Could you realise a Capital Gain, paying Capital Gains Tax at 33% and live off the proceeds, rather than paying Income Tax at 40% plus PRSI?

  Can you dispose of part of your Irish business, or can you sell a property, leaving you liable to Capital Gains Tax rather than being assessed to Income Tax on the proceeds? You could take advantage of the significantly lower rate of Capital Gain Tax that applies, and take a lower salary from your business.
Are you about to transfer property? Check taxes such as Capital Acquisition Tax, Capital Gains Tax and Stamp Duty before selling property in Ireland – huge savings can be made by choosing the right way to go about a transfer, depending on the property involved and the relationship between the transferrees.
Transferring the business to a family member

If you intend to transfer your in Ireland business to a family member there are a few tax headings to consider:
There is full relief from all Capital Gains Tax on the disposal by a parent on the sale of shares to a child regardless of the amount of money involved provided the parent is between 55 and 66 on the date of disposal. Retirement relief is available in some cases, which allows for an exemption from Capital Gains Tax. The parent transferring the shares must be over 55 years of age, must have held the shares for a ten-year period and have been a full-time director of the company to qualify for this exemption. The company must be a trading company and the child receiving the shares must hold the shares for at least 6 years after the transfer.
Capital Acquisition Tax is payable also at a rate of 20% by a child on the receipt of a gift of shares in a family company from a parent. The rate applies to the market value of shares in the company excluding the first €466,725 if there were no previous gifts from the parents to the child. There is also a relief from Capital Acquisitions Tax known as business property relief which exempts 90% of the value of the shares
Stamp Duty applies to the transfer of shares in a company. On a gift of shares from a parent to a child, the stamp duty payable is 1% of the market value of the shares, and is payable by the child.As you can see, planning ahead to minimise the tax effects of the transfer of a family business is vital and we can help you in this area.

Updated 23rd Jan 2019

Claim all your allowances If you have income in Ireland make sure you claim all you are entitled to. We automatically check that all clients are getting the correct tax allowances each year, and apply any items in the tax tips.
Are you a landlord? If you are a landlord in Ireland then you should register every new tenancy with the Private Residential Tenancies Board. If you don’t, Revenue are entitled to withdraw interest relief which means you cannot deduct interest paid when computing your tax bill. If you have a number of different tenants in the year, you need to register each of them.
Research and Development Expenditure – Tax relief changes

There are new tax benefits available to Irish companies for spending on research and development. The tax treatment in Ireland has changed recently to encourage such spending. We set out below the tax implications of the old system and the new system.

Old system
The old system applied to accounting periods commencing on or before 31st December 2008. The main points to note are as follows;

A credit is available to all Irish companies who undertake R&D activities within the European Economic Area.

– A credit of 20% is available on all incremental expenditure since 2003.

– Where a company has insufficient corporation tax against which to claim the R&D credit in a given accounting period, the tax credit may be carried forward indefinitely.

– Tax credit is in addition to any allowable deductions for R&D expenditure in the accounts of the company.

– The company is not required to hold the intellectual property rights to avail of the credit.

New system
The new system applies to accounting periods commencing on or after 1st January 2009. The main changes are as follows.

– A credit of 25% is available on all extra spending since 2003.

– Credit can be claimed in a different manner than previously. First of all, the company may offset the unused portion of the credit against the corporation tax of the previous accounting period.

– Where a company has offset the credit against the corporation tax of the previous accounting period or where no corporation tax arises for that period, and an excess still remains, the company may make a claim to have the amount of that excess paid to them by the Revenue Commissioners in 3 instalments.
– 3 instalments will be paid over a period of 33 months from the end of the accounting period in which the expenditure was incurred. The first instalment to be paid will amount to 33 per cent of the excess.

– The remaining balance will then be used to first reduce the corporation tax of the next accounting period and if any excess still remains, a second instalment amounting to 50 per cent of that excess will be paid to the company.

– Any further excess will then be used to reduce the corporation tax of the following accounting period and if an excess still remains, that amount will be paid to the company as the third instalment.

– There is a limit on the amount of tax credits payable to a company by Revenue. The amount cannot exceed the greater of;

1. Corporation tax payable by the company for the 10 years prior to the accounting period preceding the period in which the expenditure was incurred, or

2. The amount of PAYE, PRSI and levies, which the company is required to remit in the period in which the expenditure was incurred.

What constitutes Research and Development Expenditure?
Essentially only expenditure on Research and Development activities may qualify for the tax credit. Qualifying activities must satisfy all of the following conditions. They must be:

1. Systematic, investigative or experimental activities.

2. In a field of science or technology.

3. One or more of the following categories of research and development:

A. Basic research

B. Applied research

C. Experimental development

E. Seeking to achieve scientific or technological advancement and involve the resolution of scientific or technological uncertainty.

If you think that you may be incurring expenditure that meets the above criteria or are interested in carrying out some research and development please let us know and we can investigate whether you are be entitled to claim relief on the spending.

Also bear in mind that some of the tax tips discussed above apply to the employed as well as the self-employed.

Updated 23rd Jan 2019

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