In order to avail of the 12.5% rate or corporation tax a company must be carrying on “a trade” from Ireland. There is no specific statutory definition in Irish tax law as to what constitutes a “trade”. To assist in this matter Irish Revenue authorities have published guidance setting out the issues which they consider when determining whether an activity constitutes a trade for these purposes. The Revenue authorities have also published general details of the matters where their opinion has been sought as to whether a particular activity constitutes a trade for these purposes. In order to avail of the 12.5% rate of corporation tax a company must derive income from a trade that is actively carried on in Ireland. It is generally essential therefore that the profit making apparatus of the trade is located in Ireland and that the activity is controlled in Ireland. It is generally feasible for a company established in Ireland to exploit intellectual property to avail of the 12.5% rate if the company has sufficient personnel located in Ireland with the appropriate expertise and skills required to be in a position to manage the relevant portfolio of intellectual property.
The following are generally regarded as trading activities:
- activities relating to the development and exploitation of intellectual property rights
- corporate treasury functions
- investment management activities
- distribution activities
- activities relating to the carrying out of research
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