Income Tax Reliefs and Exemptions

The following are examples of some generous reliefs and exemptions under the Irish tax code.

Artists

Certain earnings of individuals who are determined by the Revenue Commissioners to have produced a work or works generally recognised as having cultural or artistic merit are exempted from Irish income tax.

Patent income

Income from a qualifying patent paid on or after 11 April 1994 is exempt where the royalty or other sum is paid in respect of:

(i)      a manufacturing activity of a company or of an incorporated enterprise whether that activity is carried on in the State or elsewhere, or

(ii)     a non manufacturing activity to the extent that the income arises from bona fide third party payments. The exemption can also apply to dividends paid out of “manufacturing activities” and bona fide third party exempt royalties in respect of “eligible shares” in a patent company.

Irish remittance basis of taxation

Up to 31 December 2007 an individual who was tax resident in Ireland but not ordinarily tax resident and/or not domiciled in Ireland was liable to Irish income tax in full on his income arising in Ireland and the U.K. and on “foreign income” only to the extent that it is remitted to Ireland. With effect from 1 January 2008 the remittance basis has been extended to U.K. source income which means that U.K. source income is deemed “foreign income” and is only liable to Irish income tax if it is remitted into this country. Only non domiciled individuals who are Irish tax resident can take advantage of the remittance basis now.

Other exemptions

Profits or gains from the occupation of woodlands managed on a commercial basis and with a view to the realisation of profits.

Other income tax reliefs exist in relation to the purchase of tax incentive properties and investments in Irish companies under the Business Expansion Scheme and Seed Capital Scheme.

Please note that there are limitations on the use of these reliefs.

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