Taxation in Ireland & BVI
Type of Taxation in Ireland
1) INDIVIDUAL TAX ON PERSONAL INCOME
Ireland’s tax system
In Ireland, the financial year begins on January 1 and ends on December 31.
In the event that you just relocated to Ireland in order to begin employment, you must apply for a Personal Public Service Number (PPSN).
Which taxes and duties are you subject to?
Depending on your employment income, you will often be required to pay income tax (IT), Pay Related Social Insurance (PRSI), and Pay Universal Social Charge (USC). For further details on what you pay tax on, go to the sections on tax credits and the tax rate band.
An individual who resides and is domiciled in Ireland is subject to Irish income tax on their international income.
If a person resides in Ireland but is not domiciled there, they are subject to Irish income tax on income derived from Irish sources, foreign employment income received while performing responsibilities in Ireland, and other foreign income that is paid into Ireland.
Irish income tax is often only applicable to non-residents’ income that comes from Ireland.
Personal income tax rates
Limits on exemptions
Certain individuals who are 65 years of age or older are eligible for an exemption from income tax. These people only have to pay income tax if their income exceeds a certain threshold. The stipulated cap for 2024 is EUR 36,000 for a married couple and EUR 18,000 for an individual who is single or widowed. With regard to dependent children, these restrictions have been raised.
What is your rate band?
Your unique situation will determine how much your tax rate band is. For instance, if you are:
• widowed or in a civil partnership;
• single;
• married or in a civil partnership.
The Tax rates, bands, and reliefs chart contains a list of the tax rate bands for the current year as well as the four years prior.
The tax rate bands are distributed equally over the course of the year under the Pay As You Earn (PAYE) system. If you work a full year, your tax rate bands will be split as follows based on how frequently you get paid:
- If you receive a weekly salary, 52 equal weekly amounts
- If you receive payments every two weeks, 26 equal fortnightly amounts
- If you receive a monthly salary, 12 equal installments
- Thirteen equal sums if your pay period is every four weeks.
How tax credits work
Your tax liability is decreased by tax credits. To use tax credits, you needed to have paid taxes that were required by your employment.
Your Tax Credit Certificate, if you are an employee, shows your tax credits.
Your employer will be informed by revenue of your overall tax credits. Revenue will only provide them with the overall amount of your tax credits, not a breakdown of them. This is what your company will use to figure out how much tax to take out of your paycheck.
Pay As You Earn (PAYE) systems distribute tax credits equitably throughout the course of the year. Your tax credits will be split into the following categories if you work the entire year:
- If you receive weekly pay, there are 52 equal weekly amounts.
- If you receive payments every two weeks, 26 equal fortnightly amounts
- If you get paid on a monthly basis, 12 equal instalments
- Thirteen equal sums if your pay period is every four weeks.
Unused tax credits
Tax credits that are not used within a pay period are carried over to one or more additional pay periods within the same tax year.
You cannot:
• refund for unused tax credits.
• carry over tax credits that aren’t used in a given tax year.
2) VAT- VALUE ADDED TAX
Value-Added Tax (VAT) rates vary at the moment depending on the goods and services.
Following are explained in this section:
- The standard rate
- reduced rate
- second reduced rate
- zero rate
- livestock rate
VAT standard rate
Value-Added Tax (VAT) is levied on the majority of products and services at the standard rate. Certain products and services, however, may be subject to lower rates or may not require VAT at all.
Listed below are a few examples of products and services that are billed at the standard rate:
• automobiles;
• furnishings;
• batteries
• Advisory services
• In furthermore, tires
Reduced rate of VAT
A reduced value-added tax (VAT) rate is applicable to specific products and services, such as:
- restaurant supplies and catering (not including bottled water, soft drinks, or alcohol)*
- Hot tea and coffee, as well as hot takeaway cuisine
- lodging accommodations, such as guesthouses, RV parks, or campsites
- Entrance fees for theaters, movie theaters, some musical performances, museums, art galleries, and exhibitions*
- Entertainment services similar to those found in fairgrounds or theme parks*
- Obtaining entry to an open farm*
- Hair salon services
- specific printed materials, with the exception of books, such as pamphlets, catalogues, brochures, and printed music
- specific fuels
- specific building services
- Maintenance services
- Generally speaking, cleaning and maintenance services
- specific equipment for photography
- the import of specific artwork and antiquities
- the availability of live horses, excluding those often used for food preparation or agricultural production
- Hiring horses
- availability of greyhounds
- Services for tour guides
- As well as temporary staff.
