:

Companies can avail of a tax depreciation deduction on capital expenditure of
qualifying Intellectual Property (IP) assets.

The definition of IP assets includes the acquisition of or the licence to use:
o Patents
o Registered designs.
o Copyrights.
o Goodwill applicable to qualifying assets.
o Trademarks.
o Brand names.
o Domain names.
o Know-how.

The tax deduction is equivalent to the depreciation charge of the IP asset in the
company accounts or a Company can choose to claim a tax deduction at a rate of
15% per annum, 2% in the final year.

A company can claim IP tax relief up to 80% of the trading income of the company in
any one year but can carry forward deductions subject to the 80% limit.

Qualifying assets are subject to a claw back if they are not used for a period of five
years.
Unilateral relief for foreign tax on royalties and interest:

Foreign tax suffered in respect of royalties (derived from certain types of intellectual
property – e.g. copyrights, patents, and trademarks) which cannot be used to reduce
the income because there is insufficient income to do so, can be used to reduce
other foreign source royalty income which is taxed as trading income. Where
royalties of the type described above or interest income are received in the course of
a trade, the amount of income from those royalties or interest may be reduced by the
amount of foreign tax borne on the royalties or interest.
Tax Depreciation:

Companies can deduct tax depreciation on expenditure on assets which are used by
the company subject to Revenue Commissioners criteria on the type of industry.
Tax Depreciation Rates
Asset
Plant and Machinery
Industrial buildings used for
manufacturing
Motor vehicles
IP assets
Rate %
12.5
4
12.5
7% or Book
depreciation
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TAX FACTS 2014 – REPUBLIC OF IRELAND

There is a separate scheme which permits an ‘accelerated allowance’ of 100% of the
capital allowances where they relate to energy saving purposes required for trading
purposes subject to Revenue Commissioners criteria and the type of industry.
Leasing:

There is a standard eight year tax depreciation life on most assets. For leases less
than eight years, assets can be written off over the shorter period for capital.
Start your own Business:

Individuals who have been unemployed for at least 15 months prior to starting their
own business as a sole trader can claim a two-year income tax exemption up to a
maximum of €40,000 income per annum.
Withholding Taxes:

There is a general withholding tax rate of 20% on dividend payments. This can be
reduced for companies who can benefit from:
o The EU parent/subsidiary directive.
o Tax treaties.
and
o
Satisfying the Revenue Commissioners criteria for both resident and nonresident companies.

Companies can make a declaration concerning their eligibility for exemption from
withholding tax which is valid for six years.

Certain annual interest payments are subject to withholding tax at a rate of 20%.
Interest payments between companies resident in Ireland or the EU are exempt from
paying interest withholding tax.

Royalties are subject to a withholding tax at a rate of 20%. This applies to annual
royalty payments or those in respect of a patent. Royalty payments paid to
associated companies resident in the EU are no longer subject to the withholding tax.

The Purchaser of an asset which exceeds €500,000 is obliged to withhold 15% of the
purchase price unless the vendor provides a certification from the Revenue
Commissioners confirming that payment can be effected.

Professional Services Withholding Tax is deducted at a rate of 20% by Accountable
Persons from payments made by them to in respect of Professional Services.
Accountable Persons include; Government Departments, Local authorities and
commercial and non-commercial semi-State bodies and their subsidiaries.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Company Mergers:

The Act introduces an exemption from capital gains tax to ensure that a merger
between an EU company and its EU parent, without the need for the company to go
into liquidation, will be a tax-free event for the company.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
5. Financial Services
Banks:

The applicable corporation tax rate for Irish resident Banking companies is 12.5%.
There is a higher rate of 25% which applies to passive income.

Ireland has a very open and progressive system which allows Financial Services
companies to avail of tax benefits for:
o Funding costs.
o Withholding tax.
o Non-resident employees working in Ireland.
o Stamp duty.
Insurance Companies:

Insurance companies also benefit from a corporation tax rate of 12.5% and can also
avail of the following:
o Investment returns for non-Irish resident policyholders accrue on a tax free
basis.
o Exempt from;
 US Federal Excise Tax per the double tax treaty for insurance and
reinsurance of US risks.
 Insurance Premium Tax for insurance premiums received in Ireland
for risks outside of Ireland and for all reinsurance premiums.
Exit Tax with effect from 1st January, 2014
RATE
EXIT TAX
%
Life policies
41
Investment Funds
41
Personal Portfolio Life
Policies
60
Investment Undertakings
60
Corporate policies
25
Foreign Account Tax Compliance Act:

The Foreign Account Tax Compliance Act (FATCA) obliges Financial Institutions to
maintain a register and report on accounts held by US controlled companies and US
individuals.

