advertisement


Great news

Corporate taxes are not personal taxes.

The Irish personal income tax regime takes much more than the UK's, but it at least has the virtue of being simple and transparent enough that I can summarise the whole thing here (PAYE and self-employed are pretty much the same):
Income from €0-€35,799.99, taxed at 20%
Income over €36,800, taxed at 40%
"National Insurance" equivalen of around 4%
A Social levy of approx 3% on income under €70000, 8% on balance
There is no tax-free allowance, but you get a refund of up to 2000 or so on your calculated income tax liabilty (4000 if you're married) - this arrangement is neutral to middle-income earners but much fairer to lower-income earners than a tax-free allowance.

On top of that, indirect taxation is higher too: new cars are taxed at around 20% above the UK, and there are no tax benefits for company cars; VAT is 23%, excise duties on alcohol are higher, primary healthcare is not free. The only thing that is cheaper here than the UK is motor fuel, by about 2-3p/litre; and 3rd-level education (which is tuition free, but annual capitation fees run to around €4000).

Incidentally, stock options are considered to be a Benefit in Kind here. The difference between the option price and market value at time of vesting is taxed as income; any profit made on sale is then taxed as Capital Gains (at 33% for gains above €1250).

Yes, plenty here have been stung by the stock option tax liability and falling share price double whammy. It’s not a one way bet by any means! CT cannot be ignored, many are lambasting the govt for keeping it at 19% and not increasing to 25% yet Ireland sit there at 12.5% without undue pressure. Of course, I understand it keeps their US corporate sponsors happy (despite the trapped cash problem) and provides a load of employment on the flip side, but it’s a staggeringly low rate which the UK would be crucified for implementing.
 
Ireland will raise its corporation tax rate to 15% for higher turnover companies. But what often seems to be forgotten outside of Ireland is that right now all companies operating in Ireland pay that 12.5% on profits, from a two-person plumbing contractor up to a trillion-dollar pharmaceutical company, and there are almost no reliefs. The OECD calculates Ireland's effective composite rate for corporation tax at 12.4%, a tiny fraction below the nominal rate; the UK's composite rate is 16.8%, despite being 19% on paper. If the UK were to drop its rate close to Ireland's, without also removing the reliefs that it gives, its effective rate would indeed be scandalously low. (These figures also exclude the effect of the UK crown dependencies that charge zero percent on corporate profits).

The 12.5% rate, and the transparency of the taxation system in general, is part of the country's policy to support indigenous businesses, not just a way of attracting foreign investment. For this reason, the new rate rise will apply to turnover above €750 million per annum; all smaller businesses will continue to pay the 12.5%... and that includes a lot of modest foreign businesses, that chose to locate in Ireland for reasons other than the taxation system. (I remember speaking to a person who was quite senior in a major pharmaceutical a few years ago, and they told me that their decision to expand their operations in Ireland rather than their site in England was primarily due to staff training costs and productivity per operator).
 
If you work for a company on PAYE, such as bankers do, there really aren’t plenty of ways to manage your income. You pay PAYE when you are paid. If you run your own business, of course different rules apply and you can decide the timing of how and when to draw income and in what form etc.

Duh. I wasn't going to bother arguing with you on this one as you were being either naive or disingenuous, but then I read this and couldn't help it.

Many, many occupations permit you to bill for some or all of your services through your own company and reap the tax advantages. None of the tax drawn shows up in the figures for PAYE income. But, I'm sure you know this.

https://www.theguardian.com/politic...-staff-mark-fullbrook-through-firm-is-dropped
 


advertisement


Back
Top