Taxation

Ireland's standard rate of corporate tax is cited as one of the key reasons foreign companies decide to invest in Ireland. These tax regimes are part of a suite of incentives that are available to businesses locating in County Waterford. In this page we provide an overview of the taxes that apply to businesses in Waterford for illustrative purposes. We recommend that you seek independent tax advice and consult with the Irish Revenue.

Corporate Tax
Ireland's corporate tax rate is 12.5% on all trading profits and 25% on non-trading income. Certain companies have their profits taxed at an effective rate of 10%. This "manufacturing rate" is being phased out but remains in existence for manufacturing, IFSC and Shannon companies until 2010. Corporate tax is assessed on the profits of a company's accounting period at the rate of tax in force during the accounting period. The figure below illustrates the competitiveness of Ireland's standard corporate rate.

Tax Graph

Tax Deductions for Intellectual Property Costs
The Irish tax treatment of intellectual property (IP) is dependent on the nature of the IP rights. Allowances are made for:

Scientific Research: revenue and capital expenditure on activities in the field of natural or applied science for the extension of knowledge is allowable as a trading expense.
Patents: can be written off by a tax deduction generally claimed over 17 years on a straight-line basis.
Know How (Industrial): can be written off fully as a trading expense in the year in which it is incurred.
Software: is written off over 8 years on a straight-line basis.
Trademarks & Copyrights: while no tax deduction is available for the cost of developing or acquiring trademarks, a deduction is available for the cost of obtaining the registration of a trademark.
Other (including brands): it may be possible to obtain a revenue deduction for costs incurred to build a brand.

Other Business Taxes
Other taxes paid by businesses in Ireland include:

Local Taxes: Waterford County Council does not apply taxes on profits of companies. Consistent with all other local authorities in Ireland, Waterford County Council applies a property tax or rates.
Value Added Tax: which is a tax on consumption, is charged on goods and services supplied in the course of business. VAT is also payable on imports from outside the European Union. Credit is available to registered traders, thus is ultimately borne by the final consumer. Exports are zero rated for VAT.
Customs & Excise Duties: As a member of the EU Ireland enjoys duty free importation of goods from other EU countries. The EU has preferential tariff agreements with certain countries and country groups. While generally excise duties are collected at point of entry, some arrangements are in place under which goods may be imported without payment of duty.
Taxes on Capital: Profits arising from the disposal of capital are subject to capital gains tax. The standard rate of capital gains tax is 25%.
Stamp Duty: is payable on the transfer of lands and buildings.
Capital Duty: arises on the formation of a limited company. The rate of this duty is 0.5%.
Capital Acquisition Tax: is applied to gifts and inheritance. There is a number of exemptions and reliefs available.
Employer Social Insurance Contributions: Employers contribution to Pay Related Social Insurance is 10.75% of gross salary.
Other schemes: are in place to attract employees such as profit sharing schemes, new share purchase relief, share ownership trusts and approved share option schemes.

Double Taxation Agreements
To facilitate international business, Ireland has generated a network of double taxation agreements. To date, Ireland has put in place 45 tax agreements with other jurisdictions, to provide for the elimination or mitigation of double taxation.

Employee Tax
Employees pay income tax at a standard rate of 20% and a higher rate of 41% depending on their income and circumstances. In addition personal tax credits are available to each individual and married couple. Employees also contribute to National Social Insurance or Pay Related Social Insurance (PRSI). Outside of work, other taxes may apply to individuals such as Capital Gains Tax, Capital Acquisition Tax or Stamp Duty.

For more comprehensive information on the tax incentives available to businesses in Waterford please contact The Irish Revenue at www.revenue.ie.