IRELAND Law and Practice Contributed by: Diarmuid Mawe, Craig Kenny, Katelin Toomey and William Fogarty, Maples Group
8.4 Income Tax Withholding for Foreign Investors Tenants of non-resident owners of Irish property are obliged to withhold tax from rental income prior to remitting overseas, at the standard income tax rate of 20%. This can be avoided if the landlord has employed an Irish agent to collect the rents. Non-resident individuals investing in Irish prop - erty are charged Irish income tax on taxable rental profits, on a fiscal-year basis. A non-resi - dent individual or partnership is subject to rental income tax at between 20% and 41%. A non- resident company is subject to 25% tax on rental income, minus deductible rental expenses. Capital gains tax is applicable at a rate of 33% on the gains made on a disposal of property in Ireland. If the seller is non-resident, this will only relate to the sale of specified assets. 8.5 Tax Benefits Although, historically, Ireland did allow individu - als to offset the cost of investment properties against their other income, such schemes were severely curtailed from 2007. There are now minor reliefs, such as the rent-a-room relief, which exempts up to EUR14,000 annually. Commercial landlords can claim tax deprecia - tion (Capital allowances) on capital expenditure for fixtures and fittings. This is provided at a rate of 12.5% over eight years. Certain types of industrial buildings (eg, factories) can qualify for industrial building allowance at a rate of 4% over 25 years.
Where the transfer of business relief applies to the sale of a “new” property, the seller may be able to claim further VAT input credit where it was not entitled to recover the VAT incurred on the acquisition or development of the property. 8.2 Mitigation of Tax Liability As mentioned in 2.10 Taxes Applicable to a Transaction , where non-residential property is transferred and subsequently utilised for the construction of residential accommodation, a stamp duty refund is available, which effectively reduces the rate from 7.5% to 2%. Stamp duty on the transfer of Irish shares is generally charged at 1% of their value. Previ - ously, stamp duty was mitigated on large-scale acquisitions through selling the corporate vehi - cle holding the property; however, transfers of corporate entities and partnerships can be subject to 7.5% duty where the entity derives over 50% of its value from Irish land intended for development, held as trading stock, or held with the sole or main object of realising a gain on disposal. This provision is subject to a number of conditions, including that the transfer involves the transfer of control of the land. There are stamp duty exemptions for intra-group Commercial rates are imposed by local authori - ties against businesses premises; the local authority determines the level of rates. An abatement from the payment of commer - cial rates may be possible where a property is vacant, although this depends on the local authority in question and varies between the different authorities. transfers of real estate. 8.3 Municipal Taxes
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