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What is corporation tax, especially for Irish Ltd.

What is corporation tax, especially for Irish Ltd

What is corporation tax?

Corporation tax is an important tax for companies on their taxable profits. The corporate tax rate has a considerable influence on the attractiveness of a country for companies to locate in. In Ireland the corporation tax rate is an advantageous 12.5%, making it one of the lowest in the EU. It determines the percentage of the company's capital that is taxed annually.

Word definition

Corporation tax is a profit tax that must be paid by corporations such as stock corporations, limited liability companies and other corporations on their taxable profits. It is levied on the excess of operating income over operating expenses in a financial year. Corporate tax rates vary considerably between different countries and can be a decisive factor in a country's attractiveness as a business location. Lower corporate tax rates can create incentives for companies to locate in a particular country or to book profits there. Higher rates, on the other hand, can discourage companies and lead to profit shifting strategies to countries with lower tax rates. In addition to corporation tax Income tax and the Value added tax one of the main sources of income for state budgets.


The US-American LLC is not subject to corporation tax.

Irish corporation tax

The low tax rate of 12.5% on profits made in Ireland makes the country an attractive location for international companies. However, certain conditions must be met in order to benefit from this favorable corporate tax rate.

Irish Director

To benefit from the low corporation tax rate, one of the directors can be resident in Ireland, which qualifies the company for Irish corporation tax.

Legal basis

As a non-Irish resident director, you can qualify your Ltd for Irish corporation tax by:

  • Management in IrelandEnsure that central management and control is exercised in Ireland.
  • Physical presenceMaintain a physical office in Ireland and employ staff there.
  • Bank account in Ireland: Maintain an Irish bank account for business transactions.
  • Regular business tripsTravel to Ireland regularly to make business decisions.
  • DocumentationAll business activities and decisions made in Ireland should be well documented.

If the requirements are not met, your Ltd may experience the following consequences:

  1. Higher tax rate: Your Ltd could be subject to the higher corporation tax rates of other countries.
  2. Double taxationRisk of double taxation, as the company may be subject to double taxation in both countries. taxable will.
  3. Loss of tax incentivesLoss of tax incentives and benefits offered by Ireland.
  4. PenaltiesPotential penalties and interest for improperly paid taxes.
  5. Legal consequencesPossible legal consequences and legal uncertainties by tax authorities.

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Disclaimer: Please note that the above dates, tax rates and regulations may change over time. Do not make any independent decisions without first consulting an expert for your individual situation. It is in your interest to always receive individual information from an experienced expert who knows your situation.

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