In order to qualify for the 12.5% rate of corporate tax, it is necessary that the company be resident in Ireland and be carrying on an active trade here. Clearly therefore the company must be incorporated in Ireland, but in addition it is essential that it be ‘managed and controlled’ in Ireland.

The usual test for ‘controlled in Ireland' is:

	That the board of directors of the Irish company actually make the policy decisions in relation to their Irish Company
	That these decisions are made in Ireland
	That the company is carrying on a business in Ireland

It is therefore necessary to have a certain minimum number of board meetings in Ireland, usually not less than two per annum.

An issue which requires careful consideration for companies involved in international projects is the question of active versus passive income. A 25% rate or tax applies to the following:

	Certain non-trading (passive) income, such as Irish rental and investment income
	Foreign income unless the income is part of Irish trade
	Dealing in or developing land other than construction operations