Taxation of a close service company?

P

polish_bloke

Registered User
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Hi,

I've got a preliminary meeting with accountants before setting up my Limited company.

They insisted that being an architect and primarily offering architectural services by my future limited company I will be taxed differently than 12,5% corporation tax. They said they would double check, but I would be taxed 12,5% on first half of the retained income and 12,5 + 25 = 37,5% on the other half.

I can't find anything like that at the revenue website - any suggestions if they are right?
 
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Re: Taxation of professionals Ltd?

It's called a close company surcharge and they are right.
 
The revenue website says:

A surcharge of 20% is payable on the total undistributed investment and rental income of a close company. Close "service" companies are also liable to a surcharge of 15% on one-half of their undistributed trading income.

So how is the company taxed in the following example:

trade income 100
expenses (10)
salaries (20)
investment in property (50)
EBT 20

Would it be
10 @ 12,5% + 10 @ 27.5% = 4 ???

and any future rental income @ 32.5 % ???

I will obviously commision an accountant but I need to understand the principles first. Thanks
 
You shouldn't even consider having property in your limited company.

As a service company you are subject to 12.5 % tax. The idea of the surcharge is to prevent people sheltering what the revenue consider as income which would otherwise be taxable at 41% in a company where you would pay only CT and then you could eventually liquidate the company and extract this money at 20%.

Basically this means that after all your business expenses it makes sense to pay out your company profits as salary.
The main benefit of a company in these circumstances is that you can pump as much of the company profits as you want into a company pension scheme for yourself
 
1. Why wouldn't I have a property in my limited company? I always thought it's one of the wisest things you could to with the investment property ...

2. But a pension is taxed at the end of the day ... isn't it ?
 
polish_bloke said:
1. Why wouldn't I have a property in my limited company? I always thought it's one of the wisest things you could to with the investment property ...
Click to expand...
I'd commission that accountant if I were you. Putting a property into a company is a pretty big shout and you should seek professional advice on that. For what its worth, i would never recommend to someone to use a company for holding a property in Ireland.
 
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I'm meeting another accountant tomorrow - I will choose one of the offers I have for sure but it's not a bad idea to educate yourself a bit...

... and the lesson is - most continental Europeans think Ireland is a tax haven ... well guys, think twice. VAT, ridiculous VRT, stamp duty, TV License, motor insurance, road tax, surcharges for small companies, astronomic tax in alcohol and cigarettes ... how many have I omitted ?
 
ou yeaaaah ... special tax on the rental income ... outrageous - and you thought that the guys living on social benefits were stupid ?
 
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