Incorporations Ltd. can
assist clients with the establishment of International Holding
favourable tax treatment of Holding Companies.
Holding Companies confer capital gains participation exemption,
foreign tax credit system, membership of
the EU, comprehensive
tax treaty network, lack of CFC and thin
capitalisation. Recent amendments in
the Finance Act 2010 (the “Act”) can be seen as continuing evidence of
commitment to attracting holding companies to Ireland.
key tax issues to consider when establishing an Irish holding company
of holding company
of Irish holding companies
of shares in an Irish holding company
operations in Ireland
- Tax treaty network
holding company incorporated in Ireland
must take one of the forms provided for by Irish
law. The most commonly used structure for a holding company is a
company or a private unlimited liability company. There are no minimum
for an Irish private company. In accordance with Irish
corporate law financial
statements must be prepared and filed on an annual basis with the Irish
Companies Registration Office.
an extremely favourable corporation tax rate of 12.5% on trading
profits which is one of the lowest in the EU and EFFA countries.
Passive income earned by a company is taxed at
of 25% and capital gains not qualifying for any relief or exemption
are taxed at 30%.
disposal of shares in a subsidiary company by an Irish holding company
will be exempt
Irish capital gains tax provided the following conditions are met;
holding company must have
held at least 5% of the ordinary share capital (including the rights to
profits and assets on a winding up) for a continuous 12 month period
and the disposal must take place during or within 2 years after the
date of meeting the aforementioned holding requirement.
if a disposal is made which brings the shareholding below 5% the
remaining shareholding will still qualify for the participation
exemption provided the remaining shares are disposed of within 2 years.
shares being disposed of must be of a company tax resident in a country
with which Ireland
has concluded a
double tax treaty or in a country with which Ireland
signed but not yet ratified a double tax treaty or in a country
resident in an
EU Member State.
the time of disposal, the shares being disposed of must be of a company
consists wholly or mainly of the carrying on of a trade or trades, or
if taken together,
the businesses of the holding company and that of the companies in
has a direct or indirect 5% or more holding, consist wholly or mainly
of one or more trades.
investee company (“Qualifying Companies”)
be resident for tax purposes in Ireland, in another EU
Member State or in a country
with which Ireland
has a tax treaty.
paid by a company located in the EU or by a company resident in a
country with which Ireland
has concluded a double tax treaty or signed but not yet ratified a
double tax treaty
(“Qualifying Companies”) to an Irish company may be liable to Irish tax
paid out of “trading profits” will be chargeable to corporation tax at
the rate of
12.5% (as opposed to 25%). In the majority of cases the application of
of corporation tax and double tax relief should ensure that no further
on such dividends. The 12.5% rate will also apply where the dividend is
of dividends received by the foreign company from the trading profits
only part of the dividend is derived from “trading profits” then the
part of the
dividend will be liable to tax at 12.5% with the balance taxable at
75% or more of the profits of the dividend paying company are trading
that company or dividends received by it out of trading profits of
that are Qualifying Companies and their trading assets constitute more than
75% of the aggregate value of all of their assets all of the dividend
to tax at the 12.5% rate (even though a percentage of the dividends is
from trading profits).
Dividends” (i.e. dividends arising on holdings of 5% or less) will also
at the 12.5% rate provided the portfolio dividend is received from a
received from other Irish tax resident companies are generally exempt from
tax of 20% must be applied in respect of dividends paid and other profit
made by companies resident in Ireland.
The obligation to withhold tax is placed on
the company making the distribution. Exemption
from dividend withholding tax is available to non-resident shareholders
in the following
domestic law, where the dividend is paid to individual recipients
or in a country with which Ireland
has concluded a double tax treaty or in a
has signed but not yet ratified a double tax treaty (“Qualifying
domestic law, where the dividend is paid to a company resident in a
Qualifying Country and which is not controlled (more than 50%) by Irish
domestic law, where the dividend is paid to a company that is under the
control of persons resident in a Qualifying Country;
domestic law, where the dividend is paid to a non-resident company that
owned (directly or indirectly) by two or more companies, the principal
class of each
which is listed (and regularly traded) on a recognised stock exchange
the Minister for Finance; and in
accordance with the EU Parent-Subsidiary directive, where the dividend
subsidiary company to its EU parent.
domestic law, where the dividend is paid to a non-resident company, the
class of whose shares is listed and regularly traded on a recognised
in a treaty country or another Member
approved by the Minister for Finance. This exemption also applies where
recipient of the dividend is a 75% or more subsidiary of such a listed