top of page

Get More From Your Company’s Capital

Updated: May 10

How much return are you getting on your bank deposits? Interest rates on bank deposits are at historic lows, even hitting 0.01% interest. It'll still be subject to the Deposit Interest Retention Tax (DIRT) 33%, leaving you with far much less at the end of the year. Factor in inflation and it'll basically be a negative yield on your bank deposits.


Looking For More Growth For Your Business?


Sure, parking cash in your bank account is needed to meet the short-term cashflow needs of your business operations – but you'll also notice how the interest itself is not high. In fact, Irish banks are currently being charged for excess deposits with the European Central Bank (ECB), and only three of them have not passed over the negative interest rates to their customers. The rate is currently at -0.5%.

Are you simply paying the bank to hold your money? Transferring the non-working capital into a life company investment plan will give you more potential for growth, with different funds available depending on your risk tolerance and time horizon.


Benefits Of Corporate Investments Through Life Assurance Policies


1. Save on taxes


If your company were to invest directly in stocks and equities, property or deposits, income from the investment is liable for a 25% cut as corporation tax. This includes the non-trading income, such as dividends and rent obtained from the investment. There is also a 12.5% standard corporation tax that the trading profits are subjected to.


On the other hand, placing the capital in a life assurance investment policy is only liable to a 25% exit tax that is applied as a gross roll-up. This means that the capital gains and all income with the policy is accumulated over time, without chunks being hived off annually – so your investment grows faster. The 25% tax is applied only once on exit, such as withdrawal, maturity, death or assignment. This gain is calculated for the accumulated amount on each 8th anniversary.


2. Easily diversify


With direct corporate investments, rebalancing your portfolio can end up triggering different sorts of Capital Gains Tax requirements depending on what you had invested in. However, the life assurance policies give you a wide array of investment options within the same product, so you can diversify your portfolio as needed without much hustle.


3. Avoid the close company surcharge


Many of the Irish resident businesses are 'close' companies. They are controlled by 5 or less participators/directors. Participators are people with an interest in the capital or income of the business. The close companies are businesses where once the full income is distributed, over 50% of it goes to the 5 or less participators.


So, what's about the surcharge? If the income is not distributed within 18 months after the accounting period where it was declared, then it will be subject to a 20% surcharge – that’s quite a significant hit to your books. Transferring those cash reserves from your deposit account and placing them into an investment product will drastically cut down, or even eliminate, the liability. With a life assurance investment policy, your investment in the bond is exempt from the surcharge. That means you can leave it to continue growing over the long term and not worry about this chunk getting bitten off.


4. Less Paperwork


Then there is the amount of accounting and red tape to follow through. For the direct company investments, you are responsible for correctly calculating, paying and reporting your tax obligations. With a life assurance package, the provider of the policy will deduct and pay the exit tax, and give you the balance – meaning you skip lots of the hoops involved.


Interested in an investment plan that is in line with your corporate strategy? At Quigley Financial Brokers, we will set you up with the appropriate team, working with you to determine the right investment options for your business.


Reach out today

Contact us today and book your consultation and see how Quigley Financial Brokers can help you choose the best options available or contact richard@quigley.ie for further information.

 
 
 

Recent Posts

See All
Benefits Of Family Life Insurance

Reach out today Family life insurance offers several key benefits that help protect the financial well-being of your loved ones. Contact...

 
 
 
Benefits Of Starting A Pension

Reach out today Would you like help deciding between private, workplace, or state pension options or running a basic pension growth...

 
 
 

3 Comments


This investment idea sounds smart because it helps your money grow over time without taking taxes out every year. It’s like using a cv services toronto—you invest once to improve something important, and it gives you better results in the long run. This kind of smart planning can really help in daily life and for your future.

Like

This is smart advice! Just like a graduate cv services helps you grow in your career, moving your money into a good investment plan can help it grow too. It’s better than letting it just sit in the bank doing nothing.

Like

Fascinating breakdown of how life assurance policies can be used for corporate investments. It's definitely something many businesses overlook. For those balancing professional growth with other responsibilities, like students needing homework help in Ireland, understanding these long-term financial strategies is invaluable.

Like
Quigley Financial Brokers, Wexford and Dublin - Financial Advisor, Mortgage Broker, Insurance Broker, Pensions Advisor, Investment Advisor Logo

Clear. Concise. Professional Advice. to private and corporate clients since 1997

Financial Broker IE Logo
Brokers Ireland Logo
LIA IE Logo

Locations

Dublin

The Merrion Centre,
Ballsbridge,
Dublin 4,
D04 W8W2

Wexford

8 Slaney Street,

Wexford,

Y35  HW21

t: (053) 914 4544

Conleith M. Quigley Financial Services Limited trading as Quigley Financial Brokers is regulated by the Central Bank of Ireland. 
​Registered Office: 8 Slaney Street, Wexford, Y35 HW21. Registered in the Republic of Ireland No. 653783.​  

While every care has been taken in the production of this ​website, no legal responsibility or liability is accepted, warranted or implied by the authors or ​Quigley Financial Brokers in respect of any errors, omissions or misstatements. This publication is intended as a guide only and does not purport to be legal advice. Readers are advised to seek independent professional advice before acting on anything contained in this publication.  

bottom of page