Dividends from Foreign Investments
Dividend income from foreign investments is taxable in Ireland, but credit for underlying tax and foreign withholding is generally available.
Dividend income from foreign investments is normally taxed at the rate of 25% except for the following cases which are taxed at 12.5%:
- dividends received from a company resident in a member state of the European Union.
- dividends received from a company resident in a country with which Ireland has a tax treaty.
- dividends received from a company resident in a country that has ratified the Convention on Mutual Assistance in Tax Matters (e.g. Azerbaijan and Ukraine). Argentina, Brazil and Indonesia has signed but have not yet ratified the Convention.
- dividends received from a company resident in a country with which Ireland does not tax a tax treaty, provided that the principal class of shares in it or in its parent company are substantially and regularly traded on a recognized stock exchange in a member state of the European Union or in a country with which Ireland has a tax treaty.
Dividends from Local Investments
Dividend income from local investments is not taxable in Ireland. However, for close companies (i.e. companies under control of 5 or fewer shareholders), a surcharge of 20% may apply on dividend income not redistributed within 18 months of the accounting period in which the income was earned.
Withholding Tax on Dividends
Ireland does not impose any withholding tax on dividend payments made to local companies, whereas a withholding tax of 20% applies to dividend payments to resident individuals.
Dividend payments to non-resident companies and individuals (whether resident or non-resident) are subject to withholding tax at 20%. However, the rate of withholding tax can be reduced by applicable double tax treaties or the EU Parent-Subsidiary Directive.