Tax on Dividend Income received by limited company

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Blue Thunder

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I am a director of an Irish limited company that invested some funds into BOI shares a few years ago. The company received dividend income during the last financial year 2024 which was reinvested to buy more BOI shares. I received a consolidated tax voucher with details of the dividend income received during 2024 from the broker but there was no dividend withholding tax applied. Does this income become liable to corporation tax when filing the company CT return for 2024 and if so is this at 25% rate? I've been informed that dividends from one Irish company to another is exempt from corporation tax but I'm not entirely sure if this is the case.
 
Blue Thunder said:
Does this income become liable to corporation tax
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No.

Dividends or other distributions received by an Irish resident company from an Irish resident company are not subject to corporation tax - Section 129 TCA.

It is also not necessary that there be a minimum shareholding relationship between the parties.

Your LTD has received what's called "franked investment income" as BOI has already paid tax on the profits which were distributed. Franked investment income is not taxable by a corporate shareholder.
 
Why?

It is very hard to envisage a scenario where it makes sense for an Irish trading company to own shares in Bank of Ireland.

If it's a director owned company, they should be getting the surplus out into the hands of the shareholders.
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Just personal circumstances at the time whereby funds existed within the company but were not available personally.
 
Just to add…
Franked investment income is subject to close company surcharge
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Now I'm a bit confused. So in that case it may well be exposed to corporation tax? In what instances does the close company surcharge apply?
 
Franked Inv income is not subject to corporation tax at 12-5%

The Close company surchage is a surchage on estate and investment income not distributed as dividends to its shareholders within 18 months of the company year end.

Estate and Inv income mainly comprises of Interest and dividends and rental income recd by the Co .
 
Millie* said:
Franked Inv income is not subject to corporation tax at 12-5%

The Close company surchage is a surchage on estate and investment income not distributed as dividends to its shareholders within 18 months of the company year end.

Estate and Inv income mainly comprises of Interest and dividends and rental income recd by the Co .
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Thanks, I'm with you now, so therefore a 20% close company surcharge would apply unless an amount equivalent to the BOI dividend was paid out from the company within 18 months. However if the company did pay out a dividend equivalent to the BOI dividend received in 2024 to its shareholders before 30/06/26 (year end is Dec 24) then the surcharge would not apply. However instead the shareholders would be personally liable to 25% tax on the dividend thay have received from the limited company?

I think it may be wise to get the shares out of the limited company in the near future but I just want to ensure that I have the tax treatment correct for 2024.
 
Blue Thunder said:
if the company did pay out a dividend equivalent to the BOI dividend received in 2024 to its shareholders before 30/06/26 (year end is Dec 24) then the surcharge would not apply.
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That's right.

Blue Thunder said:
However instead the shareholders would be personally liable to 25% tax on the dividend thay have received from the limited company?
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If Blue Thunder LTD pays a dividend, the LTD is required to apply Dividend Withholding Tax (DWT) at a rate of 25% and remit the funds to Revenue.

The shareholder will receive the net dividend (i.e. 75% of the gross dividend).

The shareholder will be liable to Income Tax (at their marginal rate), USC and PRSI on the gross dividend, with a credit for the DWT.
 
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