Holding Companies in Ireland

Why choose Ireland to open a holding company?

One of the basic reasons for which investors choose to open an Irish holding company refers to the country’s corporate taxation system. Ireland has signed over the years numerous double taxation treaties and it now has an extended network of agreements on the avoidance of double taxation; besides this, the country provides one of the lowest corporate tax rates in Europe, which makes it an ideal business destination for starting a holding company. 

Also, as an EU and OECD (Organization for Economic Co-operation and Development) member state, Ireland provides a well-regulated jurisdiction for holding companies. Due to the participation exemption, Irish holding companies may dispose of their shares in any other company within the European Union or a country Ireland has a treaty with, thus obtaining a from a capital gains tax exemption.

This exemption applies if at least 5% of the ordinary shares have been held for minimum a year and if the trading condition is respected. For complete information about the participation exemption for holding companies you can ask our specialists in company incorporation in Ireland. No matter the way you choose to start a business in Ireland, our team is at your disposal in order to help you comply with all the legal requirements available in this country.

Furthermore, our local consultants invite you to watch this useful video about the holding companies in this country:

Registering a holding company in Ireland

There are two ways to incorporate a holding company in Ireland: as an Irish private limited company or as a public limited company. The main advantage when registering an Irish holding company as private limited company is that there are no minimum share capital requirements.

For public limited companies, the minimum share capital required in Ireland is of approximately EUR 38,000 and 25% of it must be paid upon incorporation. For more details on how to start a holding company, you can address to our team of consultants in company registration in Ireland. 

Why is Ireland chosen by investors for starting a holding company? 

• • Ireland applies the capital gains participation exemption (which is available for holding companies);
• • it is also a country that applies the foreign tax credit system;
• • Ireland is a member state of the European Union (EU), which offers a set of benefits for business purposes;
• • it has signed an extensive network of double tax treaties (more than 70);
• • the dividends paid by a company to another company are generally exempted from taxation; 
• • the taxation of dividends for companies which are not based in the EU or which are not regulated by a double taxation treaty is done at a rate of 12,5%, which represents one of the lowest corporate taxes in Europe;
• • the Irish administrative system applicable to companies is very simple compared to other countries.  

The taxation of holding companies in Ireland

As presented earlier, the corporate tax rate applied in Ireland is one of the lowest in the European countries. Irish holding companies are subject to a 12,5% corporate tax rate on the profits resulted from a trading activity. All other passive income earned by an Irish holding company is taxed at a rate of 25%. Capital gains that do not qualify for the participation exemption are applied at a 33% tax rate. With regards to the taxation of the holding companies in Ireland, the following are also available: 

• • the exemption on the payment of the capital gains tax is applicable if the holding company owns at least 5% of the company’s ordinary share capital;
• • the regulation is available if the holding company is entitled to at least 5% of the annual profits;
• • these 2 conditions have to be met for a continuous period of at least 12 months;
• • the disposal of shares can be done in a period of 2 years; 
• • the regulation can also be applied if the company owns less than 5% of the shares, in certain conditions. 

When it comes to the repatriation of dividends, the Finance Act of 2013 introduced a tax credit for certain foreign dividends received by an Irish resident company. In all other cases, the withholding tax on dividends is levied at a 20% tax rate. For details about the taxation of holding companies, please contact our experts in Irish company formation.

Our representatives can also present the procedures that have to be followed upon the liquidation of a holding company registered in Ireland; investors can request information on the distribution of the company’s shares during the liquidation of a holding company operating here.