½Û×ÓÊÓƵ

In relation to Irish resident companies, rental income is regarded as passive income and is subject to the 25% rate of corporation tax. In addition, in the context of closely controlled companies, a close company surcharge of 20% can also apply to rental profits that are not distributed by the company within 18 months of the end of the tax year in which the profits were earned. The interaction of the 25% corporate tax rate and the 20% surcharge means that the effective rate of corporation tax on rental profits can be 40%.

TCA 1997, s 83 defines an investment company as a company whose income derives mainly from the making of investments, such as rental income. An investment company may deduct management expenses when calculating its taxable profits.

The Irish Revenue Commissioners accept that a deduction for directors' fees of up to 10% of gross rentals or 15% where the directors devote a substantial amount of their time in the management of the company's properties is allowable where conditions are met.

Rental income from