Imposition of tax

Where a company is resident in the Republic, tax is mposed on income accruing or arising both from sources in and outside the Republic.

Where a company is not a resident in the Republic, tax is imposed on income accruing or arising only from sources in the Republic.

Resident in the Republic is a company that is managed and controlled in the Republic.

Tax rates

Companies

10%

Public corporate bodies

25%

Exemptions

Interest income. Interest income arising in the ordinary course of business including interest closely connected with the carrying on of the business, is not considered interest but trading profit and therefore the 50% exemption is not applicable

50%

Dividend income

The whole

amount

Profit from the disposal of securities

The whole

Amount

Profits from a permanent establishment

maintained outside the Republic

(subject to certain conditions)

The whole

Amount

Deductions

Deductible from income are all expenses incurred wholly and exclusively for the production of income including:

Interest incurred for the acquisition

of a fixed asset used in the business

The whole

amount

Expenditure for the maintenance of buildings under preservation order (subject to certain conditions)

up to€512,58,

€854,30 or €939,73 per sq. m. (depending on the size of the building)

Donations to approved charities

(with receipts)

The whole

amount

Non-deductible expenses

The following are not deductible from income:

Business entertainment expenses

including hospitality expenses

of any kind which are incurred

for the business

amounts in

excess of 1%

of the gross

income or

€17.086,01

(whichever is

the lower)

Private motor vehicle expenses

The whole

amount

Professional tax

The whole

amount

Immovable property tax

The whole

amount

Interest payable or deemed to be payable in relation to the acquisition of a private motor vehicle, irrespective of whether it is used in the business or not, or other asset not used in the business.

This restriction is lifted after 7 years from the date of purchase of the relevant asset

The whole

Amount

Contributions to the Social

Cohesion Fund

The whole

amount

Losses

Carry forward of losses

Losses are carried forward indefinitely. Losses for the years 1997 onwards which have not been offset against profits arising up to the year 2002, will be carried forward to 2003 and subsequent years without time restriction.

Group relief

Losses for the current year only can be surrendered by a group company to another group company. Group relief will be given provided that both companies are members of the same group for the whole of a tax year.

Two companies are considered to be part of a group for group relief purposes if:

·         one is a 75% subsidiary of the other, or

·         both are 75% subsidiaries of a third company.

Loss of a permanent establishment outside the Republic

Losses arising from a permanent establishment outside the Republic can be offset against profits arising in the Republic. However, when a profit arises from such a permanent establishment, an amount equal to the losses that have been utilised in the past against profits arising in the Republic will be included in the taxable income.

Insurance companies

·         losses of the life business can be offset against profits of the general business

·         losses of the life business can be offset against profits from other sources

losses of the life business can be carried forward indefinitely.

Company Re-organisations

In the event of a company re-organisation, unused losses brought forward will be transferred to the new company and the provisions dealing with the set off or transfer of losses will apply accordingly.