Ireland has some of the lowest company tax in Europe at 12.5%, which is great news for lots of businesses, both in Ireland and overseas. It means that you will only be paying 12.5% on all your profits, now how does that sound? Great right?
Well, we work alongside some great small and medium businesses, both overseas and locally and one of the main reasons people come to us is because of Ireland’s company tax system. Why do you ask?
There are several reasons:
- The Irish tax system is different to most jurisdictions.
- CRO, Revenue IT systems are not very customer friendly but as Accountants, we deal with them regularly.
- We save you time and clients avoid the chance of getting hit with fines/penalties.
- We can assist with the company set-up and corporate obligations.
What do you have to do to complete a company tax return?
- Firstly you must be registered and set up on Revenue Online Services (also known as ROS) This is the system you use to pay any tax due under mandatory e-filing in Ireland.
- You calculate the preliminary tax by the specified due date
- Complete and file a CT1 Form and a 46G Form (Company) by the return filing date
- Pay any balance of tax due to Revenue.
A company must file its return and pay any tax due nine months after the end of the accounting period. The company must make this payment on or before the 23rd day of the ninth month. Companies that fail to pay and file electronically must submit their return and pay any associated tax. These companies must pay this tax on or before the 21st of the month.
Penalties & Interest
Interest is due at a daily rate of 0.0219% on late payments or payments that are not made in full. The interest is calculated by multiplying together the:
- amount of tax a company has underpaid
- number of days the tax is late
- interest rate.
You cannot appeal an interest charge to the Tax Appeals Commission. Once interest has been charged you must pay the full amount outstanding, it cannot be reduced.
If the company sends the return after the deadline they will also have to pay a surcharge of:
- 5% of the tax due up to a maximum of €12,995 if filed within two months of the filing date
- 10% of the tax due up to a maximum of €63,485 if filed more than two months after the filing date.
If the company sends the return after the deadline there will be restrictions on certain reliefs claimed. The restrictions will apply by reference to the length of the delay in filling on claims for:
- excess capital allowance
- loss relief
- group relief.
When is preliminary Corporation Tax (CT) due?
Large companies can pay their preliminary CT in two instalments when their accounting period is longer than seven months.
The first instalments is due on the 23rd of the sixth month of the accounting period. The amount due is either:
- 50% of the CT liability for the previous accounting period
- 45% of the CT liability for the current accounting period.
The second instalment is due on the 23rd of the eleventh month. This will bring the preliminary tax up to 90% of the final tax due for the current accounting period.
The company must pay 90% of the preliminary tax in one instalment if the accounting period is less than seven months.
Small companies must pay their preliminary tax in one instalment if they have a CT liability of less than €200,000 in their previous accounting period. This must be paid 31 days before the end of their accounting period, and before the 23rd of that month.
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