Irish Holding Company

By: Patrick
28 Mar, 2023


With the initiatives taken by the Irish Government to facilitate the establishment of businesses in Ireland and provide a tax-friendly environment, Ireland continues to be a destination of choice for many international companies. Being a member of the EU, offering generous tax credit schemes, the continuously expanding Double Tax Treaty (DTT), the incentive to pay dividends without being subject to withholding tax and an attractively lower corporation tax rate of 12.5%, is among the several incentives available to companies looking to establish their holding company in Ireland.

Establishing A Holding Company in Ireland

The holding company incorporated in Ireland most commonly takes the form of either a Private Company Limited by Shares or a Private Unlimited Liability Company. Private Company Limited by shares is preferred because it provides limited liability protection to the shareholders should the company face insolvency.
The overseas company becomes the subsidiary of the new Irish holding company, where the majority (more than 50%) of the shares in the international company are held by the holding company. For a group company structure, the holding company in Ireland can hold the shares in multiple companies.

Tax Residency of the Holding Company

The residency status of the Holding Company will determine the benefits it can avail from various tax schemes in place. Accordingly, the residency rules that apply to the company depend on the date of its incorporation, concerning 1 January 2015.
A company is a resident in Ireland for tax purposes if it is infected after 1 January 2015 unless treated as a resident in another country under the DTT. A cA company incorporated before 1 January 2015 will be treated as a tax resident from the transition period till 31 December 2020.

Benefits of an Irish Tax Resident Company

  • Corporate Taxation – Ireland has an attractively lower corporation tax rate of 12.5% on its usual trading income.
  • Capital Gain Tax Participation Exemption – This is relevant to the capital gain on the disposal of shares in a subsidiary of an Irish holding company. Any such payment will come exempt from Irish capital gain tax. This exemption applies where
    • The holding company has held 5% of the share capital and is entitled to 5% of the profits and assets on winding up.
    • The shares were held for a continuous period of 12 months.
    • The disposal is made within two years to meet the holding requirement.
  • Taxation on Dividend Income – The dividend income received by an Irish resident Irish from another Irish resident company is generally not subject to corporation tax or income tax. Different However, different taxes on dividend dividends to dividends received by an Irish resident Irish from a company in the EU or a country with a DTT.
  • Credit Relief / Pooling Foreign Tax Credits – The tax credit is available for foreign taxes for dividends received by an Irish company. A tax credit pooling regime is also general, whereby the excess foreign tax credits can be carried forward indefinitely.

Setting up your entity’s holding company in Ireland can be lucrative. Get in touch with our expert Support Agents to learn more about it.

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