What is a close company surcharge ?
A close company is an Irish resident company that is controlled by five or fewer participators. This applies to majority of small companies in Ireland
A participator is somebody who has a share or interest in the capital or income of a company and includes a person who has share capital, voting rights or loan capital in the company. In other words, ordinary shareholders.
There are two surcharge taxes on Irish close companies – at 20% and 15%.
Where a close company is in receipt of rents, dividends and this income is not given as a dividend to its shareholders within 18 months of the accounting period end in which the income arises, a close company surcharge will apply.
The surcharge equates to an additional 20% tax on the post-tax undistributed passive income. This is on top of the normal 25% corporation tax payable on said income. So in total a company will have an average tax rate of 45% on same
Where a close company is a professional service company such as for example architects, solicitors, the company is liable to a surcharge of 15% on one-half of its undistributed professional income. So in total company will have an average rate of tax of up to 20% ( ie 12.5% plus 7.5% ).
Subject to qualifying conditions
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