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Dividend Tax in Ireland

Updated on Monday 29th October 2018

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Dividend-Tax-in-IrelandWhat is the Irish withholding tax on dividends?  

The dividend withholding tax is applied at a standard rate of 20% for dividend payments and other distributions made by companies registered in Ireland. Most Irish companies will pay dividends twice a year and the withholding tax will apply at source on the gross dividend. Our team of specialists in company registration in Ireland can provide more information regarding the taxation of dividends.

Irish individual shareholders will be levied the tax on the gross dividend at the marginal rate, but they are entitled to a credit for the withholding tax and a refund if the withheld amount exceeding their tax liability. However, there are also exceptions when it comes to the Irish withholding tax on dividends.

The legislation stipulates a lower or 0% withholding tax for distribution of dividends if Irish double taxation agreements are enforced, and the dividend tax will not apply if the distribution is made to a holding company where the majority shareholder is an Irish tax resident company.

Corporate tax on dividends in Ireland 

 
Besides the withholding tax on dividends, the dividends in Ireland are also imposed with the corporate tax, which can vary between 0-25% (the highest threshold is available for non-trading companies). As a general rule, the dividends are taxed at the standard rate of 12,5% and our team of consultants in company registration in Ireland can offer more information on this matter.  
 
Companies operating in Ireland should also take into consideration that the dividends obtained from trading activities will be imposed with a tax applicable at the rate of 12,5%, and this regulation will be available in the situation in which the respective dividends derive from trading companies located in a country that is a member state of the European Union (EU). 
 
At the same time, the regulation is available for trading companies with which Ireland has signed a double tax treaty or the Convention on Mutual Assistance in Tax Matters. The corporate tax (applicable at the rate of 12,5%) can be eliminated in the case of subsidiaries registered in a member state of the EU or the European Economic Area (EEA), which are entitled to a credit relief.  
 

Irish residents exempt from paying the dividend tax

Certain citizens or Irish companies are exempt from paying the withholding tax on dividends, according to several sections in the Tax Consolidation Act. Among these are the pensions schemes, the employees qualifying in share ownership trusts (ESOTs), charitable organizations, as well as the following, which can be presented by our specialists in company formation in Ireland

  • collective investment companies and Irish tax resident companies;
  • the brokers designated by the Special Portfolio Investment Account (SPIAs) and entities promoting games or sports;
  • fund managers qualifying for the Approved Retirement Funds or Approved Minimum Retirement Funds provisions;
  • individuals falling under the regulations of Schedule F of the Irish Income Tax Act.
The corporate tax applicable to dividends can also be exempted in the situation in which the dividends are received by an Irish resident company from another legal entity incorporated in this country. As a general rule, the dividends received from foreign companies are liable to the payment of the corporate tax, but, as mentioned above, such entities can qualify for a credit relief
 

Are there any taxes for Irish scrip dividends? 

 
Yes, according to the taxation system in Ireland, the scrip dividends are imposed with a tax applicable at a rate of 20%. The scrip dividend refers to a type of certificate, which allows its holder to obtain dividends and to issue additional shares within the company. In this case, the company is required to pay the relevant amount of withheld tax to the Irish Revenue; our team of Irish company formation agents can offer further information regarding the scrip dividend
 

When to pay the withholding tax on dividends in Ireland

 
The companies that are required to pay the withholding tax on dividends have to submit the relevant documents on the 14th of each month, for the distributions registered in the respective period of time. To do so, they will have to use the online platform available at the Revenue Online Service (ROS). The documents have to be filed regardless if the company made any distributions or not in the respective month.  
 

Foreigners exempt from paying the dividend tax in Ireland

Foreign individuals, residents of countries Ireland has double tax treaties with, but also non-resident charity organizations are exempt from paying the dividend tax. Foreign companies registered in a EU country that are not controlled by Irish citizens and non-resident companies that own 75% of the shares of an Irish subsidiary are also exempt from paying the dividend tax.

Irish companies listed on the Stock Exchange of an EU country that have been approved by the Minister of Finance also qualify for exemption from paying the withholding tax on dividends. For complete details about the Irish tax system you can rely on our consultants in company formation in Ireland. You can also contact us for details about tax incentives available for foreign investors.

 

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