There is a withholding tax penalty of 30% for certain unreported sources of income
with effect from 1st July, 2014.

In practice, Financial Institutions will be obliged to report details of accounts held by
US companies and individuals to the revenue Commissioners.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
Asset Management:

Companies are subject to a corporation tax rate of 12.5% on their trading profits.

Irish domiciled funds are exempt from Irish tax on their income and gains.

There is a withholding tax of 41% on distributions and gains which applies to taxable
Irish investors.

Non Irish and exempt Irish investors are not subject to withholding tax on
distributions and gains once appropriate declarations have been made.

Irish funds are not subject to withholding taxes where it applies to dividends and
interest received from Irish equity and bond investments.

Irish funds are not subject to stamp duty unless it relates to an in specie transfer of
Irish assets.
Umbrella offshore funds:

The same tax treatment relating to the exchange of units in an Irish investment
undertaking applies with that of an equivalent ‘good’ offshore fund.
Islamic Financing:

Ireland has a number of double taxation agreements with Islamic states to include;
Saudi Arabia, Bahrain, United Arab Emirates and Kuwait.

Investment in Sharia compliant investment vehicles is primarily achieved by way of
utilising the Undertaking for Collective Investments in Transferable Securities
(UCITS) structure within the Ireland Financial Services Centre.
Enterprise Securities Market:

The Enterprise Securities Market (ESM) is a market for securities of smaller growth
companies.

There are specific rules for compliance for trading on the ESM to include;
o Appointing an ESM adviser.
o Complying with the application and ongoing reporting requirements.

There is an exemption form the stamp duty rate of 1% on transfers of shares.
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TAX FACTS 2014 – REPUBLIC OF IRELAND
6. Property and Construction
Local Property Tax:

The Local Property Tax (LPT) is charged of all residential properties in the State and
came into effect on the 1st July, 2013. A half-year payment was due in 2013, with a
full-year payment due for 2014.

The LPT is a self-assessed tax based on the on the householders own assessment
of the value of the property based on Revenue Commissioners guidelines.

The current LPT rate is 0.18% for properties with a market value of €1,000,000 and
0.25% on any valuation greater than €1,000,000.
Real Estate Investment Trusts:

Real Estate Investment Trusts (REIT’s) are a globally recognised standard for
investment in rental property and must meet the following criteria:
o The company must be resident and incorporated in Ireland.
and
o
It must be listed on a recognised stock exchange in any EU member state.

There is a 2% stamp duty charge on property transfers into an Irish REIT.

REIT’s are exempt from tax on rental income and on any capital gains from disposing
of property.

Distributions to shareholders out of a REIT are subject to a withholding tax rate of
20% and individuals and corporates will be taxed at their prevailing tax rates if they
are Irish resident individuals or entities. Non-Irish resident shareholders can further
benefit if there is a double tax treaty in place. Pension funds are deemed exempt
from withholding tax.

Non-resident shareholders can benefit from having no capital gains liability. Capital
gains do not have to be distributed and can be retained and reinvested as part of the
share price, the only tax liability being the 1% stamp duty for disposal of shares.
Commercial:

There is a standard rate of 2% stamp duty for all commercial transactions.

Irish resident companies are subject to a rate of 25% corporation tax on rental
income.
Incentive CGT relief:

A special incentive CGT measure is being introduced for property purchased
between midnight on 6 December 2011 and the end of 2014. If a property is bought
during this period and held for at least seven years, the capital gain relating to that
seven-year holding period will be fully relieved from capital gains tax.
Page 23 of 32
TAX FACTS 2014 – REPUBLIC OF IRELAND
7. Value Added Tax

Value Added Tax (VAT) is a tax on consumer spending and is calculated by VAT
registered traders on their supply of goods and services.

