Ireland – An Ideal Location For Intellectual Property Trading Companies – Withholding Tax and Stamp Duty – Part 4

Apart from a highly skilled, English speaking workforce; membership of the E.U.; an excellent standard of living for employees seconded to Ireland; a large network of international routes and a successful track record of investment, research and development from United States corporations there are many advantages to setting up Intellectual Property Trading companies in Ireland.

The main focus of this article is the tax advantages which can be summarized under the following headings and viewed in Parts 1 through 4 on TaxConnections Worldwide Tax Blogs:

1.  Corporation Tax – Part 1
2.  Capital Allowances – Part 2
3.  Research & Development Relief – Part 3
4.  Withholding Tax – Part 4
5.  Stamp Duty and Summary – Part 4


In general, Irish resident companies must deduct 20% withholding tax on dividends and other profit distributions.

There are, however, a number of situations where shareholders can receive dividends free from withholding tax from an Irish resident company providing certain documentation is filed.  For example:

1.  Where the recipient of a patent royalty payment is resident in an E.U. member state or a country in which Irish has a double taxation treaty in place.

2.  In situations where no tax treaty is in place, unilateral relief for foreign tax suffered on royalties received from abroad is available.

Extensive exemptions are available with regard to dividend payments to:

1.  Irish resident companies

2.  Pension Funds

3.  Companies controlled by residents from an E.U. member state or tax treaty country and not under the control of Irish residents.

4.  Companies that are not resident in an E.U. / treaty country but which are controlled by tax treaty residents

5.  Individuals resident in an E.U. member state or tax treaty country

As a result of these exemptions it is generally possible to extract profits from an Irish resident company by way of dividends free from Irish tax.

A point to remember:

Withholding tax of 20% may apply to interest payments on loans/advances paid in the course of a trade or business to an E.U./Treaty country resident company.  Providing the loan is capable of lasting in excess of twelve months no withholding tax should apply.


Intellectual Property can be transferred to an Irish resident company without incurring Stamp Duty in Ireland.

Goodwill that is directly attributable to such IP is also covered by this stamp duty exemption.


Ireland has one of the most competitive tax structures for trading and holding companies.  The main tax advantages are:

1.  12½% standard rate of Corporation Tax.
2.  Significant Tax Credits for R&D Expenditure
3.  No Capital Duty on incorporation.
4.  Generally no Irish Stamp Duty on the transfer of Intellectual Property
5.  Exemption for gains on the disposal of shares in a subsidiary company.
6.  Tax Relief on the acquisition and development of Intellectual Property.
7.  Exemption from withholding taxes to companies resident in E.U. member states and countries with which we have a double taxation treaty.
8.  Availability of 25% Tax credit for capital expenditure incurred on buildings constructed or refurbished for the purposes of carrying on an R&D activity.

Since founding Accounts Advice Centre in Dublin in 1996, Claire McNamara has established a reputation for successfully advising businesses, corporate and personal tax clients. Her knowledge spans various sectors and her experience includes corporate transactions, inheritance tax planning, International Tax Treaties, personal tax as well as advising on issues affecting non domiciled individuals and offshore clients. She constantly delivers a value added service and efficient tax management solutions to high net worth private clients, property owners, executives, entrepreneurs, entertainers and members of various professions.

As a Chartered Tax Adviser, Claire has considerable experience in professional practice and will personally help you to deal with all your tax affairs competently, professionally and successfully. She has also lectured extensively in taxation on courses for the main professional accountancy qualifications including A.C.C.A., A.C.A. and C.P.A. and is actively involved in preparing students for the Irish Tax Institute’s CTA qualification.

Claire has effectively handled a number of Revenue Audits and Appeals on behalf of her diverse client base and has successfully negotiated solutions resulting in substantial differences to the eventual tax liability, surcharge and penalties.


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