Taxation in Ireland

After the state weathered the tax crisis of the 1980s, it gradually began expanding the corporate tax base. Between 1982 and 1986 there were some restrictions on tax-based funding. Then, in the late 1980s and early 1990s, there was a general change in industrial policy that broadened the corporate tax base. Generally, Irish corporation tax is levied on worldwide profits. It is made up of taxable profits and income from companies resident in the country. Foreign companies, on the other hand, are subject to corporation tax on their creditable profits.

Ireland has a specific corporate tax code which includes four basic tax credits aimed at achieving specific policy objectives: the Knowledge Development Box (KDB), the Development (R&D) Tax Credit aimed at reducing business expenditure on research and development (BERD ) to increase. However, partnerships, such as self-employed persons or sole proprietorships, cannot be subject to corporate income tax. This means that profits and profits from trading by companies are considered income subject to income tax.

Statistics
Ireland's tax system is progressive, meaning that the higher the income, the higher the tax rate applicable to that income. Data collected last year (2016) shows (Publicpolicy.ie) that the tax a person pays on half the average income is the second lowest in the OECD (34 countries in total), which is 1/10th the Danish tax rate, for example .

Types of taxes in Ireland
Ireland has several types of taxes: an income tax, a value added tax (VAT), corporation tax and also Universal Social Charge (USC) on your earned income and Pay Related Social Insurance (PRSI).

Corporate taxes
Since the creation of the Irish Free State in 1922, a tax on corporate income levied by the Irish authorities has been authorised. There is also an Article 74 of the Irish Free State Constitution which contains provisions for transitional provisions in relation to the levying and collection of taxes previously imposed under British administration in Ireland.

The common corporate tax rate for qualifying dividends from EU and tax treaty jurisdictions is set at 12.5%. However, a 25% corporation tax is levied on all passive income. However, companies may be subject to other taxes. For example, stamp duty on the transfer of property - the rate is 1-2%, local property taxes with the rate - 0.18-0.25%. There are also industry-specific taxes set in the country. This can be a ship tonnage tax or a construction tax, for example.

In addition, there is a special tax that applies to certain petroleum activities depending on the profit yield of a location. Therefore, the applicable tax rate can vary between 25% and 40%. Another example is a carbon tax levied on mineral oils such as kerosene or car fuel that can be bought in Ireland. The rates of these taxes are EUR 20 per tonne of CO2 emitted.

VAT tax
VAT in Ireland can be referred to as a consumption based tax assessed on the value added to available goods and services which can be applied to almost everything that country offers and sells for use or consumption. VAT tax rate applicable in the country is 23%. However, there can other tax rates depending on the type of goods or services provided.

Income taxes
Every person living in Ireland must pay his or her worldwide income taxes. The basic condition is living in Ireland for 183 days or more during one tax year or for 280 days or more during the tax year and the previous tax year. If less than that, then a person is not considered tax resident and shall only pay taxes on income earned in Ireland. Tax rates for incomes are: up to 33 800 EUR – 20% and over 33 800 EUR – 40%. There is a special Pay As You Earn (PAYE) system established in the country governed by Irish Tax and Customs office.

Pay Related Social Insurance (PRSI)
PRSI payments can be considered as a part of the Social Insurance Fund (SIF). This fund provides help by paying for Social Welfare benefits and pensions. It shall be paid by all employed residents except those who are earning 38 EUR or more per week by doing full-time or part-time job, workers who are self-employed and their annual income is 5,000 EUR a year or more and persons who are 16 years old or over or are under pensionable age.

Universal Social Charge (USC)
USC is referred to as a tax which must be paid on person’s total income. However, there are some types of income that are exempt. For example, an individual can pay USC at the standard rate or the reduced rate, depending on the circumstances. Reduced rates of Universal Social Charge apply to those individuals who are aged 70 or older or hold a Medical Card which is full, if a person reaches the age of 70 or holds a full medical card at any time during the year, having total income of 60,000 EUR or less otherwise the standard rates of UCS shall be applied to incomes.