As a partnership is not a separate legal entity, its partners share the profits and losses of the partnership business directly. As a result, they are directly assessed for income tax on their respective shares of the profits and losses of the partnership. However, there are numerous expenses that can be deducted against these profits and this is one of the advantages of using a partnership as a business vehicle.

As each partner will be a self-employed person, he will need to complete his own his own personal tax returns at the end of each tax year and, in doing so, include details of the partnership income, capital gains and losses in those returns. This requirement is of course in addition to the requirement on the partnership itself to make annual tax returns.

As the partnership is not a company, it will not be obliged to pay any corporation tax – thereby avoiding the current 12.5% tax payable by companies on their profits.

If the partnership has any employees, it will need to register for PAYE and collect and pay income tax and social insurance in the usual way.

A partnership must register for VAT where annual sales turnover exceeds €37,500 in the case of the supply of services and €75,000 in the case of a partnership supplying goods.