Ireland - Corporate - Withholding taxes (2024)

Irish resident companies are required to withhold tax on certain types of payments as set out below (see sub-sections below for WHT exemptions and table at end of this section for WHT rate reductions).

RecipientWHT (%)
DividendsInterestPatents, royalties
Resident companies252020
Resident individuals252020
Non-resident companies and individuals252020

Dividend WHT

DividendWHT applies at 25% to dividends and other distributions. However, an exemption may be available where the recipient of the dividend is either an Irish company or a non-Irish company eligible for the Parent-Subsidiary Directive (which in Ireland requires a 5% or greater shareholding).

Exemptions from dividend WHT also are available where the recipient of the distribution falls into one of the categories listed below and provided an appropriate declaration is made to the company paying the distribution in advance of the distribution. In a move to significantly ease the administrative burden in applying for exemption for dividend WHT, this declaration is now self-assessed and valid for up to six years.

  • Irish tax resident companies (a declaration is not required for Irish tax resident companies that hold a 51% or greater shareholding of the company).
  • Non-resident companies that are resident in a country with which Ireland has a tax treaty or in another EU member state, where the company is not controlled by Irish residents.
  • Non-resident companies that ultimately are controlled by residents of a tax treaty country or another EU member state.
  • Non-resident companies whose principal class of shares are traded on a recognised stock exchange in a treaty country or another EU member state or on any other stock exchange approved by the Minister for Finance (or if the recipient of the dividend is a 75% subsidiary of such a listed company).
  • Non-resident companies that are wholly owned by two or more companies the principal class of shares of each of which is traded on a recognised stock exchange in a treaty country or another EU member state or on any other stock exchange approved by the Minister for Finance.
  • Individuals who are resident in a tax treaty country or in another EU member state.
  • Certain pension funds, retirement funds, sports bodies, collective investment funds, and employee share ownership trusts.

Companies that make a dividend distribution are required, within 14 days of the end of the month in which the distribution is made, to make a return to the tax authorities containing details of the recipient of the dividend, the reason for any exemption from dividend WHT, and to pay over any tax withheld. In addition, Irish resident companies (or intermediaries) are required to take all reasonable steps to obtain and keep a record of the tax reference number for each person beneficially entitled to receive distributions.

Interest WHT

Financial institutions operating in Ireland are obligated to withhold tax (deposit interest retention tax or DIRT) out of interest paid or credited on deposit accounts in the beneficial ownership of resident companies, unless the financial institution is authorised to pay the interest gross. The rate is 33%. There is no DIRT on interest paid to non-residents where a written declaration of non-residence is completed. Certain yearly interest payments are subject to WHT at the standard rate of income tax (currently 20%). Interest payments made by companies to companies resident in other EU member states or in treaty countries are generally not subject to WHT under domestic law. The EU Interest and Royalties Directive may also provide an exemption from WHT for payments between associated companies. In addition, Ireland’s DTTs may provide an exemption/reduced rate of WHT on interest payments.

Royalties WHT

Royalties, other than patent royalties, are not generally subject to WHT under domestic law. Patent royalty payments and certain other annual payments are subject to WHT at 20%. Lower WHT rates may be accessed under treaties, subject to certain documentation and reporting requirements. The EU Interest and Royalties Directive may also provide an exemption from WHT for payments between associated companies. Associated companies, for the purpose of this directive, are companies where one can directly control at least 25% of the voting power of the other or at least 25% of the voting power of both companies is directly controlled by a third company. In all cases, all companies must be resident in a member state of the EuropeanUnion.

Outbound Payments

Finance (No.2) Act 2023 introduced new outbound payment rules into Irish legislation which apply to payments of certain dividends, interest and royalties to associated entities in no-tax and zero tax jurisdictions, as well as those included on the EU list of non-cooperative jurisdictions, made on or after 1 April 2024. There are grandfathering provisions that apply to arrangements which were in place on or before 19 October 2023. As such, the new measures will not apply to such grandfathered payments until 1 January 2025.

The new legislation limits the operation of certain domestic withholding tax exemptions in respect of captured payments, as well as requiring reporting of these, by providing that withholding tax should be applied on applicable payments by Irish companies to associated entities that are resident in no-tax, zero-tax or non-cooperative jurisdictions. There are however a number of exclusions from the new rules, subject to certain conditions. Please refer to "Significant developments" above for further details.

