All companies in Ireland are required by law to file returns to and pay associated taxes with the Revenue and file annual returns to CRO (Company Registration Office). Failure to comply with tax obligations or reports submission in Ireland may result in serious implications starting from substantial fines that accumulate on a daily basis, loss of the right for audit exemption, company liquidation, and legal prosecution of a company’s directors.
However, for starting enterprises dealing with all their tax obligations and return compliance may be challenging. Therefore, in this guide we go into the logistics of principal taxes for Irish companies to give you the most awareness about your tax obligations. We cover such topics as tax return deadlines in Ireland, payment conditions, and possible penalties for failure to comply with filing and payment obligations.
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Annual Return (B1 form) is an electronic document that must be submitted to CRO once a year. Annual Return sets out certain prescribed company information about the company’s directors, balance sheet, and notes to the financial statements. Every company regardless if it carries out any trading activity or not should file annual returns.
When Do Annual Accounts Have to be Filed?
The first annual return for newly incorporated companies should be filed 6 months after company incorporation. The subsequent annual return filing due dates fall on the “anniversary” of the first annual return. Companies file annual returns once in a calendar year (01.01 to 31.12) or can use any other financial year date as long as it’s no more than 9 months from company NARD (next annual return date). Most companies move their annual return deadline to 30.09 to have exactly 9 months from the end of a previous calendar year.
Failure to Interest Annual Return on Time
Failure to file annual returns within the deadline may result in the company incurring late filing fees (from €100 to a maximum €1,200) and losing any entitlement to claim audit exemption for two years. It means that your company will need to conduct an audit for two years which results in additional hassle, time and money spending (prices for audit services in Ireland start from minimum of 2,000 Eur).
Moving the Company Return Filing Date Back or Forward
The ARD (Annual Return Date) can be moved back or forward once your company needs it. The most common reason for shortening the interest date is if the allocated date falls more than 9 months after the financial year end. In such a case, the annual return should be made up to an earlier date. When a company wants to shorten the date of annual return, they should tick the box in form b1 to change the date.
Irish companies can also prolong the date of their next annual return submission. The ARD can be extended not more than once every 5 years and for no longer than 6 months. For this purpose, the form B73 should be filed and submitted to CRO within 4 weeks from the company’s current ARD.
*Please, note that the newly incorporated companies in Ireland have no right to request to alter the first ARD date.
Corporation Tax Return
Corporation tax in Ireland is the tax levied on profits of an Irish company. Non-resident companies are also subject to CT if they trade in Ireland through the branch or agency or if they receive profits and gains in respect of rental property in Ireland.
Corporation tax is levied on profits generated worldwide, not only on the territory of Ireland. The first tax rate of 12,5% is for “active” traders only. Incomes accumulated from “passive” activities such as investments or income from rental property are charged at the rate of 25%. Corporation tax returns are filed on the self-assessment system on the Revenue Online Service (ROS).
Corporation Tax Return Deadlines in Ireland
The corporation tax return filing date is dictated by the financial year end. A company must file its corporation tax return and pay associated tax no later than on or before the 23rd of the ninth month after the end of an accounting period if they pay electronically. All other companies should comply with their CT payment and filing two days earlier, on the 21st day.
Late Corporation Tax Return Filing and Payment
Late Corporation tax return filing and payment of associated tax result in financial responsibilities of a corporation and losing certain reliefs claimed. Late payments or payments that have not been made in full are subject to daily interest rates. The interest is calculated based on the amount of tax a company has underpaid, the number of days the tax is late, and the interest rate.
Failure to file a Corporation tax return on time may result in a late filing fee of €12,695 if the return is overdue for 2 months (5% of the tax due). After that, the late filing fine can reach €63,485. (10% of the tax due).
If you are an employer who makes payments to employees or a company director who pays themselves a salary, you must report payroll information to the Revenue. You must pay to the Revenue all tax you deduct from your employees’ pay. If your organisation integrated payroll software into its workflow, there are two ways to submit payroll returns in real time:
- Direct Payroll Reporting: a seamless “communication” between ROS and Payroll Software and exchange of all necessary information.
- ROS Payroll Reporting: manual upload of files created by payroll software.
For each payroll submission, an employer has to provide the Revenue with payroll the following information for each employee:
- Amount of payment;
- Date of payment;
- Amount of taxes deducted (Income Tax, Local Property Tax, and Universal Social Charge).
Payroll return is supposed to be filed to ROS on a monthly basis no later than the 23rd of the following month. However, it depends on the frequency that you make payments to employees. If you pay your employees weekly, you will need to submit payroll statements each week.
Missing Payroll Return and Payment Date
Missed payroll return and payment date or any errors made during submission imply a fixed €4,000 fixed penalty for each breach of the PAYE regulation. Additionally, there is a €3,000 fixed penalty imposed on the company secretary for each breach. Penalties are currently applied to all kinds of breaches both where there’s evidence of a deliberate breach and unintentional behaviour.
Value Added Tax is a general tax levied on all goods and services bought and sold for use or consumption in the European Union. Each EU-member state applies its own standard rules of VAT. General requirements for VAT registration in Ireland are passing the following annual thresholds:
- 75,000 Eur in case of persons supplying goods only;
- 41,000 Eur for persons making acquisitions from other EU members also known as ICA (Intra community acquisition);
- 37,500 Eur in case of persons supplying services only;
- 10,000 Eur for making mail-order or Intra-community distance selling of goods and cross-border TBE (telecommunications, broadcasting & electronic) services into the state.
Learn more about how to register for VAT in Ireland.
VAT Tax Return Deadline in Ireland
VAT Returns filing and associated tax payment due dates usually fall on the 19th day of the month following the end of each taxable period in Ireland. The taxable period for VAT return filing and tax payment is two months commencing on the first day of January, March, May, July, September, and November.
