IRELAND Law and Practice Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Simon Shinkwin and Carlo Salizzo, Matheson LLP
A company will generally be considered tax resi - dent in Ireland if it is centrally managed and con - trolled in Ireland, regardless of where it is incor - porated. If a company is incorporated in Ireland, the general rule is that the company will be Irish tax resident unless it is tax resident in another country under the terms of a double tax treaty. The rate of corporation tax payable on a com - pany’s profits will depend on whether the profits arise from trading (broadly, operational activi - ties) or non-trading (eg, passive investment) activities. A low rate of 12.5% applies to trading profits, with a 25% rate applying to non-trading income. The question of whether a company is carrying on a trade is primarily one of fact to be decided on a case-by-case basis, although Irish Revenue is willing to provide an opinion as to whether a particular activity constitutes the carrying on of a trade in certain circumstances. Losses incurred by a company in respect of trad - ing operations can generally be carried forward indefinitely for use against future profits of that trade. Losses can also be surrendered to other companies within a group for Irish corporation tax purposes. OECD Pillar Two Minimum Tax Ireland has implemented the OECD’s Two-Pillar solution to address the tax challenges arising from the digitalisation of the economy in line with the EU Implementing Directive. The Directive obliged EU member states, including Ireland, to introduce a minimum tax rate of 15% for multi - nationals with annual revenue over EUR750 mil - lion. Ireland introduced its legislation in Finance (No 2) Act 2023 and it came into force on 31 December 2023. Ireland has implemented a qualifying domestic minimum top up tax (QDMTT) to top-up Irish tax
paid by in-scope entities to 15% (on profits com - puted in accordance with the OECD Pillar Two rules and the EU Directive). The existing 12.5% corporation tax rate contin - ues to apply to multinationals and domestic busi - nesses operating in Ireland that do not exceed the EUR750 million group revenue threshold. As a result, there has been no change in the 12.5% corporation tax rate for the majority of business - es in Ireland which remain outside the scope of Chargeable gains realised by an Irish tax resident company on the disposal of a capital asset are generally subject to corporation tax at an effec - tive rate of 33%, where relief or exemptions are not available. A non-Irish resident company will be subject to corporation tax in a similar man - ner on gains realised on the disposal of speci - fied Irish assets (broadly, Irish branch assets and Irish land and buildings, Irish minerals and explo - ration rights, or shares deriving their value from such assets or Irish branch assets). VAT Supplies of goods and services in Ireland are generally 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 excep - tions. The obligation to account for VAT on supplies made by a company may arise for the supplier or customer, depending on the relevant circum - stances, such as whether the supply involves a the minimum tax. Chargeable Gains
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