VAT applies to the majority of goods and services in Ireland and also goods imported
into Ireland from within or outside the EU.

Companies who have a turnover of €75,000 for goods or €37,500 for services are not
required to register or charge VAT.
Rates of VAT
Types of Goods and Services
This applies to all goods and services
that are not exempt or liable at a reduced rate.
Certain fuels, building services, repair, cleaning
and maintenance services generally
and certain photographic supplies.
Tourism and labour intensive industries, including
hotel accommodation and
restaurant services, admissions to entertainment
facilities;
certain printed matter including newspapers,
periodicals and maps.
Livestock, live greyhounds and hiring horses;
Certain Exports, certain food and drink, oral
medicine, certain books.
These include certain financial and medical
activities and educational activities.
RATE %
Standard
Rate
23
First
Reduced
Rate
13.5
Second
Reduced
Rate
9
Reduced
Rate of
4.8
Zero rated
Exempted
VAT – Property and Construction:

The first supply of newly developed property is taxable for a period of five years after
completion.

The second and subsequent supply is taxable for a period of two years after
occupation.

There is an option to tax the supply of properties where the supply would otherwise
be exempt.

Lettings are exempt but there is an option to tax the rents between unconnected
parties. The option to tax applies where the parties are connected but the lessee is
entitled to deduct 90% of the VAT charged on the rent.
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TAX FACTS 2014 – REPUBLIC OF IRELAND

A Capital Goods Scheme ensures that the amount of VAT deductible on the
acquisition or development of a property will correspond with the use of the property
over a period of 20 years, 10 years for refurbishment work.

Sub-contractors not established in the State who provide construction services to
contractors who are registered for tax are not required to register for VAT, the
principal contractor must account for the VAT.
Relevant Contracts Tax:

Relevant Contracts Tax (RCT) applies to payments made by a principal contractor to
a subcontractor under a relevant contract (this is a contract to carry out, or supply
labour for the performance of relevant operations in the construction, forestry or meat
processing industry). RCT applies to both resident and non-resident contractors
operating in the construction, forestry or meat processing industry.

A reverse charge places the onus for VAT where principal contractors and
subcontractors are involved. The principal contractor will now have to account for the
VAT on construction services, previously accounted for by the subcontractor.
Page 25 of 32
TAX FACTS 2014 – REPUBLIC OF IRELAND
8. Capital Taxes
Capital Gains Taxes:

Capital Gains Tax (CGT) is a self- assessment tax, a tax arising on the disposal of
assets. A disposal means a transfer of ownership in an asset whether by means of
sale, gift, exchange or otherwise and includes a part disposal of an asset. Any form
of property (other than Irish currency) including an interest in property is an asset for
CGT purposes.

There is an annual exemption of €1,270 for CGT.

Unused capital losses in a current or earlier years may be offset against any future
gains after the annual exemption is applied.

Individuals liable for CGT:
o Resident or ordinarily resident, and domiciled in the State. There is a CGT
liability on all worldwide gains.
o Neither resident nor ordinarily resident in the State. There is a CGT liability on
gains on the disposal of specified assets.
o Resident or ordinarily resident in the State but not domiciled. There is a CGT
liability on gains from the disposal of Irish situated assets in full and on gains
from the disposal of foreign assets where any gains are remitted into the
State.

The following are examples of assets which are subject to CGT:
o All forms of Land and property, wherever situate, including sites, be they
developed or green field and with or without planning permission, houses,
apartments, and commercial property.
o Shares in either Irish resident or non-resident companies.
o Non Irish Governmental Stocks and Securities.
o Antiques
o Paintings.
o Jeweler.
o Certain capital sums derived from assets.
o All forms of incorporeal property including options and the goodwill of a
business.
o Trade assets.

The following are exempt from CGT:
o Gains from the disposal of Governmental Stocks and Securities.
o Gains from the disposal of tangible movable property, where the amount or
value of the consideration does not exceed €2,540.
o Gains from the disposal of wasting assets, i.e. assets with a predictable life of
less than 50 years, for example, a private motorcar, livestock etc.
o Gains from the disposal of a principal private residence.
o Prize Bond, Lottery and Gaming winnings.