However, the Collector-General (persons responsible for collection of taxes and implementation of debt management programs) may approve the following taxable periods under the following circumstances:
- 6 months if your annual VAT liability is 3000 Eur or under;
- 3 months if your annual VAT liability is between 3,001 Eur and 14,400 Eur;
- file VAT obligations with annual return if you’re making equal instalments by direct debit.
Late Filing Penalties
You may incur penalties for late filing, non-filing of VAT return and non-payment of associated tax. The Revenue may charge interest for late VAT filing and payment. The current interest rate is set at 0.0274 per day on unpaid sums. There’s also 5% and 10% penalties of owed amount on top of interest.
The OSS (One-Stop-Shop) /IOSS (Import One-Stop-Shop) concepts were introduced in July 2021. These place new legal requirements on the way VAT is collected, declared and paid. OSS and IOSS both facilitate VAT reporting for distant sellers. They allow businesses to register, report, and pay VAT in only one country rather than in all countries where they carry out trading activity.
OSS returns are due by the last day of the month following the reporting period. For example, the Q1 OSS return is due by 30 April, and the Q3 OSS return is due by 31 October. Likewise, monthly OSS returns are also due by the last day of the month following the reporting period.
The difference between OSS lies in the geographical “origin” of goods and services. OSS relates to selling goods inside the European Union (from one EU-member state to another). IOSS is designed for companies selling goods and services to customers in the European Union from the third territory valued at f €150 or less. For goods of a higher value, standard VAT import rules apply.
VIES is an acronym for VAT Information Exchange System. Standard VIES application rules cover the following individuals:
- Traders registered as VAT payers in Ireland
- Traders that supply B2B zero rate goods or services or both to traders registered for VAT in another EU member state.
This is applicable regardless of the value of goods and services. The return must be submitted by the 23rd day of the month following the relevant month. If the number of supplies is less than €100,000 in a month, you may file returns quarterly.
Income Tax Returns
Income tax in Ireland is a direct tax collected and paid through PAYE (pay as you earn). Income tax return is an official form that an individual whose sole or main source of income is a PAYE employment or pension. Non-proprietary company directors who pay all their tax under PAYE must also file income tax returns to Irish Revenue. The easiest way to comply with your income tax return obligation is to file and pay through ROS.
Individuals should file an income tax return (Form 11) and file associated tax no later than a year after the end of the reported period. For instance, the 2021 income tax return is no later than November 16, 2022 for customers who file and pay on ROS. For customers who file and pay in any other way, the income tax return and payment due date is the 31st of October
RCT is a tax that applies to principal contractors’ payments to subcontractors in construction, forestry and meat processing. RCT compliance, filing, and payment are handled via ROS. RCT tax is calculated at a 0%, 20% and 35% rate.
A principal contractor in this case is an individual who uses a subcontractor’s services to carry out activities for their business. A subcontractor, respectively, is an individual who carries out services for a principal contractor in accordance with a relevant contract that is not a contract of employment. Subcontractors should register for ROS to access details regarding their transactions.
RCT Return Filing Due Date Ireland
Principle contractors should make payments to subcontractors via the tax deduction system eRCT system. Before the payment is made, a principle contractor should notify the Revenue about the gross amount of an intended payment.
In paid online, RCT payment deadline for principal contractors is no later than 23rd of the month following the end of a reported period (monthly or quarterly). Those who pay by any other means should file and pay their RCT no later than the 14th of the following month. In their turn, subcontractors are liable for filing income tax returns and payment of associated tax.
Audit Exception for Private Companies – How to Avoid Audit
Irish corporate law required all local limited companies to have an auditor who performs an account audit every year. Audit is a process of independent examination of a company’s financial account. The role of an auditor is to verify that the accounts have been prepared with accordance with company law and generally prepared accounting standards. An audit report is handled with a company’s annual return. A company may lose its right to audit exemption if it fails to fail annual return on time in the year in which an exemption is claimed or in the preceding year. In such a case, a company loses its right to audit exemption for the following year either.
Types of Audit Exemption
No public company in Ireland can qualify for audit exemption. However, private companies have the right to avoid audits provided they meet certain conditions exposed in the Companies Act 2014. Depending on the type and size of a company, it can claim one or a few audit exceptions: small company exemption, dormant company exemption, small group exemptions.
Phased Payment Arrangements: How to Pay Taxes by Portions
Irish companies must pay all their taxes on time in order to remain compliant. However, the Revenue understands that it’s not always possible. Thus, you can avail of the option to pay your debts with PPA (phased payment arrangements). PPA is a system that allows companies to repay their tax debts in instalments over a period of time (no longer than 36 months).
To apply for PPA, you must fill out a special declaration on ROS. General conditions that allow companies to avail PPA are the following:
- the general volume of a debt to be paid is larger than 500 Eur;
- all tax due are submitted to Revenue;
- not have a running PPA;
- You agree to pay your current tax obligations as they fall due.
Revenue usually reviews and responds to PPA applications within 10 days. If Revenue will request additional information, you will receive a notification via ROS. Failure to respond within stated deadlines will mean your PPA application is automatically cancelled.
To sum up, Irish company formation requires proper awareness of your responsibilities as a legal entity to official authority. Knowing where, when, and how to handle your return and associated taxes is vital for every company director even though they hire a responsible accountant to look after business compliance. Just in case you’re looking for an Irish company service provider to trust your return submission, Chern & Co has you covered. We work with already established companies as well as beginner entrepreneurs and help them launch and run their transparent businesses on the territory of Ireland.
Contact us for a free quick introductory call to discuss your particular case.