Avoid Close Company Surcharge Tax

Companies that earn deposit interest are liable to 25% corporation tax on that income.   If the Company is controlled by the Directors or five or fewer shareholders, the company is deemed to be a “Close Company” and is liable to a further 20% close company surcharge on the deposit interest.

This surcharge can be avoided by paying dividends to the shareholders, but this leads to income tax for the recipients and is not always tax efficient.

If the Company chooses to invest the funds in a “life assurance” saving product, the income is rolled up until the exit date of the policy and is taxed at 25% on exit.

The benefit is that the income is NOT liable to the 20% close company surcharge.

If you are interested in discussing this further, please contact Gerry Higgins (FCCA, AITI, B. Comm) on +353 (0)1 677 9000 or by email.

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