Other assets which may attract a CGT exemption:
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TAX FACTS 2014 – REPUBLIC OF IRELAND
o
o
o
Gains made on the sale of a private residence together with grounds of one
acre subject to occupation criteria.
Transfer of a site from a parent to a child subject to valuation and acreage
criteria.
Retirement relief but it is limited to categories of qualifying assets.
Rates of CGT
Date Disposal Made
from 6 December 2012 - 33%
from 7 December 2011 to 5 December 2012 30%
from 8 April 2009 to 6 December 2011 - 25%
from 15 October 2008 to 7 April 2009 - 22%
made on or before 14 October 2008 - 20%
Rate %
33
30
25
22
20
Retirement relief:

An individual over 55 years of age continues to be exempt from CGT on disposals of
certain ‘qualifying assets’ (broadly, a business or shares in certain family companies)
to his or her child. However, where the individual has reached 66, this exemption has
been restricted to qualifying assets with a market value of up to €3,000,000 and no
relief for the excess. This incentivises the handing-over of family businesses,
including farms, where an individual reaches 55 years of age but removes the
incentive for more valuable businesses where the owner has reached 66.

There is a related change in the exemption which previously applied to an individual
over 55 selling qualifying assets where the sale or transfer is not to their children.
Previously, where the proceeds did not exceed €750,000 the gain was exempt from
capital gains tax. This exemption is now restricted where the individual has reached
the age of 66. For such persons, a full exemption is only available where the
proceeds do not exceed €500,000, with marginal relief applying thereafter.
All of these restrictions apply only to disposals made on or after 1 January 2014.

Holding Companies:

Irish resident Companies are exempt from capital gains tax where disposals are
made from qualifying shareholders of at least 5% in subsidiary companies who are
tax resident in an EU or treaty country.

For group companies, holdings of other members of the group are taken into account
to comply with the minimum holding requirements.
o Tax credits from foreign dividends may be offset against the corporation tax
on other foreign dividend income.
o Tax credits may be carried forward indefinitely and offset against corporation
tax on dividends in future accounting periods.
o Foreign tax credits earned by a foreign branch can be offset against Irish tax
from branch profits in other countries, unused tax credits can be carried
forward indefinitely.
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TAX FACTS 2014 – REPUBLIC OF IRELAND

Foreign dividends paid out of trading profits are subject to a 12.5% corporation tax
rate where the Company meets required criteria.
Capital Acquisitions Tax:

Capital Acquisitions Tax (CAT) is a self-assessment tax and applies to assets which
are transferred without corresponding consideration for value and comprises Gift
Tax, Inheritance Tax and Discretionary Trust Tax.
o There are a number of reliefs available in relation to CAT namely; Business
Relief, Agricultural Relief, and Favourite Nephew Relief which are calculated
on a case by case basis. Exemptions may also apply to certain classes of
property and to certain classes of individuals per Revenue Commissioners
criteria.

The standard rate of tax is CAT is 33% in respect of gifts and inheritances taken on
or after 6th December 2012.

The following are exempt from CAT:
o Gifts and Inheritances between spouses and civil partners.
o The first €3,000 given by a disponer to a beneficiary on an annual basis.

CAT reliefs:
o Business and Agricultural relief can benefit from a 90% reduction once certain
Revenue Commissioners conditions have been met.

The tax payable by the beneficiary is calculated based on the relationship between
the disponer and the beneficiary. The relationship determines the maximum tax free
amount permitted or more commonly known as, ‘group thresholds’.
o
The Group Thresholds are subject to change on direction from the
Department of Finance.
Tax free Group Thresholds
Group
Threshold
Relationship to
Disponer
A
Son/Daughter
*Tax Free
Tax Free
Amount
Amount
from 8th Threshold
April 2009
from
to 31st
6th
December December
2009
2012
€434,000
€225,000
Parent**/Brother/Sister/
€43,400
B
€30,150
Niece/Nephew/Grandchild
C
Relationship other than
€21,700
€15,075
Group A or B
* The Group Thresholds for 2009 are included for illustrative purposes.
** In certain circumstances a parent taking an inheritance from a child can qualify for
Group A threshold.
Page 28 of 32
TAX FACTS 2014 – REPUBLIC OF IRELAND
9. Research and Development
Research and Development:

Companies can avail of a corporation tax deduction up to 37.5% on certain Research
and Development expenditure.
o Incremental R&D expenditure qualifies for a tax credit of up to 25% in addition
to the 12.5% tax rate.
o 2003 is fixed as the base year or if there was no R&D expenditure in 2003,
the relief is calculated on the actual qualifying expenditure incurred for the
applicable accounting period.
o R&D tax credits can be used retrospectively against prior year profits or can
be used to reclaim excess tax paid over a three year cycle subject to the
Revenue Commissioners criteria.