WHT on capital gains

Where any of the following assets is disposed of, the person by whom or through whom the consideration is paid (i.e. the purchaser) must deduct capital gains WHT at 15% from the payment:

  1. Land or minerals in Ireland or exploration rights in the Irish continental shelf.
  2. Unquoted (unlisted) shares deriving their value or the greater part of their value (more than 50%) from assets described in (1).
  3. Unquoted (unlisted) shares issued in exchange for shares deriving their value or the greater part of their value from assets as described in (1).
  4. Goodwill of a trade carried on in Ireland.

The requirement to withhold tax does not apply where the consideration does not exceed EUR 500,000 (EUR 1,000,000 if the asset is a house or apartment as defined in legislation) or where the person disposing of the asset produces a certificate from the Revenue Commissioners authorising payment in full. A clearance certificate may be obtained by making an application in the prescribed form to the Revenue Commissioners. The certificate may be obtained on the grounds that the vendor is Irish resident, no capital gains tax is due in respect of the disposal, or the capital gains tax has been paid. WHT is creditable against the capital gains tax liability of the vendor, and any excess is refundable.

To avoid the requirement to withhold, clearance must be obtained before the consideration is paid. There is no exemption from the withholding procedure where the asset is held as trading stock or where the transaction is intra-group and a capital gains tax liability does not arise. Failure to obtain the certificate will lead to the purchaser being assessed to capital gains tax for an amount of 15% of the consideration.

Professional services withholding tax (PSWT)

Individual income tax at the standard rate (currently 20%) is deducted from payments for professional services by government departments, state bodies, and local authorities. Credit is granted for any PSWT withheld against the corporation tax (or income tax for an individual) liability of the accounting period in which tax is withheld.

Relevant contracts tax (RCT)

RCTis a WHT that applies in the construction, forestry, and meat-processing industries in Ireland. It applies where a ‘principal contractor’ engages a subcontractor under a ‘relevant contract’ to carry out ‘relevant operations’.

The RCT system applies if the ‘relevant operations’ are carried out in Ireland, to include Irish territorial waters and any area over which Ireland has exploration and exploitation rights. Therefore, it is irrelevant whether or not the parties to the contract are resident in Ireland, the parties are liable to tax in Ireland, the contract is executed outside Ireland, or whether payments under the contract are made outside Ireland.

It is important to note that principal contractors who are liable to RCT may not necessarily operate in the above industries. In the case of construction, in particular, relevant contracts may be entered into by a variety of entity types. For example, companies involved in electricity generation, oil and gas exploration, and telecommunications undertakings are all classed as principal contractors. In addition, any person who undertakes relevant operations and is liable/answerable to another person (including group entities) for those works will also be regarded as a principal contractor for RCT purposes. Relevant operations are also broadly defined. Examples are fit-out work in offices/buildings; repairs to buildings and structures; ground works; installation, alteration, and repairs to various systems in buildings (e.g. electrical, ventilation, water supply, telecommunications, burglar and fire protection systems); mining; exploration works; and also certain haulage contracts.

It is also important to note there is no group relief for RCT; consequently, any inter-group arrangements for carrying out relevant operations will give rise to RCT issues for both entities.

Where RCT applies, the principal contractor must notify the contract and all payments under the contract to Irish Revenue on the eRCT system in advance of payment being made. Once the principal notifies Irish Revenue that they intend on making a payment to the subcontractor, Irish Revenue will then revert on a real-time basis and issue a Deduction Authorisation to the principal advising of the rate of RCT to be withheld from the gross payment. The current rates of RCT are 0%, 20%, and 35%, and the rate applied to a subcontractor depends on the Irish tax compliance position of the subcontractor. The 20% rate will apply to subcontractors that are registered with Irish Revenue and have a good tax compliance record. The 35% rate will apply where the subcontractor is not registered for tax in Ireland or has an inadequate tax compliance record. The subcontractor is entitled to credit for, or offset of, the RCT withheld by the principal and paid to Irish Revenue after year-end.

If, however, the subcontractor has applied for and received zero rate authorisation from Irish Revenue, then 0% RCT rate applies and the subcontractor can receive payment gross without deduction of RCT.

If a principal does not notify payments to Irish Revenue in advance of making payment to the sub-contractor, then penalties will apply. It should be noted that the cost of non-compliance with RCT procedures are severe and can range up to 35% of the gross payment; consequently, it is important that RCT is considered before undertaking any construction related activity, in addition to meat-processing and forestry activity.

