Fintech and Tax

The Irish financial services environment is conducive to companies operating in the Fintech space. The BigTech community is established and thriving, the availability of skills and expertise is in abundance and the location of the island of Ireland geographically offers a gateway to Europe and further. 

Ireland offers many benefits to Fintech businesses.  In addition to the country’s geographical location, the availability of the right skills and expertise, and Ireland’s track record, the Irish tax system offers valuable reliefs to Fintech businesses.

The Irish tax system

In addition to the competitive corporation tax rate of 12.5%, valuable tax incentives are available under the Irish tax system:

• The Research and Development (R&D) Tax Credit aims to incentivise technology companies to move to Ireland, and Irish companies already established to carry out or fund the carrying out of R&D activities by universities, in the EEA. This includes expenditure on scientific research or plant and machinery that is used wholly and exclusively for R&D activities.
• The Intangible Assets Regime allows for favourable capital allowances to be claimed on ‘specified intangible assets’ such as patents, trademarks, brand names and certain goodwill. Such capital allowances reduce the profits of the company subject to tax. 
• The Knowledge Development Box (KDB) grants a deduction of 50% of qualifying profits when calculating the tax, resulting in an effective tax rate of 6.25%. Qualifying profits means profits earned by the company through its intellectual Property (IP) assets (such as patents, copyrighted software) developed as a result of R&D activities.
• Ireland also has a comprehensive double tax treaty network, currently there are agreements with 74 countries of which 73 are in effect. A double tax treaty essentially provides relief from the international double taxation of income and gains. Where Ireland does not have a double tax treaty with a particular country or jurisdiction or a treaty does not cover a particular tax, Irish tax law provides unilateral relief against double taxation in respect of certain types of income and gains. 

Challenges

This thriving community also brings with it some challenges. The emergence of BigTech companies into the financial services sector and the growth and advancements in technology means evolving legal and regulatory requirements. 

With the support and advice from the specialist team at Grant Thornton such challenges can be managed and the benefits of locating your Fintech business in Ireland can be realised. 

Why Grant Thornton?

Grant Thornton supports Financial Services companies and businesses who are looking to innovate in products and services and to new companies looking to update their business with the use of Fintech.

We bring cross functional, dynamic teams with the expertise and know how to identify the right opportunities and to build the best framework.  We provide advice and information on products embedded with machine learning, artificial intelligence, distributed ledger technology, blockchain, digitalisation, cryptocurrency, cybersecurity and risk management.

In particular, our specialist financial services tax and advisory teams can advise on company and tax registrations in Ireland, how to qualify for, and claim, the valuable Irish tax incentives. 

See our Financial Services Tax hub