Companies are generally subject to corporation tax on their capital gains as well as their income. In contrast, individuals are subject separately to capital gains tax on capital gains and income tax in income. Trading losses of a company may be thereby offset against capital gains in the same period.
The accounting period is treated as period of assessment for capital gains tax for the company.
Although company capital gains tax is strictly speaking corporation tax, the rules in respect of the calculation of the capital gain or loss, are almost identical to those which apply to capital gains tax for individuals. The actual capital gain is adjusted upwards and included in the corporation tax charge so that it effectively suffers 33% tax. Gain multiplied by (33%/12.5%) is included.
A non-resident company, in common with all other non-residents is taxable on so called specified assets within the State. This consists of lands, buildings, mineral rights and shares deriving their value from the same. Capital gains tax and not corporation tax)applies.
The profits and gains of a branch or agency in the state of a non-resident company are subject to Corporation tax. Non-resident companies are subject to corporation tax in respect of disposals of assets used for and by a branch or agency through which it conducts business in Ireland. The assets concerned must have been used for the purpose of the trade carried out by the branch agency.
Capital gains for companies are subject to a higher 33% rate of corporation tax. The rate is the same as that applicable to capital gains for individuals. Corporation tax on capital gains is charged by reference to the accounting period of the company in the same manner as corporation tax on profits. However as development land is subject to capital gains tax, it is charged by reference to the calendar year.
Company development land gains are subject to capital gains tax .. Therefore it is calculated separately and taken out of the corporation tax computation. This ensures that they stand separate from other gains and profits for the purpose offset of losses. See the capital gains tax section for the definition of development land (essentially land whose value exceeds its current planning permission permitted use value).
Because development land gains are subject to capital gains tax the standard calendar year period of assessment applies.various restrictions applicable to development land gains apply. The standard due dates for capital gains tax and development land applies. Accordingly tax on the capital gains generally due by 15 December in the year the games in December by 31st January and the following year.
Companies’ capital losses are calculated in the same manner as for individuals. The capital gains tax rules apply subject to required modifications. Capital losses are allowed and offset against company capital gains only. Unused losses in the current period may be rolled forward against future capital gains.They are not available for offset against company profits.
Gains and losses on development land are not subject to corporation tax so there is no possibility of losses and development land being offset against corporation tax on gains (or profits/income).
Trading losses can be offset against both profits and gains for the purpose of corporation tax in that period. An adjustment is made to the amount of loss which may be offset against gains to reflect the different corporation tax rate.
Because capital gains of a company are subject to corporation tax, the exemptions for start up companies apply to capital gains tax for companies. The relief applies to assets of a qualifying trade. Certain other conditions and anti-avoidance provisions apply.
Where a Irish resident company goes non-resident, it is deemed to dispose of all of its assets at open market value and to have immediately reacquired them. This triggers an immediate capital gains tax charge. The deemed disposal also occurs where a branch or agency of a non-Irish resident company transfers assets to its head office or permanent establishment in another country or transfers its business or its assets to another territory.
There are important exemptions from this so called exit charge. Assets such as land buildings minerals and shares deriving the same continue to be within the scope of Irish capital gains tax so are not subject to the exit charge. Where the assets continue to be used after the disposal by a branch our establishment in the State,there are exemptions subject to compliance with conditions.
A 12.5% rate of tax applies to asset in use for the purpose of trade. Other assets are subject to the capital gains tax rate. The disposal is deemed to take place at market value. It is deemed to take place just before cessation of residence.
Is possible to elect to defer the exit tax where the company takes up residence in another EU or EEA state.the deferment allows for payment in six equal annual instalments equivalent to the due date for corporation tax or capital gains tax as the case may be.revenue may require security.
Are there is a deferral the whole amount becomes immediately due if
- there is any late or non-payment
- cessation of residence in the EU/EEA without becoming resident in anotherEU/ EEA state
- liquidation/ insolvency event/ winding up of the company
- disposal of the relevant assets
The exit charge does not apply where a company is controlled by a company resident in or controlled from a country with which Ireland has a double taxation treaty (broadly non-tax havens) , which is not ultimately controlled by Irish residents.
Where the company is 75% subsidiary of an Irish resident company and a parent and subsidiary go non-resident, an election to postpone the exit charge may be made, subject to certain conditions. The postponement applies to foreign trading assets of the company. The exit charge on those assets may arise to the parent if it ceases to be resident or ceases to have the 75% link or if the company disposes of the foreign assets concerned.
If some assets are disposed of a proportion of the original gain is deemed to arise. If none of the above happened in 10 years there is no charge. If any of the events do occur the resident parent is taxed.
The charge does not apply where the company is controlled by a person or company in a state with which Ireland has a double taxation treaty. It does not apply where the company is ultimately owned by Irish persons or controlled in non-double tax treaty countries.
The tax may be collected from other members of the group, a so called controlling director of the company or a company which controls the company which is liable. A controlling director is one who has control of the company, This includes a director who holds or controls the shareholding, the voting rights or other rights which entitle him to the majority of the share capital, the majority of dividends or majority of assets in a winding up.
There is an exemption from capital gains tax for the disposal of an interest in a trading company in which it has at least a 5% ordinary share capital interest. The trading company must be resident in Ireland the EU or a country with which Ireland has a double taxation agreement.
A company must meet certain tests in order to be a trading company. At least 50% of its assets must be trading assets and 50% of its income trading receipts.
The 5% or greater interest must be held for certain periods (generally 12 months).