Thank you for your comment.
So this means that if you start your own buisiness and get income only from dividends you in efferct pay two taxes on the same money.
I thought Script dividend ment somethying like offsetting one against the other???
Yes Corporation tax is low , but what is the point in talking about it in terms of been low at all when tax of 58% has to be paid before the money is in your pocket?
The buisiness makes profit and the Irish state takes 58% before you put it in your pocket and then with the €42 left you could buy say 5 packets of cigeretts which are worth about $10 before tax.
So the Government takes 90% , but Corporation tax is low.
Well you need to consider what the alternative to a company is, and it's a sole trader.
Looking at a very simple example purely from a tax perspective, if you've got a business making €250k of profit, and only want / need €50k in cash, you'll still have to pay income tax on the sole trade profit of €250k, most of which will be at the high rate, 41% + 4% PRSI + 7% USC. So at the end of the day you'll have paid 110k - 120k in tax, regardless of the fact that you may have only drawn 50k out of the business.
On the other hand if you trade through a limited co., you pay yourself a salary of about 75k gross out of the company, in order to get your 50k into your hand. This salary is an expense for the company, so it pays tax on 175k rather than 250k, and it pays it at the 12.5% corporation tax rate. So the company pays about 25k in order to get you your salary, and 22k in Corpoartion tax, a total of less than 50k.
The catch is that the money is still in the company, and you may have to pay income tax in order to extract it, but at least the company still has the use of the money, and it can be used to invest, or put into a director's pension, or used to expand the business. And at present there are a number of reliefs that allow for tax efficient exits, whereby you can realise some of the accumulated wealth, which was built up suffering a low rate of tax.