Second reduced rate of VAT
Only a few products and services are subject to the second reduced rate of Value-Added Tax (VAT), which includes
- journals
- A few e-journals. This does not include:
- those that are mostly or entirely dedicated to advertising; or
- those that are primarily or entirely composed of audio or video content.
3.the provision of sporting facilities by an individual or entity other than a non-profit organization.
From November 1, 2020, until August 31, 2023, the following supplies are liable to be charged at the second reduced rate of VAT:
• hot take-out food, hot tea, and coffee;
• hotel rentals, such as guesthouses, caravan parks, or camping sites;
• admissions to theaters, cinemas, certain musical performances, museums, art galleries, or exhibitions;
• amusement services similar to those provided in fairgrounds or amusement parks; • admission to an open farm;
• hair salon services; and
• certain printed materials like brochures, leaflets, catalogues, or printed music (without books).
The following supplies are subject to the second reduced rate of VAT from May 1, 2022, until October 31, 2024:
- the availability of electricity;
- the availability of gas, whether liquid or gaseous, for use in heating or lighting purposes in homes or businesses. This does not include :
- automobile gas
- liquefied petroleum gas intended for use as a propellant
- gas used for metal cutting or welding
- and gas sold as lighter fuel.
Zero rate of VAT
Value-Added Tax (VAT) is not charged on the following products and services:
- exports
- intra-Community supplies of goods to VAT-registered persons in other European Union (EU) Member States
- certain food and drink
- certain oral medicine, non-oral medicine, and sanitary products
- certain books, e-books and audiobooks
- certain newspapers and e-newspapers
- certain animal feeding stuffs, certain fertilizers, seeds and plants used to produce food
- supply and installation of solar panels on private dwellings and recognized schools • clothing and footwear appropriate to children under 11 years of age
- supplies to VAT-registered persons authorized by Revenue under the zero-rating scheme for qualifying businesses.
Livestock rate of VAT
Livestock in general is subject to the Value-Added Tax (VAT) livestock rate. Additionally, this rate is applicable to horses that are typically used for:
• food preparation; or
• agricultural production.
| Date Effective From (%) | Standard Rate (%) | Reduced Rate (%) | Second Reduced Rate (%) | Livestock Rate (%) | Flat rate compensation percentage for farmers (%) |
|---|---|---|---|---|---|
1 Jan 2024 | 23 | 13.5 | 9 |
4.8 |
4.8 |
1 Jan 2023 |
23 |
13.5 |
9 |
4.8 |
5 |
1 Jan 2022 |
23 |
13.5 |
9 |
4.8 |
5.5 |
1 Mar 2021 |
23 |
13.5 |
9 |
4.8 |
5.6 |
3) CORPORATE TAX (CT)
Businesses that are based in Ireland are required to pay CT on their global earnings if they comprise both capital gains and income.
Non-resident businesses are also required to pay CT if they:
- Conduct business through an Irish branch or agency
- Receive earnings or gains from the sale of rental property in Ireland.
The amount of CT that a business must pay is determined by income tax regulations. The Capital Gains Tax (CGT) regulations are followed in calculating chargeable gains.
Under Mandatory e-Filing and e-Payment, an organization is required to file its return and pay any taxes owed using the Revenue Online Service (ROS).
Information on how businesses pay for and file their CT is provided in the section on CT payment and filing.
Basis of charge
The Corporation Tax (CT) has two rates:
- For trading income, 12.5%
- 25% for profits from a trade that is excluded (as that term is defined in Tax Consolidation Act section 2)
- 25% for income that is not traded, such as investment and rental income.
CT is levied during an organization’s accounting period based on its profits. There is a maximum 12-month duration for this period. Profits are allocated and taxed based on time if the tax rate varies during the accounting period.
Company residency rules
Rules for companies that are incorporated in Ireland
Depending on whether a company was incorporated in Ireland before or after January 1, 2015, different residence laws may apply.
If a company was incorporated in Ireland on or after January 1, 2015, it is considered to be a tax resident here. This will be the case unless a Double Taxation Agreement treats it as a tax resident corporation in another nation.
A corporation has a transition period ending on December 31, 2020, if it was incorporated before January 1, 2015. Unless a corporation is tax resident in another nation under a double taxation agreement, it will be considered a tax resident as of this date.
This regulation will not apply if, after December 31, 2014, a business possesses both of these:
- an ownership transfer and
- a significant alteration to the character and manner of the business.