Financial Institutions Levy

The Financial Institutions Levy was originally introduced for a three-year period with the express purpose of enabling the financial services sector to contribute to economic recovery. The levy applied to any bank or building society that was required to pay DIRT to the Revenue Commissioners in a specified year (the 'base year') in respect of interest paid on deposit accounts and expired on 31 December 2023. Finance Act (No.2) 2023 introduced a revised bank levy for 2024 and subsequent years, which will be payable by specific banks that previously received State assistance. The revised bank levy will apply at a rate of 0.112% of relevant deposits held by the Financial Institution.

WHT rate reductions and exemptions

Exemptions and rate reductions apply under domestic law and under tax treaties. Where an exemption from WHT is not available (please see sections above for domestic law exemptions), a reduced rate of WHT may apply under an applicable tax treaty. The table below sets out the reduced rates of WHT that may be available to payments from Ireland of dividends, interest, and royalties under an applicable tax treaty.

RecipientWHT (%)
Dividends (1)InterestPatents, royalties (3, 4)
Non-treaty25 (5)2020
Treaty
Albania0/5/100/77
Armenia0/5/150/5/105
Australia01010
Austria000
Bahrain000
Belarus0/5/100/55
Belgium015 (2)0
Bosnia and Herzegovina000
Botswana0/50/7.55/7.5
Bulgaria5/100/5 (2)10 (2)
Canada5/150/100/10
Chile5/155/155/10
China5/100/106/10
Croatia5/10010 (2)
Cyprus000/5 (2)
Czech Republic5/15010 (2)
Denmark000
Egypt5/100/1010
Estonia5/150/10 (2)5/10 (2)
Ethiopia50/55
Finland000
France2500
Georgia0/5/1000
Germany5/1500
Greece5/155 (2)5 (2)
Hong Kong00/103
Hungary5/1500
Iceland5/1500/10
India100/1010
Israel0/105/1010
Italy1510 (2)0
Japan01010
Kazakhstan0/5/100/1010
Korea, Republic of000
Kosovo0/5/10/150/50
Kuwait005
Latvia5/150/10 (2)5/10 (2)
Lithuania5/150/10 (2)5/10 (2)
Luxembourg000
Macedonia0/5/1000
Malaysia100/108
Malta5/1505 (2)
Mexico5/100/5/1010
Moldova5/100/55
Montenegro0/5/100/105/10
Morocco6/100/1010
Netherlands0/1500
New Zealand01010
Norway0/5/1500
Pakistan5/100/1010
Panama50/55
Poland0/150/10 (2)10 (2)
Portugal150/15 (2)10 (2)
Qatar005
Romania30/3 (2)0/3 (2)
Russia1000
Saudi Arabia0/505/8
Serbia5/100/105/10
Singapore00/55
Slovak Republic0/1000/10 (2)
Slovenia5/150/5 (2)5 (2)
South Africa5/1000
Spain005/8/10 (2)
Sweden000
Switzerland000
Thailand100/10/155/10/15
Turkey5/1510/1510
Ukraine5/155/105/10
United Arab Emirates000
United Kingdom5/1500
United States5/1500
Uzbekistan5/1055
Vietnam5/100/105/10/15
Zambia7.50/108/10

Irish tax legislation allows for favourable treatment in situations where a DTT has been signed but not yet ratified.

Notes

  1. Domestic legislation may also provide an exemption from the dividend WHT, subject to providing the necessary documentary evidence of qualification. An exemption may also be available under the EU Parent-Subsidiary Directive.
  2. The EU Interest and Royalties Directive may provide an exemption from WHT for payments between associated companies.
  3. In general, royalties WHT applies only in the case of patent royalties.
  4. Under domestic legislation, WHT will generally not apply if the loans or advances are for a period of less than one year or if the interest is paid in the course of a trade or business to a company resident in an EU or treaty country and that country imposes a tax that generally applies to foreign interest receivable.
  5. Rate applying to distributions made on or after 1 January 2020 (previously 20%).

Ireland has signed Double Taxation Agreements (DTAs) with 76 countries; 74 are in effect.

Ireland has signed new tax treaties with Ghana and Kenya. However, these are not yet in effect.

Negotiations for new DTAs with Oman and Uruguay have concluded and for a Protocol to the existing DTA with Mexico.

Ireland signed a new DTA with Kosvo and the provisions began to take effect on 1 January 2023.

