12.5% corporation tax and access to the EU? Yes, that is certainly one of the reasons why the tech giants have found Ireland so attractive, and why many of my clients are relocating their offices to Dublin.
This rate of 12.5% is one of the very lowest ‘headline’ corporation tax rates in the EU, beated only by Bulgaria at 10% and Hungary at 9%. The average of OECD nationals is about 25%. It is also well-governed and OECD whitelisted. It has one of the lowest secrecy scores in the FSI rankings for 2018.
However, as with all tax matters these days, it is all a question of substance over form. In other words, you cannot simply set up an off-the-shelf company in Ireland, direct your revenues through it, and expect to be able to pay less tax.
The 12.5% rate of Irish corporation tax only applies in respect of profits from trade carried on – or partly carried on – in Ireland. This means you have to prove that this was actual trading – not just ‘passive’ income (trading presupposes activity), and that the activies are carried out in Ireland rather than abroad.