• Corporation tax: One of the most favourable taxation locations in the world: a 12.5% Corporation Tax rate on trading activities.

• Tonnage tax: The most competitive, business friendly tonnage Tax for shipowners and managers in the European Union.
• Holding Company: An excellent holding company location
• Double Taxation Agreements: A huge range of double taxation agreements

Corporation Tax

The corporate tax rate in Ireland is 12.5%. Corporation tax is charged on the profits of a company. "Profits" for corporation tax purposes consist of income (business or trading income comprising active income).

Investment income comprising passive income is taxed at 25% and capital gains tax is 20%

One of the key benefits of Ireland's corporate taxation has been the stability and consistency of taxation policy by successive governments over the past 20 years. Successive governments have consistently reduced the taxation burden on companies and individuals over the past 20 years. The current corporation tax rate of 12.5% has been negotiated with the European Union and has been agreed to run to 2025.

Click here to find out more about taxation in Ireland

Tonnage tax

Irish tonnage tax was introduced in 2002 to offer shipping companies a competitive, stable and flexible corporation tax regime. Tonnage tax is a misnomer since it is not a tax in itself, rather it takes a 'notional' profit and taxes it under the normal Irish corporation tax rate of 12.5%. The notional profit is calculated according to the tonnage of the vessel, hence the title 'tonnage tax'.

Calculating your tonnage tax bill could not be easier. The table below lists the 'Fixed profit per day' rate.

Take your vessels net tonnage and apply the rates according to the formula provided. When you have your notional 'profit' figure apply Ireland's standard corporation tax rate of 12.5%.

You now have your tax bill.

Key benefits of Irish tonnage tax include the following:

• Ship Managers Qualify
• No Ownership Requirement
• Vessel Financing Advantages
• No Training Restrictions
• Ship Owners and Bareboat Charterers Benefit
• Time Charter-in Three Times Your Owned/Bareboat Tonnage
• Flag Blind - No Vessel Registration Requirement
• A Broad Variety of Vessels Qualify
• A Wide Range of Income Qualifies
• Extend Your Time in Tonnage
• Tax certainty for 10 Years at Any Time

How to calculate your Tonnage Tax:

Fixed Profit Rates

Find out more about the Irish Tonnage Tax for Shipping Companies

Call the IMDO on +353 1 476 6500 or e-mail business@imdo.ie

KPMG International Guide

http://www.kpmg.ie/inv_irl/Pubs/Tonnage_tax.pdf PDF

Irish Holding Companies

For a tax planner, the ideal holding company regime is one which has:

• A good tax treaty network (so as to mitigate foreign withholding taxes);
• No local taxation of foreign dividends; and
• No taxation of gains on disposal of subsidiaries.

The importance of these features varies according to the circumstances of the business, and indeed other features may also figure in an evaluation.

Importance of holding company regimes

There is a growing trend for holding companies to be more than mere shells. Instead the holding company jurisdiction often operates as a regional headquarters, with its personnel being involved in the supervision and coordination of the activities of the group's subsidiaries in the geographical area of its responsibility. It may also acquire importance as a centre for treasury, group financing, or administrative functions which would otherwise be duplicated in multiple jurisdictions. Often such a company of this type acts as a magnet for other activities such as research and development or manufacturing. The result of the above is high quality employment, of precisely the type Ireland is seeking to attract as it moves up the value chain.

Ireland's low tax rate for trading activities is very attractive to multinationals who are in a position to establish profitable operations here.

As part of the country's constant drive to maintain a business friendly environment for investors the government recently introduced a Holding Company regime allowing firms to act as a European/Regional holding or intermediate holding companies. The changes relate to the treatment of capital gains and foreign dividends:

• Irish holding companies are allowed an exemption from capital gains tax on the disposal of shares in their subsidiaries. The exemption is subject to a number of conditions. To be regarded as a holding company, the company must hold at least 5% of the shares of another company.
• The Irish tax system taxes the receipt of foreign dividends at a rate of 25%, but allows this liability to be reduced, in certain circumstances, by the foreign underlying tax already paid on this income. There is a unilateral tax credit for underlying foreign tax provided there is a 5% shareholding relationship between the companies. In addition, "Onshore pooling," allows the foreign dividends to be pooled together, before they are offset against the Irish tax liability. The tax credits do not need to be utilised in the year that the dividend is received. They can be carried forward indefinitely or offset against Irish tax on future foreign dividends.

Double Taxation Agreements

Ireland currently has 44 tax agreements with the following countries:

Australia, Austria, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Israel, Italy, Japan, Republic of Korea, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, the United Kingdom, the United States of America and Zambia.

All information on Double Taxation Agreements are available on this link