Provided of course that your business has made tax profits for the period in question. Ireland has again offered many generous reliefs that make it possible to reduce this rate of taxation, low though it is, through research and development reliefs, pension contributions, new entity start up exemptions and other significant measures. Once your Company is in the system, it must pay preliminary corporation tax each year, generally one month before your Company’s financial year end - however you can base this payment on your Company’s prior year tax liability. The 12.5% rate is not available to certain activities, such as real estate rental.
When we think about Corporation Tax, we are speaking about Companies obviously. Ireland again offers a seriously advantageous relief to owners of incorporated businesses. It offers the choice to hold one’s equity in a qualifying company through a holding company, a company that does nothing perhaps except own the shares in a trading entity. In the event of a sale of this trading subsidiary, the proceeds from such a sale are exempt from CGT, currently 33% in Ireland at the time of writing. We appreciate that if you need access to the proceeds then you will crystallise a quantum of tax based on what you need, anywhere from 33% to 55%.
At Searing Point we believe that one should choose to avoid crystallisation of taxes unnecessarily and allow one’s capital accumulate and compound. Desirable assets may be attained within a corporate structure and arms-length usage agreements may be effected to minimise the taxation impact, and spectacularly so when one thinks about the time value of money.