Corporation Tax Rates

From 1st January 2003, a corporation tax of 12.5% applies to trading profits in all sectors including international services.

Tonnage Tax

The shipping industry received a major boost in the December 2000 budget with the introduction of the 12.5% rate of corporate tax on a nominal profit figure for certain shipping activities.  This long term incentive was introduced to replace the 10% rate of corporate income tax for shipping companies which expired on the 31st of December 2000.

Qualifying shipping activities are activities of a company in the course of a trade carried on in the State, which consist of:

• the use of a qualifying ship for the purposes of carrying passengers or cargo by sea, for reward;
• the provision of services, ancillary to that use, on board a qualifying ship;
• the subjecting of fish to a manufacturing process on board a qualifying ship;
• the letting on charter of a qualifying ship for use for those purposes where the operation of the ship and the crew of the ship remain under the direction and control of the company;
• the use of a qualifying ship for the purposes of transporting supplies or personnel to, or providing services in respect of, a mobile or fixed rig, platform, vessel or installation of any kind at sea.

For accounting periods beginning on or after 1 January 2002, qualifying shipping activities will be subject to a special tonnage tax regime instead of the normal corporation tax regime.  The measure was approved by the European Commission in December 2002.

Under the tonnage tax regime, profits are calculated on the basis of a nominal profit according to the net tonnage of the ship concerned. The standard corporation tax rate for trading income is then applied to the specified profit base.

Download PDF -  Irish Tonnage Tax

The nominal profit is calculated on a sliding scale, using the following rule:

1.00 Euro/100 net tons for the first 1,000 net tons
0.75 Euro/100 net tons from 1,000 up to 10,000 net tons
0.50 Euro/100 net tons from 10,000 up to 25,000 net tons
0.25 Euro/100 net tons over 25,000 net tons

There is no additional taxation at a later stage, unlike the Norwegian tonnage tax regime where additional corporation tax is levied on profits when they are transferred out of the shipping industry.

Examples

A 15000 dwt chemical tanker of 5890 net tons will have an annual tax liability of	€  2129.55
A 45000 dwt handymax bulker of 16010 net tons will have an annual tax liability of	€  4906.97
A 75000 dwt panamax bulker of 19455 net tons will have an annual tax liability of	€  5692.86
A 170000 dwt capesize bulker of 63200 net tons will have an annual tax liability of	€ 11315.00
A 270000 dwt VLCC of 79920 net tons will have an annual tax liability of	€ 13222.13