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Taxation of Holding Companies in Ireland

Taxation of Holding Companies in Ireland

holding company in Ireland is registered for the sole purpose of owning and managing other legal entities. Ireland has become an attractive business destination for the registration of holding companies due to numerous tax advantages and tax exemptions (for example, this type of company can benefit from a capital gains participation exemption). 

Businessmen who want to open a company in Ireland as a holding company should also know that this business structure is exempted from the payment of the withholding tax on dividends and it can also benefit from the provisions of the double taxation treaties signed by this country. Our team of local consultants can offer advice on the tax benefits applicable to a holding company

Taxation system applicable to Irish holding companies – explained by our experts in company formation in Ireland 

Once a holding company is established in Ireland, it will become liable to taxation, as it is the case of any other business form registered in this country. One of the taxes applicable to a holding company is the corporate income tax, which is imposed at the standard rate of 12,5%. Our Irish company formation consultants present below the other taxes applicable to a holding company:

  • • the passive income of a holding company is taxed at the standard rate of 25%
  • • in the situation in which the company does not qualify for a tax exemption on the capital gains, it will be taxed at the standard rate of 33%;
  • • the capital gains tax is not applicable if the holding company holds directly or indirectly minimum 5% of the ordinary share capital for a period of at least one year;
  • • a holding company that has disposable shares has to be a tax resident in one of the countries with which Ireland signed a treaty for the avoidance of double taxation

How is the corporate income tax applied to Irish holding companies? 

In the situation in which the Irish company earns foreign dividend income and the respective dividend is paid from trading profits, the company will be imposed with the standard corporate income tax, imposed at a rate of 12,5%Our team of consultants in company formation in Ireland can provide further information on this matter. 

However, certain foreign dividends can be imposed with a corporate tax of 25%, but tax exemptions can be applied in this case as well, under the Irish tax credit pooling system. Investors are invited to contact our team of specialists in Irish company formation for more details concerning this rule.