Ireland
Holding Company Formation

Advantages and Tax Benefits

Why choose Ireland to Open a Holding Company?

An Irish holding company offers a range of strategic advantages for multinational groups, particularly in the context of EU operations, IP ownership, and investment structuring. Ireland is known for its business-friendly environment, extensive treaty network, and favorable tax regime for holding and intellectual property companies.

The main reason for opening a holding company in Ireland is the taxation system. The low corporate tax and the extended network of double tax treaties Ireland has with many countries provide an excellent environment for holding companies. Also, as an EU and OECD (Organization for Economic Co-operation and Development) member state, Ireland provides a well-regulated jurisdiction for holding companies.

Due to the participation exemption Irish holding companies may dispose of its shares in any other company within the European Union or a country Ireland has a treaty with, thus obtaining capital gains tax exemption. This exemption applies if at least 5% of the ordinary shares have been held for minimum a year and if the trading condition is respected.

The main features that give Ireland a competitive advantage over other jurisdictions are as follows:

• No withholding tax on the payment of dividends by the holding company to EU or tax treaty countries.
• No capital gains tax on the disposal of shareholdings in subsidiaries.
• No transfer pricing, thin capitalization or CFC rules.
• Tax deductions for interest on borrowings to acquire shareholdings in subsidiaries.
• Favourable treatment on the receipt of dividend income.
• Extensive Tax Treaty network and access to EU Parent-Subsidiary Directive.
• Low tax rates for both trading operations and investment activities.

These incentives together with the economic and telecommunications infrastructure, the English speaking population and membership of the EU make Ireland one of the most attractive destinations in Europe for multinational companies.

It is for some or all of the above reasons that many of the world’s leading multinational companies have, and continue to, establish holding companies in Ireland.

Ireland has become a very attractive place for multinational companies!

Key Advantages of an Irish Holding Company

Participation Exemption for Capital Gains

Capital gains from the disposal of shares in subsidiaries (EU or non-EU) are exempt from Irish tax, provided:

• The Irish company holds ≥5% of the shares.
• The subsidiary is resident in an EU or treaty country.
• The company is a trading company or part of a trading group.
• Shares are held for at least 12 months in the preceding 2 years.

Ideal for holding equity in global subsidiaries.

No Withholding Tax on Dividends (with structuring)

While Ireland has a 20% dividend withholding tax, exemptions apply for:

• Dividends paid to companies in the EU, tax treaty countries, or under the EU Parent-Subsidiary Directive.
• Qualifying Irish-resident individuals or companies.
• Non-residents with favorable declarations and treaty protection.

Most multinational holding structures can be organized to eliminate WHT entirely.

Exemption for Foreign Dividends

Foreign dividends may be exempt or taxed at 12.5% instead of the headline 25%, under certain conditions:

• Paid by a trading subsidiary in the EU or a treaty country.
• The subsidiary is subject to a meaningful rate of tax (typically ≥12.5%).

Efficient for cash repatriation from EU and treaty-based subsidiaries.

Extensive Double Tax Treaty Network

• Ireland has over 70 double tax treaties, including USA, UK, Germany, France, India, China, Canada, and Australia.
• These treaties provide withholding tax reductions and relief from double taxation.

Very useful for reducing foreign WHT on dividends, interest, and royalties received by the Irish company.

EU & OECD-Compliant Regime

• Ireland is a full EU member and compliant with OECD BEPS standards.
• Irish holding companies are respected internationally and not seen as “offshore” or tax haven entities.

Beneficial for access to EU directives, funding, and cross-border structuring.

Low Corporate Tax on Trading Income

• Ireland’s headline corporate tax rate is 12.5% for active trading income.
• Although this does not directly affect holding passive income, it allows for group finance, licensing, and IP activities in the same vehicle or group.

Attractive IP Regime

• Ireland offers a Knowledge Development Box (KDB): 6.25% tax on qualifying IP income.
• Generous capital allowances for acquired IP (can offset taxable income).

Useful for integrating IP holding functions with shareholding and finance.

No Capital Duty or Minimum Capital

• No stamp duty on the issuance of shares in Irish companies.
• No capital duty or minimum capital requirements.

Choosing Ireland for a Holding Company
Further Reasons

Extensive Double Tax Treaty Network

• Ireland has 70+ tax treaties, including with the US, UK, China, Germany, France, India, and Canada.
• Treaties often reduce foreign WHT and ensure no double taxation.

EU Membership and Access to EU Directives

Ireland is a full EU member, so Irish holding companies benefit from:

• EU Parent-Subsidiary Directive (no WHT on intra-EU dividends).
• EU Merger Directive (tax-neutral reorganizations).
• EU Interest and Royalties Directive.

This is a major advantage over jurisdictions like Hong Kong or Switzerland for EU-focused groups.

Strong Reputation and Credibility

• Ireland is seen as a transparent, onshore, OECD-compliant jurisdiction.
• Not considered a tax haven.
• Commonly used by global giants like Apple, Google, and Facebook for European operations.

This improves banking access, regulatory acceptance, and counterparty trust.

Stable and Business-Friendly Legal Environment

• Based on common law, offering predictable corporate governance and investor protections.
• Reliable courts and strong IP protection.

Flexible Corporate Structuring Options

• No minimum share capital.
• 100% foreign ownership allowed.
• No capital duty on share issues.
• Easy to set up and maintain (typically within a week).

Summary

TBA services

We have 2 decades of experience in the incorporation and management of asset holding companies, whether it be for owning property, or for other reasons such as holding an investment portfolio.

We do not simply incorporate Ireland Holding companies – we always take a client’s needs and personal circumstances into consideration before deciding upon which jurisdiction of incorporation will be best and most suitable.

Owning your assets through a company can reduce or eliminate the inheritance tax, capital gains tax and income tax, and afford confidentiality (seen as a major benefit for those clients residing in high-risk countries). Asset holding companies can also circumvent the need for the granting of probate, an often time-consuming and expensive process, and play a vital role for long term family financial planning.

We are happy to examine possibilities with you for as long as it takes, in order to find the best solution for you and your family.

Please do not hesitate to contact us for more information on how we might be able to benefit you in the ownership of your assets.