Under these conditions, the business will be considered a resident for tax purposes as of the ownership transfer date.
Rules for companies that are incorporated in Ireland
Depending on whether a company was incorporated in Ireland before or after January 1, 2015, different residence laws may apply.
If a company was incorporated in Ireland on or after January 1, 2015, it is considered to be a tax resident here. This will be the case unless a Double Taxation Agreement treats it as a tax resident corporation in another nation.
A corporation has a transition period ending on December 31, 2020, if it was incorporated before January 1, 2015. Unless a corporation is tax resident in another nation under a double taxation agreement, it will be considered a tax resident as of this date.
This regulation will not apply if, after December 31, 2014, a business possesses both of these:
• an ownership transfer and
• a significant alteration to the character and manner of the business.
Under these conditions, the business will be considered a resident for tax purposes as of the ownership transfer date.
The central management and control rule was used to determine if a corporation was resident prior to the introduction of these rules. If a company’s core management and control were carried out in Ireland, it was considered to be a resident. Whether the business was incorporated in Ireland or not, this remained the case. On a transitory basis, Irish companies incorporated prior to January 1, 2015, will still be subject to this rule.
Rules for companies that are not incorporated in Ireland
Foreign-incorporated companies are subject to the central management and control rule. For taxation purposes, a company is considered to be resident in Ireland if it was incorporated abroad and is managed and controlled centrally in Ireland.
British Virgin Islands (BVI)
a collection of about 40 islands. Flying from east of Puerto Rico, which is located between the Atlantic and Caribbean seas, takes around twenty-five minutes. As a British Commonwealth member, the Virgin Islands (BVI) follow a legal framework that is based on English Common Law (parts of Delaware Law are included in its Business Company Law). This system works in tandem with local statutes.
A BVI business is attractive to many international corporations and individuals because it does not have to pay taxes, is not subject to foreign exchange regulations, and only requires minimal information to be submitted for filing when requested by the local government. BVI is currently among the most sought-after locations worldwide for offshore registration.
Annual government fee
Depending on the maximum number of shares allowed to be issued and the date of the company’s establishment, the BVI firm is required to pay a yearly fee to the government. Businesses that have a share capital of up to $50,000 pay $350 annually. Businesses having a share capital of more than USD 50 001 make an annual payment of USD 1100. Stamp Duty For non-BVI citizens, stamp duty is applied to real estate transactions at a rate of 12%. For BVI citizens, the charges are reduced at 4%.
Capital Gains Tax
No.
VAT
No.
Trust Taxation
If a trust is established by or on behalf of a non-resident individual, owns no land in the BVI, and does not conduct business there, trust income is free from taxation.
Individual Income Tax
Unless the person is employed by the BVI, no BVI income tax is assessed.
Control over foreign exchange no
taxes on payroll. Social Security Businesses operating in the BVI are required to pay social contributions and payroll tax. Self-employed individuals do the same. For small businesses, the payroll tax rate is 10%; for large firms, it can reach 14%. Employees may be required to refund up to 8% of their compensation. Payroll tax does not apply to the first $10,000 USD. Employers pay a rate of 4.5% and employees pay a rate of 4% toward social contributions.
Taxes on Real Estate
Land tax is imposed on BVI residents and businesses at the rate of USD 3 for the first acre and USD 1 for each additional acre. The annual tax for foreign nationals is USD 50 for the first half acre, USD 150 for the second half acre, and USD 50 for each additional half acre of land. The annual real estate tax is 1.5% of the projected annual rental value of the property. international agreements on taxes
Advantages
Tax Advantages
The BVI offers a favorable tax environment, which is one of the main draws for establishing an offshore corporation there. There are no inheritance, capital gains, or corporate income taxes when a BVI corporation is established. Businesses and individuals may save a lot of money on taxes as a result of this.
Business Simplicity
The BVI offers a simplified company registration procedure and a business-friendly regulatory environment. The BVI has no restrictions on currency exchange, which permits companies to operate in multiple currencies and eases cross-border transactions.
Asset Security
BVI company incorporation is a well-liked option for people and companies wishing to protect assets from future creditors or legal problems since it provides strong asset protection protections.
Keep Information Private
Entrepreneurs enjoy a high degree of confidentiality when they form a BVI company. Generally, ownership information is kept private, and the names of directors and shareholders are safeguarded by stringent privacy regulations upheld by the BVI.
Disclaimer: Above all information is for general reference only and sourced from internet, before making any kind of decision please visit the authorized websites of authorities and service providers.