In recent years, Irish fiscal and taxation policy has been successful in establishing the country as an attractive jurisdiction for multinationals to locate, exploit and develop their intellectual property through the availability of significant tax relief for capital expenditure and research and development expenditure. Complementing the intellectual property taxation regime, Ireland’s well established common law corporate legal system offers a range of legal protections for the inventors and owners of intellectual property rights.
The Key Tax Advantages of Ireland as an Intellectual Property Location
Income from the exploitation of intellectual property where the portfolio of intellectual property is actively managed by an Irish resident company is taxable at the corporation tax rate that applies to trading income, 12.5%. Active management includes development, marketing and promotion and licensing of rights to third parties for the use of the intellectual property. A corporation tax rate of 25% applies to non-trading income.
Tax relief is available for the capital expenditure incurred on intangible assets used for the purposes of a trade of the company. The tax write-off is available in line with the standard accounting treatment (companies must prepare accounts under IFRS or Irish GAAP) or, alternatively, companies can opt for a 15 year fixed write down of 7% per annum and 2% in the final year. This relief is available where the intangible asset is acquired from either a foreign affiliate in certain circumstances or a third party acquisition. (Relief is capped at 80% of trading income and there is a clawback of this relief where the intellectual property assets are sold within 10 years).
Tax relief of up to 37.5% can be obtained on qualifying incremental research and development expenditure (R&D). A tax credit of 25% is available on qualifying research and development expenditure in excess of base year expenditure (2003), for companies establishing in Ireland after 31 December 2003 all qualifying R&D expenditure incurred should qualify for the R&D credit. The tax credit is in addition to the standard corporation tax deduction available at 12.5% for qualifying expenditure.
There is no withholding tax on patent royalties paid to a foreign company which is resident in another EU Member State or country with which Ireland has a double taxation treaty in place.
Where no tax treaty is in place unilateral relief for foreign tax suffered on royalties received from abroad is available.
Exemptions can be availed of that allow dividends to be paid by an Irish resident company free from Dividend Withholding Tax including where the recipient is resident in an EU Member State or in a country where a double taxation treaty with Ireland is in place or to a company that is not resident in an EU Member State or double taxation treaty country but is controlled by a resident in an EU Member State or double taxation treaty country and where dividends are paid to a listed company.
The Irish Government offers a range of financial support/grants for R&D carried out in Ireland.
Cafico International provides the following services in assisting with IP migration
- Company incorporation services
- Tax registration and administration services
- Procurement of professionally qualified resident directors
- Company secretarial services and the provision of a registered office or business address
- Day to day management and administration services
- Bespoke financial reporting and accounting services
- Treasury and cash management services
- Bank account opening, reconciliation and administration
- Assistance with R&D grant applications.