Ireland has signed Protocols to the existing DTAs with Isle of Man and Guernsey. The provisions of these began to take effect from 1 January 2023.

Ireland - Corporate - Withholding taxes (2024)

FAQs

How to calculate corporation tax in Ireland? ›

Ireland's standard corporation tax rate is 12.5%, applied to trading or 'active' income. The 25% tax rate is for non-trading or 'passive' income—for example, income you receive from rental properties or investments. Working with a professional accountant means they will expertly handle these calculations for you.

Why does Ireland have such a low corporate tax rate? ›

These lower effective tax rates are achieved by a complex set of Irish base erosion and profit shifting ("BEPS") tools which handle the largest BEPS flows in the world (e.g. the Double Irish as used by Google and Facebook, the Single Malt as used by Microsoft and Allergan, and Capital Allowances for Intangible Assets ...

How to reclaim withholding tax in Ireland? ›

You may claim the tax withheld as a credit against your Income Tax Return (IT) (Form 11) or Corporation Tax (CT) in that tax year. You must include the gross amount of tax that has been withheld in your Form 11 or Form CT1 tax return.

What is the US withholding tax treaty with Ireland? ›

Specifically, the treaty allows U.S. citizens and residents to claim a foreign tax credit for the income tax they paid on Irish sourced income to Ireland against their U.S. tax liability. Conversely, Ireland offers a credit for U.S. taxes paid on U.S. sourced income against it's own tax liabilities.

Is corporation tax in Ireland 15%? ›

The Shift to a 15% Corporate Tax Rate:

The new minimum tax rate, effective from the 1st of January, 2024, sees a shift from the previous corporate tax rate of 12.5% to a higher 15% for certain large companies.

How to calculate corporation tax? ›

Example corporation tax calculation

To carry out your calculation, you need to add back any depreciation and entertaining costs to the profit before accounts total. Then you must subtract any capital allowances so that you end up with the profit value that is liable to tax.

Is Ireland a corporate tax haven? ›

Ireland is referred to as a tax haven because of the country's taxation and economic policies. Legislation heavily favors the establishment and operation of corporations, and the economic environment is very hospitable for all corporations, especially those invested in research, development, and innovation.

What are the disadvantages of corporation tax in Ireland? ›

Disadvantages include higher setup and compliance costs, more filing requirements, and less privacy as financial statements must be published. Directors also have legal duties. Ireland offers a competitive 12.5% corporate tax rate and other incentives like R&D tax credits that support starting a company.

Who pays the most corporation tax in Ireland? ›

1 Apple – €2.29bn

According to the financial accounts of its main Irish subsidiary – Apple Operations International Limited (AOI) – the iPhone maker paid a corporate tax charge of €2.286 billion in the Republic for the 12 months ending September 26th, 2020.

How do you calculate corporation tax rate? ›

For corporations, the effective tax rate is computed by dividing total tax expenses by the company's earnings before taxes.

What is 25% corporation tax rate in Ireland? ›

There are two rates of Corporation Tax (CT): 12.5% for trading income. 25% for income from an excepted trade (as defined in part 2 of the Taxes Consolidation Act) 25% for non trading income, for example rental and investment income.

How do I calculate my tax in Ireland? ›

How your Income Tax is calculated
  1. applying the standard rate of 20% to the income in your weekly rate band.
  2. applying the higher rate of 40% to any income above your weekly rate band.
  3. adding the two amounts above together.
  4. deducting the amount of your weekly tax credits from this total.
Jan 1, 2024

What is the tax rate for a Ltd company in Ireland? ›

Benefits of a Private Limited Company. The main benefit of trading as a limited company is the limited liability bestowed upon the shareholders of the company. Limited companies in Ireland also qualify for corporation tax at 12.5%.

References

Top Articles
Latest Posts
Article information

Author: The Hon. Margery Christiansen

Last Updated:

Views: 5865

Rating: 5 / 5 (70 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: The Hon. Margery Christiansen

Birthday: 2000-07-07

Address: 5050 Breitenberg Knoll, New Robert, MI 45409

Phone: +2556892639372

Job: Investor Mining Engineer

Hobby: Sketching, Cosplaying, Glassblowing, Genealogy, Crocheting, Archery, Skateboarding

Introduction: My name is The Hon. Margery Christiansen, I am a bright, adorable, precious, inexpensive, gorgeous, comfortable, happy person who loves writing and wants to share my knowledge and understanding with you.