Taxation Services*

Providing Everything You Need

Income Tax (IT)

Income Tax lies at the heart of the direct tax system in Ireland and is a Tax that is imposed on an individual’s income who is deemed a “resident” of the Emerald, for a given tax year. It covers a number of Schedules, from Schedule D - Case I which imposes taxation on profits from a trade income, right through to Schedule F - Irish Dividend Income. There is even a schedule covering proceeds from criminal activity and how same is subject to taxation (a valued bonus on top of the sentence already handed down).

The extent of an individual’s liability to Irish income tax depends on:

whether he/she is tax resident in Ireland;
whether he/she is ordinarily tax resident in Ireland; and
whether he/she is domiciled in Ireland.

Your residence status for tax purposes is determined by the number of days that you are present in Ireland in a tax year. You will be resident in Ireland for a tax year in either of the following circumstances:

If you spend 183 days or more in Ireland during a tax year or,
If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year. For example, if you spend 140 days here in Year 1 and 150 days here in Year 2, you will be resident in Ireland for Year 2.

Contact us today to see how your income sources may be subject to taxation; the approach and filing deadlines associated with same and whether or not certain reliefs/deductions maybe available, to mitigate same.

Corporation Tax (CT)

Corporation Tax as the name suggests is a taxation applied to the profits of certain trading company’s resident in the state and is levied at a rate of 12.5% on the retained adjusted trading profits of an entity.

There is also a higher rate of corporation tax of 25% levied against non-trading entities or entities with passive income such as rental income.

This would be one of the key tax advantages of choosing incorporation for a business as a company with notable earnings can benefit from having such profits retained and taxed in a more efficient manner, with a view to initially growing the business and to target more efficient tax reliefs throughout the life cycle of the business/owners.

Talk to BWD Accountants today to see if your business has the potential and correct structure, to avail of such reliefs in the form of Entrepreneurial Relief or Retirement Relief, leading to enhanced succession planning.

Note – Certain new start up business can avail of a 0% Corporation Tax rate on trading profits for the first two years in business. However this is directly linked to the amount of staff you employ and employers PRSI paid on such employee salaries.

Capital Gains Tax (CGT)

CGT is a tax imposed on Irish residents on the disposal of certain assets owned by you. It is levied at a current rate of 33% and at its simplest form, assesses the gain made from deducting the price you paid for an asset when you acquired it, from the sale proceeds when you disposed of it, allowing for certain allowances, inflationary and indirect costs incurred.

All forms of property are regarded as assets for Capital Gains Tax purposes whether situated in or outside the State. Examples of assets are:

Land
Investment Property
Shares
Goodwill

There are a number of exemptions from CGT such as:

Gains from the disposal of Government Stocks and Securities.
Gains from the disposal of tangible movable property, where the amount or value of the consideration does not exceed €2,540.
Gains from the disposal of wasting assets, i.e. assets with a predictable life of less than 50 years, for example, a private motorcar, livestock etc.
Gains from the disposal of your principal private residence.
Prize Bond, Lottery and Gaming winnings.

The first €1,270 of taxable gains by an individual in a tax year are exempt. In the case of a married couple this exemption is available to each spouse but is not transferable.

An individual’s exposure to Irish capital gains tax depends on their tax residence and domicile status. Note Irish specified assets (i.e. assets located in Ireland) are always subject to Irish CGT.

Our Capital Gains Tax services may be of particular interest to those considering disposing of assets. We will be happy to advice on any related matters prior to potential sales and calculate any associated Capital Gains Tax liability for decision making. We can also advice on payment dates which may assist with cashflow/budgeting requirements.

Capital Acquisitions Tax (CAT)

Capital Acquisitions Tax (CAT) arises on the gift or inheritance of an asset. The difference between the two is whether an asset is assigned during one’s lifetime (Disponer) and the associated implications.

The amount of CAT to be paid varies depending on the relationship between the beneficiary (person receiving the gift or inheritance) and the person who provided the gift or inheritance (disponer). The gift/inheritance is valued for CAT purposes on the date the beneficiary becomes entitled to it. The total amount of the gift/inheritance taxable is the market value minus allowable deductions for example funeral expenses (in the case of an inheritance), legal costs or any debts which must be paid by law.

The level of CAT owed to the revenue will depend on the relationship between the disponer and the beneficiary. Any gift or inheritance received that exceeds the beneficiary’s group tax exemption threshold is taxed at its current rate of 33%. The tax exemption thresholds are as follows:

Group Thresholds*

Group A (€335,000)

Covers disposals from Parents to immediate Children (Son/Daughter - including step child or adopted child)

Group B (€32,500)

Covers disposals to Brother/Sister, Niece/Nephew, Parent, Grandchild/Great Grand Child of disponer.

Group C (€16,250)

Any relationship to disponer not included in Group A or Group B

The beneficiary of the gift/inheritance is responsible for ensuring that any CAT owed is paid and returned to Revenue by a specified date. If you are non-resident then you must appoint a third party, such as a solicitor or accountant to take responsibility for the payment of CAT to the Revenue.

It is worth noting that if the total value of gifts and inheritances exceeds 80% of the relevant group threshold received by a beneficiary, the beneficiary must file a CAT return (Form IT38). This obligation applies even though there is no CAT liability arising.

Subject to certain conditions, there are a number of exemptions/deductions from CAT as follows:

Gifts or inheritances between spouses.
The first €3,000 of taxable gifts from one individual to another in a calendar year.
Payments for damages or compensation.
Benefits received for charitable purposes.
Business Relief – applies to gift or inheritance of business property.
Agricultural Relief – applies to gift or inheritance which consists of agricultural property such as land or machinery.

Talk to BWD Accountants today to see how your assets may be structured to minimise the tax exposure, as part of your succession planning.

*Information correct at time of publishing

BWD Accountants - Capital Acquisitions Tax (CAT)

Tax Planning

As continually eluded too on our website and which is etched in our ethos; is the continued importance associated with structuring and positioning a client’s affairs, with a view to maintaining and enhancing one’s wealth. We are proactive from day one and drawn upon our skill and knowledge gained over numerous years of experience, to ensure that same is structured accordingly.

We work with clients to ensure important future transactions are properly planned from a Tax efficiency perspective on a range of areas such as deciding on buying or selling property, making investments, retiring from or selling a business, making a gift to an individual or family member. All of these events usually attract a Tax liability which can be minimised or avoided in a Tax compliant manner in certain circumstances by proper advance Tax Planning. Some other areas we have significant expertise in include:

Tax efficient retirement planning
Incorporation of a business from other out-dated approaches
Succession planning such as transferring assets to family members etc
Estate Planning