IRELAND Law and Practice Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Simon Shinkwin and Carlo Salizzo, Matheson LLP
cross-border element. Businesses are generally obliged to register for VAT in Ireland. Withholding Tax Ireland imposes withholding tax on payments of distributions and dividends by Irish-resident companies at a rate of 25% and payments of interest, patent royalties and certain annual pay - ments at 20%. However, there are broad exemp - tions from these withholding requirements. As a result, withholding tax will generally 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 Ire - land, 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 exemp - tion for transfers of certain IP rights and broad reliefs for intra-group transfers and group reor - ganisations and mergers. 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 incen - tives available in Ireland, including research and development (R&D) tax credits and capital allow - ances for capital expenditure incurred to acquire certain intellectual property. Ireland also offers a digital games tax credit to incentivise developers to produce digital games that contribute to the promotion and expression of Irish and European culture. The credit is available on expenditure
incurred in the design, production and testing stages of the development of qualifying digital games, provided certain conditions are satisfied. Research and Development Tax Credit Irish tax legislation provides a tax credit regard - ing certain expenditures on R&D activities, build - ings, and plant and machinery. Credit is available for 30% 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 require - ment that the research and development seeks to achieve scientific or technological advance - ment and involves the resolution of scientific or technological uncertainty. Ireland recently increased the rate of its R&D tax credit to 30% to ensure that this regime remains best in class and is regarded as a “qualifying refundable tax credit” for the purposes of the OECD’s Pillar Two rules. Capital Allowances Regime for Capital Expenditure on the Provision of Certain Intellectual Property A special capital allowances (tax deprecia - tion) regime is available for capital expenditure incurred to acquire certain categories of intel - lectual property (known as “specified intangible assets”) for a company’s trade. Specified intan - gible assets for these purposes include patents, trade marks, brands, copyrights or computer software, 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 company; 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
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