Ireland is a leading location for the development, exploitation and management of intellectual property ("IP"). According to IDA Ireland, the number of global companies centralising their IP management in Ireland has made Ireland one of the largest exporters of IP in the world. One of the key drivers for this is the attractive tax regime, including the 12.5% corporation tax rate on trading income, a flexible 25% tax credit on the cost of eligible research and development activities, capital allowances on the cost of acquiring certain intangible assets and a large double tax treaty network to facilitate the flow of funds between Ireland and other countries. Ireland has signed double tax treaties with over 70 countries. The network of treaty partner countries is set out in the Appendix in the attached PDF.
Facts and Figures
Ireland is home to eight of the top ten global technology companies, eight of the top ten global pharmaceutical companies and 15 of the top 25 medical devices firms in the world.
In recent years, Ireland has attracted a range of innovative social media companies, including Google, Facebook, Twitter and LinkedIn, all of whom have established their European headquarters here.
Corporation Tax - Rate of Tax
Ireland has two rates of corporation tax on income. The 12.5% rate applies to trading income of an Irish company. The 25% rate applies to non-trading, or passive income.
Generally, trading means the carrying on of business or the engaging in activities on a regular basis with a view to realising a profit.
The Irish Revenue Commissioners, in considering whether an activity constitutes the carrying on of a trade, look at whether there is commercial rationale for the type of situation proposed, whether there is real value added in Ireland and whether there are employees and/or directors in Ireland with sufficient levels of expertise and skill to actually carry on the trade.
In terms of a trade relating to IP, the Irish company should have employees and directors in Ireland who are genuinely involved in the operation of the business and all decisions of importance in terms of the management and control of the business (at a strategic level) are undertaken in Ireland. There should be a certain degree of activity around the promotion and management of the IP and staff with the appropriate skill and expertise would need to be located in Ireland to carry on this activity.
International IP Structures