U.S. TAX GUIDE IN IRELAND
What should US citizens know about owning an Irish company? 
If you’re a US citizen owning a business in Ireland, it’s important to be aware and understand that different tax rules apply compared to the United States.
Whether you operate as a sole proprietor, in a partnership, or run a limited company, each business structure in Ireland comes with its own set of obligations.
Table of Contents
How do US tax rules impact your Irish business?
Even though your company is based in Ireland, the IRS still expects you to report your business activities.
This often means filing Form 5471, which provides the IRS with details about your ownership in the foreign company. Not filing this form can result in a significant penalty—starting at US$10,000.
What’s attractive about Ireland’s corporate tax rate?
Ireland offers a corporate tax rate of 12.5% on trading income, making it one of the lowest in Europe. This rate has attracted many US business owners to Ireland.
However, be aware that this rate is set to increase to 15% starting December 31, 2024.
In addition to the low tax rate, Ireland offers tax credits for research and development (R&D), which can further reduce your tax liability.
How do Irish and US tax systems differ?
The key difference is that the US taxes your global income, while Ireland taxes only the income you earn within its borders.
Fortunately, the US offers foreign tax credits to prevent double taxation, helping you manage tax obligations in both countries.
Why might you consider setting up an Irish holding company?
An Irish holding company can be beneficial if you own shares in other businesses.
It allows you to take advantage of Ireland’s favorable tax rates and treaties, particularly when receiving dividends from foreign subsidiaries, including those in the US.
How does the US-Ireland tax treaty benefit you?
The US-Ireland tax treaty is designed to prevent double taxation. It outlines which country has the right to tax different types of income, helping to reduce your tax burden.
What challenges do US citizens face when managing an Irish company?
Owning a business in Ireland while being a US citizen comes with challenges such as understanding complex tax laws in both countries, complying with Controlled Foreign Corporation (CFC) rules, managing currency fluctuations, and ensuring proper VAT compliance.
How can you successfully manage an Irish business from the US?
- Use the tax treaty: The US-Ireland tax treaty can help reduce your taxes.
- Explore tax benefits: Take advantage of Irish incentives like the R&D tax credit.
- Keep your tax strategy updated: Regularly review your tax plans to stay compliant.
- Work with a tax advisor: A professional familiar with both US and Irish tax laws can guide you.
- Leverage Ireland’s location: Ireland can serve as a gateway to the European market.
- Consider a holding company: This structure might offer tax benefits and simplify operations.
