Taxation On Worldwide Profits
Offshore Company incorporation Law sets certain provisions for a company to be treated as a private company, as well as taxes on resident and non-resident companies. Non-resident companies pay only on profits derived from trade carried out by a branch or agency in Ireland, while resident companies are taxed on worldwide profits.
Irish Revenue Commissioners typically base their decision on how the taxes are determined, as resident or non-resident, based on where central management and control of a company are carried out. The place where important business decisions are made will be the critical factor. Non-resident companies should hold such meetings outside of Ireland, and its articles of association should state that all director meetings and shareholder meetings take place outside Ireland. Other aspects of establishing a company in Ireland are discussed.
Incorporation of Irish non-resident companies
Under Irish Company Law, a company to be treated as a private company (in contrast to a public limited company) must include in its Articles of Association provisions:- a. restricting the number of its members to 50
b. restricting in some manner transfers of shares
c. prohibiting any offer of shares or debentures to the public and
d. prohibiting the issue of bearer shares. Non-resident company status and corporation tax - current law
In Ireland, resident companies are charged with Corporation Tax on all their worldwide profits. Non-resident companies, on the other hand, pay tax only on profits derived from any trade carried on through a branch or agency of the Company in Ireland. Corporation tax legislation does not indicate how the residence of a company is to the determined and therefore the rules relating to residence have evolved through case law. The principal determination that the Irish Revenue Commissioners concern themselves with is where the central management and control of the Company is carried on. This is a question of fact and not just of location and the Revenue will look to the actual meetings rather than the day to day management of the Company, that is, to the place where important business decisions are made. A non-resident company, therefore should have its' meetings outside Ireland and the Articles of Association of the Company should provide that all Directors' Meetings and meetings of shareholders must be held outside Ireland. Other incidental factors are also taken into account by the Revenue, such as: * The country in which dividends are declared by the Company
* The residence of the Company Secretary
* The location of the Company's seal
* The place where the accounts of the Company are made up and audited. Past experience indicates that the Revenue Commissioners are more concerned with the location of exercise of management control by the Directors rather than the incidental factors above.
| 