IRELAND Law and Practice Contributed by: Philip Tully, Emma Doherty, Alice Duffy, Simon Shinkwin and Marie McGinley, Matheson LLP
VAT Supplies of goods and services in Ireland are gener - ally subject to VAT. The standard rate of VAT in Ireland is 23%. Reduced rates ranging from 0% to 13.5% may apply to supplies of certain specified goods and services, and full exemptions apply to certain goods or services. A business engaged in an activity subject to VAT should typically be entitled to recover the VAT it incurs on purchases, subject to certain exceptions. The obligation to account for VAT on supplies made by a company may arise for the supplier or customer, depending on the relevant circumstances, such as whether the supply involves a cross-border element. Businesses are generally obliged to register for VAT in Ireland. Withholding Tax Ireland imposes withholding tax on payments of distri - butions and dividends by Irish-resident companies at a rate of 25% and payments of interest, patent royal - ties and certain annual payments at 20%. However, there are broad exemptions from these withholding requirements. As a result, withholding tax will gener - ally not arise on payments made to persons resident in another EU member state or in a jurisdiction with which Ireland has agreed a double taxation treaty. Stamp Duty Irish stamp duty applies to certain documents that transfer property and are executed in Ireland, relate to property situated in Ireland (such as Irish real estate or shares in Irish companies), or relate to a matter or thing done or to be done in Ireland. However, there are various exemptions and reliefs from Irish stamp duty, including an exemption for transfers of certain IP rights and broad reliefs for intra- group transfers and group reorganisations and merg - ers. Where an exemption is not available, stamp duty generally applies at a rate of 1% to transfers of shares and 7.5% for transfers of commercial property. 5.3 Available Tax Credits/Incentives There are a number of tax credits and incentives avail - able in Ireland, including research and development (R&D) tax credits and capital allowances for specific types of capital expenditure. Ireland also offers a
digital games tax credit to incentivise developers to produce digital games that contribute to the promo - tion and expression of Irish and European culture. The credit is available on expenditure incurred in the design, production and testing stages of the devel - opment of qualifying digital games, provided certain conditions are satisfied. Research and Development Tax Credit Irish tax legislation provides a tax credit regarding certain expenditures on R&D activities, buildings, and plant and machinery. Credit is available for 35% of the allowable expenditure (in addition to a general tax deduction at 12.5%). A number of conditions must be satisfied for the credit to be available, including a requirement that the research and development seeks to achieve scientific or technological advancement and involves the reso - lution of scientific or technological uncertainty. The R&D tax credit is currently regarded as a “quali - fying refundable tax credit” for the purposes of the OECD’s Pillar Two rules and is expected to also qualify as a “qualified tax incentive” for these purposes. Capital Allowances Regime for Capital Expenditure on the Provision of Certain Intellectual Property A special capital allowances (tax depreciation) regime is available for capital expenditure incurred to acquire certain categories of intellectual property (specified intangible assets) for a company’s trade. Specified intangible assets for these purposes include patents, trade marks, brands, copyrights or computer soft - ware, among other categories of IP. Capital allowances on qualifying expenditure may either be claimed: (i) in accordance with amortisation charged to the profit-and-loss account of the com - pany; or (ii) on a straight-line basis over 15 years at the rate of 7% for the first 14 years and 2% in the final year. Capital allowances are available to offset taxable profits earned from the specified intangible assets subject to an 80% cap. Revenue will expect a robust valuation report to sup - port the arm’s length nature of the capital expendi - ture, and taxpayers must maintain documentation
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