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We have recently been involved advising clients on the implications of this relief.

The relief provides incentive to foreign companies and their employees and reduces employees salary from income tax for the first five years after relocation.

The main conditions are as follows:

 Key details as follows:
 
 1. employee arrives in Ireland during 01/01/2012 and 31/12/2014
2. applies to employees of companies incorporated and tax resident in a DTT country or tax info exchange  agreement country
or associated companies such as Irish ones. The employee can therefore take up employment with associated Irish company and qualify
3.employee must have been employed by the relevant employer for the 12 months prior to arriving in Ireland and must perform substantial
duties here for 12 months. The relief applies for the first 5 years of the individuals residency.
4. employee must not have been tax resident in Ireland for any of the 5 years preceding the year of arrival
5. employees may also recover cost of one return trip for their family to home country and school fees up to  € 5000 paid tax free
6. must be a minimum base salary of € 75,000 & 30 % of salary in excess of € 75,000 is excluded from Irish tax.
7. relief only extends to income tax, not USC or PRSI
8. certain remuneration excluded such as BIK, bonus payments, stock options etc
9. Cannot claim new SARP relief for any employee engaged in R&D activities, old  SARP (relevant prior to 01/01/2012), new Foreign Earnings Deduction (applies to employees from BRICS countries only), cross border relief (only relevant if employee is commuting between two DTT countries , spends at least 1 day per week in Ireland and duties performed outside Ireland) or split year treatment (where employees income only from date of becoming resident here is liable to taxation)

If you would like advice on whether this would apply to you on relocation of your employees to Ireland then please see O’Mahony Donnelly Contact Details

These tax laws may affect you individually as an investor and also any foreign based staff members you may decide to hire & who relocate to Ireland with your new business venture.

We act for many personal tax clients who have moved to Ireland and whom we advise on tax residency, tax domicile and non tax resident issues.

In this article I would like to focus on Irish tax law surrounding those Irish tax resident individuals who are  ’non-domiciled’ for Irish taxation purposes.

Whilst tax residency can be easily defined, depending on the number of days spent in a country during a tax year, the concept of domcile is more complex and uncertain. The original concept of domicile was formed by English courts during the 19th century. Legal definitions of ‘domicile’ state that a persons domicile is the country where he or she intends to reside permanently and indefinitely. Every person must have a domicile and cannot have more than one country at any time. (source www.lawreform.ie)  This is unlike tax residency as you can be tax resident in more than country at a time.

A person acquires a domicile of origin at birth and this is usually the domicile of their father at that time which remains with them until they reach the age of majority. Should their father change their domicile during this time then their domicile of origin also changes.

A domicile of choice may be acquired once an individual has reached adulthood and the individual would have to reside in a country with the intention of residing there indefinitely. There would also have to be a severance of links with the country of domicile of origin.

There are numerous factors that are considered in assessing whether a domicile of choice has been acquired, such as where the individual retains property, location of business interests, bank accounts & where their will is drawn up.

Once you have established that you are non-domiciled then the folowing tax planning points are relevant:

• Income from Irish sources is taxable in Ireland
• Income from UK or foreign sources is only taxable to the extent of amounts remitted here
• Remittances of capital are not subject to Irish income tax
• Income earned at a time when the individual was not resident in Ireland would be treated as capital in nature and therefore not subject to Income tax here when remitted
• There are special rules for employment income
• Liability to Capital Acquisitions Tax (CAT) is based on the donor or donee’s Irish tax residency or ordinarily residency. If neither is Irish resident or ordinarily resident then CAT is confined to gifts or inheritances situated in Ireland.
• Capital Gains Tax (CGT) is based on the individual’s Domicile, Irish tax residency or ordinarily residency

Should you wish to discuss your own personal tax issues see our contact details.

It is  now time to start work on personal taxes for 2011. 

For planning purposes, early preparation of your tax return has the following advantages:

 a. You have advance notice of your tax liability and therefore time to plan for settling your tax liability months ahead;

 b.You have adequate time to avail of tax planning opportunities such as additional pension contributions to reduce your tax liability;

 c. Filing your return before the deadline does not mean you have to pay your tax early, you still have until the normal tax payment dates to do this;

 d. It reduces the possibility of tax based surcharges or interest being levied for late filing or late payment;

e. It gives adequate notice to your professional advisers, to allocate sufficient resources,  provide you with a higher level of service and eases the substantial work pressure on their firm during the busy autumn filing period.

If you require assistance with any Irish personal tax issue then see our contact details

If you have a  recognised accountancy qualification and a minimum of 4 years experience planning and completing audit and audit exempt clients to partner review stage — and you are interested in working for an innovative firm with a wide range of international clients.

We are also still looking for an Experienced Accounting Technician for 6 months maternity cover.

Go to our recruitment page for more on these positions.

One of the qualifications is that you provide a significant portion of funding yourself or raise it from commercial sources. Also, receipt of funding at this stage doesn’t preclude you from getting additional funding when you are out of the start-up stage, including assistance with the cost of expansion.

“Enterprise Ireland’s initial equity investment in start ups is mainly in the range €100k – €500k. Our investment can be in the form of ordinary shares and/or convertible preference shares. We do not take more than 10% of the ordinary equity.” They also state that they do not normally take a seat on the Board.

Before contacting Enterprise Ireland to start the application process they ask that you review Do I qualify for help from Enterprise Ireland?

Click here to download the brochure for this programme.

We can assist you in setting up a limited company in Ireland and provide a full range of business and accountancy services, with a focus on assisting international companies looking to set up in Ireland.

Contact us for further information on setting up a business in Ireland.

