Withholding taxes in Ireland are generally imposed at the rate of 20% on the payments of the dividends. However, foreign investors should know that the company can be exempted from paying the withholding tax in the situation in which the respective legal entity is a direct beneficiary of the European Union’s (EU) Parent – Subsidiary Directive, on which our team of Irish lawyers can offer more information.
Regulations related to the Irish withholding taxes
Investors who operate a company in Ireland must know that the withholding taxes are applicable to the following types of entities:
- resident companies;
- resident natural persons;
- non-resident companies;
- non-resident natural persons.
Withholding taxes in Ireland are normally imposed on the payments related to dividends and interest, but there are certain categories which are exempted from paying the tax. This is applicable in the case of qualifying non-resident Irish entities, as long as they are tax residents of an EU member state.
However, the rule can also be applicable in the case of tax residents with which Ireland has signed a treaty for the avoidance of double taxation.
In terms of the payments due to other Irish companies, the tax regulations applicable in Ireland provide that the transfer can be also exempted from paying the tax, but only in the case of the withholding tax of dividends. The withholding tax on interest, royalties or patents is imposed at the rate of 20% and our team of lawyers in Ireland can assist with more details on the procedure.
Our accountants in Ireland can answer any questions about the withholding taxes on dividends, those on interest and patent royalties. For qualifying companies, we also provide details on the qualifying exemptions under the existing double taxation agreements. If you wish to know more about our services, which also include bookkeeping and annual filing services, please contact us for details.
Other exemptions from the Irish withholding tax
The legislative system applicable in Ireland states that not only commercial companies or natural persons can be exempted from the tax burden associated with the withholding tax. For example, pension funds are not required to pay this tax.
Several types of investment funds in Ireland may also be exempted, such as in the case of the collective investment undertakings, but also charities or institutions that are involved in performing sports activities.
Please contact our law firm in Ireland for an in-depth presentation on the taxation system applicable to withholding taxes, as well as on other types of entities which can benefit from tax exemptions.