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Benefits of Ireland as Holding Company Jurisdiction

June 27th, 2014
Due to changes in Irish government fiscal policy over several years, Ireland has become a favored location for holding companies for many global firms. The low corporate tax rate has generated much publicity. However the tax rate is only one of many reasons for...

Due to changes in Irish government fiscal policy over several years, Ireland has become a favored jurisdiction for holding companies for many international trading corporations. Irelands low corporate tax rate has been the subject of much publicity, particularly during the country's IMF/EU financial structuring deal. However, the low corporate tax rate is only one of many reasons to locate a corporartion in Ireland.

Key Benefits of Locating Holding Companies in Ireland:

1. Low corporate tax rate of 12.5% on trading profits, without limit. 25% on on-trading profits or foreign income.

2. The Finance Act of 2011 intriduced an extension of 0% corporate tax rate for new start-up companies for the first three years of trading. The tax benefit has been capped to the amount of employers PRSI (social insurance) paid on employees' salaries to aid job creation.

3. No dividend witholding tax (DWT) on payments made to individual shareholders resident in either an EU or double taxation treaty country.

4. No DWT applies where they are paid to a non-resident company shareholder where that company is not controlled (50% or more shareholding) by Irish residents.

5. Dividends received by an Irish holding company from trading profits of a subsidiary are generally taxed at 12.5% corporation tax.

6. Limited transfer pricing legislation which only applies to large firms with a turnover of more that EUR 50 million, employees of more than 250, and assets of over EUR 43 million.

7. Capital Gains tax exemption for disposal of shares in a subsidiary company. There is a minimum shareholding requirement of 5% and shareholding period of one year. Other conditions are that the subsidiary must be a trading company, or the Irish company and its group on a whole must be a trading group.

8. Double taxation treaty network with 66 countries in effect, and more waiting to be implemented which simplify the distribution of profits internationally and provides some clarity to Ireland's direct tax system and how it applies in conjunction with an EU or DTT country.

9. Membership of the EU and euro currency gives Ireland an advantage when trading with fellow EU countries.

10. The ability to combine trading activities with its holding company function i.e. charging fees for managing a foreign subsidiary would be deemed to be an economic trading activity and the profits of such an activity would attract low corporation tax.

11. No 'Controlled Foreign Company(CFC)' or 'Thin Capitalisation Rules' are currently in force in Ireland.

12. There is a favorable approach by the Irish government towards foreign owned holding companies

13. Low capital start-up costs for investing in an Irish limited company.

14. Remittance taxation system available for non-domiciled Irish resident individuals re-locating to Ireland.

15. Abolition of employers' PRSI on share based renumeration in teh Finance Act 2011 significantly reduces employers' costs, and is a sigificant benefit in deciding on whether to locate in Ireland.

City Trust has been assisting multinational firms set up holdong firms in Ireland for over seven years, and previously as a division of Fortis Bank. For further details please contact Danny Cox directly on +353 1 675 3140 and dannycox@citytrust.ie

City Trust and Corporate Services Ltd. is authorised by the Irish Department of Justice and Equality to carry on business as a trust or company

service provider (TCSP) Registered in Ireland, 1st Floor Riverview House, 21/23 City Quay, Dublin 2. Company Reg No. 182760