A civil partnership is defined as a relationship similar to marriage for two people of the same sex who enter into a legal agreement governed by the ’Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010′.

Qualified Co-habitants are broadly defined as a same or opposite sex adult couple who are not married nor in a civil partnership, unrelated, living together in an intimate relationship and have lived together for 5 years (or 2 years if they have had a child together)

The tax changes involve income tax, capital gains tax, capital acquistion tax and stamp duty and they seek to give similar taxation rights to ‘civil partners’ and ‘qualified co-habitants’ as follows:

1. Civil partners can choose how they are assessed, either singly, jointly, separately in the same way as married couples.

This will bring a tax benefit as tax credits may be pooled between them, whereas before the changes they may have been lost.

Qualified co-habitants cannot choose to be jointly or separately assessed and will continue to be taxed as single individuals

2. In the year of registration of civil partnership the individuals are taxed as single persons but with a provision to refund tax should this result in a higher liability than if being taxed as civil partners

3. Civil partners can transfer the family home to their partner without any liability to capital gains tax or capital acquisition tax

For qualified co-habitants CGT exemption via principle private residence relief may apply to the transferor 

For qualified co-habitants capital acquisition tax will apply on the excess over € 16604 at 25%

There are many other provisons in the Finance (No 3) Bill 2011 and if you would like an opinion on your own situation please contact us at the following link

http://www.omahonydonnelly.ie/contactus.htm

Each member firm is an expert in their respective countries and the newsletter is a valuable guide on the issues discussed.

Enterprise Worldwide are a global alliance of independent accountancy firms of which we are members, in order to provide the most comprehensive service to our clients operating international businesses.

If you would like to view the full article please visit http://omahonydonnelly.ie/omd-ew-european-business-newsletter-5.pdf

Due to changes in Irish government fiscal policy over several years, Ireland has become a favoured location for holding companies for many US & UK international trading corporations.  Our low corporate tax rate has gained many news headlines in Europe, particularly during Ireland’s IMF/EU financial structuring deal. However, our low corporate tax rate is only one of many reasons to locate your corporation here.

Key Benefits of Locating Holding Company in Ireland

1. Low corporate tax rate of 12.5% on trading profits, without limit.
2. Finance Act 2011 introduced an extension to 0% corporate tax rate for new start-up companies for the first three years of trading. The tax benefit has been capped to the amount of employers PRSI paid on the employees’ salaries, to aid job creation.
3. No dividend withholding tax (DWT) on payments made to individual shareholders resident in either an EU or double tax treaty country.
4. No DWT applies where they are paid to a non-resident company shareholder where that company is not controlled (50% or more shareholding) by Irish residents
5. Dividends received by an Irish holding company from trading profits of a subsidiary are generally taxed at 12.5% corporation tax.
6. Limited transfer pricing legislation which only applies to large companies with a turnover of  more than €50M, employees of more than 250 and, assets over € 43m
7. Capital Gains tax exemption for disposal of shares in a subsidiary company. There is a minimum share holding requirement of 5% and shareholding period of 1 year, plus other conditions.
8. Double tax treaty network with 55 countries in effect and 7 more waiting to be implemented which simplify the distribution of profits internationally and provides some clarity to our direct tax system and how it applies in conjunction with an EU or DTT country.
9. Membership of the EU and Euro currency gives Ireland an advantage when trading with fellow EU countries
10. The ability to combine trading activities with its holding company function i.e. charging fees for managing a foreign subsidiary would be deemed to be an economic trading activity and the profits of such an activity would attract low corporation tax.
11. No ‘Controlled Foreign Company (CFC)’ or ‘Thin Capitalization rules’ are currently in force in Ireland
12. There is a favourable approach by the Irish Government to foreign owned holding companies
13. Low capital start up costs for investing in an Irish limited company
14. Remittance taxation system available for non-domiciled Irish resident individuals provides a tax incentive to foreign individuals re-locating to Ireland
15. Abolition of employers PRSI on share based remuneration in Finance Act 2011 significantly reduces employers costs and is a significant benefit in deciding on whether to locate in Ireland.

If you are considering locating a holding company in Ireland and require further advice on these issues please see O’Mahony Donnelly Contact details

Some of the key measures are that are hoped will help rebuild confidence in Irelands economy to those in Ireland and abroad.

1. Commitment to our 12.5% corporation tax rate to favour existing and prospective  investors. This is something that continues to have broad cross party support in Ireland, despite requests by EU neighbouring countries to increase it. 

2. Amendment to Research and development tax credit scheme that allows companies more flexibility as how they account for the credit. This will increase attractiveness of Ireland as an international trading location to internationally mobile R & D multinational firms.

3. Abolition of employers PRSI charge with efect from 01/01/2011, on share based remuneration. It is expected this will have a positive impact on decisions on whether to locate here due to reducing the employers costs.

4. Reduction in reduced VAT rate from 13.5% to 9% effective from 01/07/2011 until 31/12/2013, which is expected to benefit the jobs rich, labour intensive tourism sector. Other non-tourism related businesses who currently pay VAT at reduced rate of 13.5% will not change.

5. Abolition of Air Travel tax

6. Common Visa treatment with the UK for overseas visitors. Where such visitors already hold a UK visa this will enable them also to travel to Ireland.

7. Lower rate of Employers PRSI of 8.5% to be halved with effect from 01/07/2011 until 31/12/2013

8. Pension levy on the value of pension funds of 0.6% until 31/12/2014

These are the headline measures announced and if you would like to discuss how this may affect your existing or potential business then contact me at  http://www.omahonydonnelly.ie/contactus.htm