At NDTAX Limited we work with corporate clients at various stages of the business life cycle, from start-up entities and family businesses to larger corporate groups with international parents/subsidiaries.
Companies, and indeed corporate groups, are structured in a variety of ways for commercial, legal, practical and tax reasons. As experienced tax consultants we analyse, evaluate and advise on various reliefs available to businesses and the tax implications of day-to-day business transactions that may take place between corporate group members
We know that tax is a significant variable cost to business and something that needs to be considered in conjunction with all business decisions – large or small. Meeting the company’s tax compliance obligations is a must.
We also understand that each business has its own interests and needs. However, developing a robust tax strategy is key and will ensure your business is protected now and in the future. It is important to holistically analyse future business plans and opportunities from a commercial and tax perspective to ensure you are appropriately financed and structured to succeed.
We help a wide range of clients to develop, grow, maintain and sell their businesses – some key areas we advise on are:
- Company incorporations and tax registrations
- Administration of Corporation Tax
- Close companies and owner managed businesses
- Tax consideration for non-trade sources if income
- Relief for losses
- Intellectual property and Research and Development
- Distributions from business profits
- Restructuring a business
- Implementing a Hold Co structure
- Share for share exchange
- Management buy outs
- Tax Efficient extraction of profits
- Employee taxes and payroll obligations
- Taxation of annual payments and charges on income.
We deliver a consistent and timely tax compliance service to all our clients, helping you to plan for upcoming deadlines and cash flow requirements, advise on tax payments due, act as liaison with Revenue and deal with unforeseen changes that may impact your business.
Depending on your personal circumstances you may need a regular income from your company or perhaps or a lump sum in the future. Tax efficient extraction of cash from a company requires careful planning to ensure minimal tax leakage. We have outlined in brief below the most common methods of extracting cash from a company and the implications. If you want a further detailed analysis of any of the options below get in touch with our team today! Salary Any salary payable to you as a director or benefits in kind taken must have the appropriate PAYE/PRSI deducted at the marginal rate of tax. However, a salary payable to a company owner is normally a tax deductible expense for a company. If there is sufficient surplus cash, would generally recommend that a salary is taken annually to maximize the 20% income tax rate band (currently €35,300) . Dividends Dividend payments are not tax-deductible payments for the company. The company will be required to withhold dividend withholding tax at 25% from any dividends paid to you as a shareholder. The dividend would be taxed at your marginal rate of income tax in addition to USC and PRSI where applicable when filing the your income tax return. A tax credit would be available to you for the DWT deducted. The lower level of withholding tax gives you a cash flow advantage (with the income tax return for 2021 not due to be filed and paid until October/ November of 2022) but not an overall reduction in tax payable. The main advantages of paying a dividend is that it may reduce the close company surcharge, if any, payable by the company in respect of passive income earned, in addition to the cash flow advantage of the 25% withholding tax rate. Pension Contributions A director’s pension can be set up for your benefit, allowing the company to transfer profits away from the business tax efficiently and ring fence them for your future. Contributions paid by the company will be fully tax deductible for corporation tax purposes provided they do not exceed Revenue limits, which are generous, and the contributions are paid during the accounting period in which the deduction is made. Gains arising in Revenue-approved schemes made by the pension fund are exempt from income tax and capital gains tax. In addition, there will be no BIK payable by you on the pension contributions. Termination Payments A certain level of tax free ex gratia payment is often available to a director/employee leaving an office or employment with a company subject to certain conditions and limitations. This could be very tax efficient method of extracting cash from your company in advance of a sale or wind up of the company, or indeed if you are stepping down from your position as director. The relief is based on the years of service as a director/employee and the level of remuneration paid during that time. The Liquidation of the Company If a company has cash reserves and is considering winding up it will normally be more tax efficient to liquidate the company and extract the cash at the capital gains tax rate of 33%/10% than to take the money as income (e.g. dividend or salary taxed at the marginal rates). It is important to consider the use of termination payments and/or pension contributions to fully maximise the tax savings available in advance of liquidation, as outlined above. The liquidation could be combined with capital gains tax retirement relief/ entrepreneur relief to reduce or possibly eliminate the tax liability on liquidation. There are anti-avoidance provisions relating the liquidation of companies that need to be considered (specifically where an individual is seeking to avoid income tax by liquidating the company) which we can advise on further if necessary.
We help our clients to ensure that they are ready for potential investors. We understand the fundraising process and can help ensure that your business is attractive to right people. We have extensive experience advising on Employment Investment Incentive and Start Up Capital Incentive.
We advise across the key incentives and reliefs available – talk to us today about the following: 1. Revised Entrepreneur Relief: This relief gives a capital gains tax (CGT) rate of 10% on qualifying business assets, such as shares held by an individual in a trading company or business assets owned by a sole trader and used in their trade. The relief is subject to a lifetime limit of €10M (subject to conditions). With the standard rate of CGT in Ireland currently at 33%, this is a valuable relief for those who qualify. 2. SURE (Start Up Relief for Entrepreneurs) SURE is targeted at PAYE workers who leave employment to start a new trade via a newly established company. The relief provides a refund of income tax paid in previous years for qualifying claimants. There are a number of specific conditions that both the individual and the company must meet in order to qualify for this relief. Generally, these are: • Your last 4 years income was mainly PAYE (employment income) • You must hold at least 15% if the issued share capital in the newly incorporated trading company • You must purchase shares in the new company by investing cash • You must become a full-time employee or director of the company within 6 months of making the investment. So, if you are an employee, an unemployed person or someone who has recently been made redundant talk to us to see how this incentive may work for you. 3. Exemption from corporation tax for new companies: If you start-up company is incorporated and commences to trade before 31 December 2021 and has an annual corporation tax liability of less than €40,000 then you may be able to apply for a relief from corporation tax. (You may be entitled to partial relief where the overall CT liability is between €40,000 and €60,000) The relief is linked to the amount of employers PRSI that is paid subject to a maximum of €5,000 per employee and overall limit of €40,000.