Corporation tax rates
|Accounting period||Standard rate||Higher rate||Lower rate|
|31 December 2003 – onwards||12.5%||25%||n/a|
|Year ending 31 December 2002||16%||25%||12%|
|Year ending 31 December 2001||20%||25%||12%|
|Year ending 31 December 2000||24%||25%||12.5%|
|Year ending 31 December 1999||28% (First £50,000 at 25%)||n/a||n/a|
|Year ending 31 December 1998||32% (First £50,000 at 25%)||n/a||n/a|
|1 April 1997 to 31 April 1997||36% (First £50,000 at 25%)||n/a||n/a|
|1 April 1995 to 31 March 1997||38% (First £50,000 at 25%)||n/a||n/a|
|1 April 1991 to 31 March 1995||40%||n/a||n/a|
The standard rate of corporation tax (s 21) is 12.5%.
Foreign dividends paid from trading profits are taxed at 12.5%. If the dividend is not paid from trading profits, it is taxed at 12.5% provided:
(a) 75% or more of the paying company’s profits are trading profits, or derived from trading profits arising in EU States or treaty countries.
(b) 75% or more of the recipient’s assets, on a consolidated basis, must consist of trading assets.
Where the recipient company owns not more than 5% of a paying company based in an EU State or treaty country, the dividend is also taxed at 12.5%.
Excess foreign tax credits in respect of dividends taxed at 12.5% are not available for set-off against dividends taxed at 25% (but not vice versa).
The following types of income are taxed at 25% (s 21A):
(a) untaxed interest and income from foreign property (Case III income),
(b) miscellaneous income not taxed under any other heading (Case IV income),
(c) rental income (Case V income), and
(d) income from mining activities, petroleum activities, and dealing in land.
A start-up trading company can get a three year exemption which reduces its corporation tax charge (up to €40,000 per annum) to nil.
There is marginal relief if the charge is between €40,000 and €60,000. In theory, this means a start-up company can earn annual net profits of €320,000 (€40,000 divided by 12.5%) and pay no tax.
However, the relief is linked to the amount of employer’s PRSI paid by the claimant company, subject to a maximum of €5,000 per employee, and an overall limit of €40,000. The relief does not apply to trades carried on by associated companies.
This relief expires on 31.12.2018.
Knowledge Development Box (KDB)
The KDB rate of corporation tax on profits from patented inventions and copyrighted software (qualifying assets) is 6.25% (s 769I).
Pay and file
A company with a tax charge below €200,000 may pay preliminary tax based on its previous year’s liability.
A company with a tax charge above €200,000, must pay in two instalments:
(a) the first is payable on the 21st of the sixth month of the accounting period (e.g., 21 June for a calendar year period),
(b) the second is payable on the 21st of the eleventh month of the period (21 November for a calendar year period).
Where a company pays and files electronically, the 21st becomes the 23rd.
The preliminary tax payment must equal 90% of the ultimate liability.
Any remaining balance must be paid on or before the return filing date (s 958(3)).
Filing of return
A company must file a corporation tax return on or before the return filing date, i.e., the last day of the ninth month after the end of the accounting period (s 951).
Close company surcharge
A surcharge of:
(a) 20% applies where a closely held company does not distribute investment or rental income to its shareholders (s 440), and
(b) 15% applies where a closely held professional service company does not distribute its income to its shareholders (s 441).