You need to qualify for Corporation Tax when you create a Limited Company in Ireland. This article will explain what Corporation Tax is, how it is applied to your company’s services or goods, and how you can qualify for it.

What Is Corporation Tax?

Corporation Tax (CT) is a tax on Irish company profits and on companies that are incorporated in Ireland. Businesses pay it based on Income Tax rules.

There are twoCorporation Tax rates, 12.5% and 25%:

• The 12.5% rate applies to trading income from selling products and services.
• The 25% rate applies to non-trading income from rental properties or investments and to excepted trade.

Your business will be liable for tax on income and profits if it is based and controlled in Ireland. If your company operates outside of Ireland, but it has an Irish branch, then it will be taxed according to the 12.5% Corporation Tax rate.

CT is applied on profits during the company’s accounting period, which cannot extend past a year.

How Do I Qualify for the 12.5% Corporation Tax?

You should register for the 12.5% Corporation Tax if your company deals with active trade—selling products and services. Your company must be based and controlled in Ireland to qualify for the 12.5% CT, and its activities must satisfy resident rules and criteria.

If you do not meet the criteria, then the Irish Revenue Commissioners will expect that you pay the 25% CT rate instead. It is more than just starting a business or incorporating a business in Ireland; you have to prove that you qualify for the 12.5% CT. Therefore, it is important that you answer these questions and see whether your company is eligible for the tax or not:

• Where was your company’s policy decided?
• Where are investment decisions made?
• Where is your company’s head office located?
• Where do most of your directors live?
• Where does your company hold Board of Directors meetings?
• Where do most of your employees live?
• Who makes the decisions in your company and where does he/she make them?

Make sure that the answers to these questions prove that your company is headquartered in Ireland for you to get the 12.5% CT.

How Do I File My Corporate Tax Return Once I Qualify?

Your company must use Revenue’s Online Service (ROS) to file CT tax returns and pay other taxes through mandatory e-Filing. It also needs to pay the preliminary tax before its specified due date, complete and file a CT1 Form and a 466 Form, and pay any tax balances by the return filing date.

It is important that you file your return and pay any taxes, nine months after your company’s accounting period ends and on or before the 23rd of the ninth month. Companies that fail to pay taxes and file their return must submit it and pay any associated tax due on or before the 21st of the month.