Up to the 1st January, 2014, the first €200,000 of qualifying R&D expenditure
benefitted from a tax credit of 25% on a volume basis. With effect from 1st January,
2014, the threshold has been increased to €300,000.

Up to the 1st January, 2014, the outsourcing limit for sub-contracted R&D costs was
10%. With effect from 1st January, 2014, the limit has been increased to 15%.

Companies can choose to allocate a portion of the free credit to reward employees
by way of a tax free credit.
Page 29 of 32
TAX FACTS 2014 – REPUBLIC OF IRELAND
10.
Revenue Powers
Taxes and Consolidation Act, 1997:

The Revenue Commissioners have numerous powers as set out in the Taxes and
Consolidation Act, 1997 (the “Act”), a selection of key powers are set out below:
o Section 886 places an obligation on tax payers to maintain books and records
relating to their tax status which are to be retained for six years.
o Section 900 obliges a tax payer to produce record and documents within a
twenty one day period.
o Section 905 allows a Revenue inspector to enter a business premises and to
search and remove any records once it does nor attach any client
confidentiality or privilege.
o Section 908 allows the Revenue Commissioners apply to the Courts for an
order freezing assets.
o Section 910 allows data to be shared across Government departments.

Section 1084 of the Act allows the Revenue Commissioners to accrue a surcharge
for late returns:
o Maximum of 5% capped at €12,695 if returns are filed within two months.
o Maximum of 10% capped at €63,485 if returns are filed after two months.

Section 1080 of the Act allows the Revenue Commissioners to accrue interest:
o 0.0219% per day for unpaid direct taxes.
Consolidated VAT Acts 1972 – 2010:

Section 18 permits a Revenue inspector to enter a premises where they believe a
business is being carried and to request books and records to be produced with the
exception of documents which attach confidentiality or privilege.
Steps to take for a Revenue Commissioners inspection:

Advise the Revenue Commissioners that you wish to seek legal advice prior to the
search being undertaken. The Revenue Commissioners have discretion to allow
access to legal advice prior to a search being undertaken.

Verify the identity of all officials present and request proof that they have the requisite
power to carry out a search.

Request written confirmation of the legal basis of the visit. If the search is by way of
warrant, request a copy of the warrant and the relevant legislation and ensure that
the warrant is valid.
o The revenue can only enter a ‘dwelling house’ on foot of a valid warrant per
Article 40.5 of the constitution which protects the inviolability of the dwelling of
a citizen.

Seek confirmation if the search is connected to criminal activity as any statements
made can be used in future proceedings.
Page 30 of 32
TAX FACTS 2014 – REPUBLIC OF IRELAND

If the search is limited to named or specified individuals or entities, ensure that
access is confined to those named by the Revenue Commissioners.

Make copies of all records removed and request a written receipt from the Revenue
before they leave the premises.
Page 31 of 32
TAX FACTS 2014 – REPUBLIC OF IRELAND
11.
Stamp Duty

Stamp Duty is a tax on instruments where assets cannot be passed by delivery i.e.
land.

Stamp duty on the transfer of assets between associated companies can be
eliminated dependant on the relationship between both companies per Revenue
criteria:
o Companies must have a 90% relationship.
o The relationship is maintained for at least two years after the transfer.

There is an exemption from stamp duty for transfers Intellectual Property.
Rates of Stamp Duty
Asset Type
Rate %
Transfers of Stocks and Shares
less greater than €1,000
1
Shares issued
Transfer of property
0
1-2
Premiums on leases of land,
houses and other real property.
1-2
Average annual rent reserved by a
lease (Applicable rate dependant
on length of lease)
1-12
Residential Property
Up to €1,000,000
Greater than €1,000,000
Rate %
1
2
Page 32 of 32