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Situated in the North Atlantic, Ireland is an island separated from Great Britain to its east by the North Channel, the Irish Sea, and St George’s Channel. Ireland is known for its wide expanses of lush, green fields. According to its history, Ireland’s economy has been based on farming and agriculture. But the government’s efforts to attract business have turned the country into Europe’s second wealthiest nation. Ireland is world’s one of the most dynamic economies. On a global scale, Ireland scores highly in many of the key areas of importance for companies looking to invest, this is why Ireland has become the headquarters for many Multinational Companies (MNC’s).
It is well known that, over the past few years Ireland has established itself as an investment destination of choice for many multinational companies. Following are some reason which accelerate the foreign investment in Ireland:
Availability of skilled labour
Ireland has a young, flexible, adaptable and mobile workforce. Ireland has always been regarded as a center of excellence for education. Ireland ranks 15th in the world for its ability to attract, retain and educate global talent. It even offers preferential terms to highly skilled immigrants coming to Ireland from outside of the EU.
Attractive holding company regime
Ireland’s attractive tax, regulatory and legal regimes, combined with an open and accommodating business environment has established it as a world class location for the headquarters of many international companies.
Ireland has a charming background when it comes to achievements in science and technology. It continues to dominate the global stage as far as research and tech advancements are concerned. World’s top most companies are some of the tech giants with data centers in Ireland. It should be an inspiration that big tech companies have a reason to do business in Ireland.
Good track record
- Over 1,000 multinational corporations are continuing to expand their facilities in Ireland due to the profitability and success of their Irish operations.
- Ireland also offers companies a barrier free access to over 500 million consumers within Europe.
Free trade agreements
Ireland participates in the free trade arrangements of the European Union (EU) and European Free Trade Association (EFTA), and is a member of the World Trade Organization (WTO). The EU negotiates trade agreements on behalf of the member states – including Ireland. These agreements deal with preferential duty rates on the shipment of goods between the EU and countries around the world.
Simple Tax Regime
In Ireland, the income tax is imposed on the worldwide income of an individual who is resident and domicile of the country.
- A non resident individual is generally liable to Irish income tax on Irish source income only.
- There is no local income tax applicable in Ireland.
Individual income tax rates
- Single and widowed person with no dependent children having income up to 35,300 EUR are liable to tax at a rate of 20% , while for income more than 35,300 EUR is liable to tax at a rate of 40%.
- Married couple with one member earning income up to 44,300 EUR are liable to tax at a rate of 20%, while for income more than 44,300 EUR are liable to tax at a rate of 40%.
- Married couple with both member earning incomes (of at least 26,300 EUR each) having income up to 70,600 EUR are liable to tax at a rate of 20%, while income more than 70,600 EUR are liable to tax at a rate of 40%.
In Ireland, corporation tax is levied on corporate income and capital gains:
- Resident companies are taxable in Ireland on their worldwide profits (including gains).
- Ireland’s taxation rate for corporations is 12.5%. In addition, Ireland charges a corporate tax rate of 6.25% for revenue tied to a company’s patent or intellectual property.
- Non resident companies are subject to Irish corporation tax only on the trading profits of an Irish branch or agency and to Irish income tax on certain Irish source income.
- Ireland does not levy any local or regional taxes on income.
The presence of world’s top most companies makes Ireland a key European low tax country especially attractive for IT related and internationally traded services. Following are the various types of companies available in Ireland:
Private Company Limited by Shares (LTD)
In this type of company the shares are owned by its shareholders wherein their liability is limited to the number of shares that they own. The company is a separate legal entity and, therefore, is separate and distinct from those who run it.
Designated Activity Company (DAC)
DAC is a form of company in Ireland created by the Companies Act, 2014. Like a limited company, designated activity companies have limited liability. Additionally, they may only carry out activities listed in their constitution documents, and so the concept of ultra vires continues to apply to them.
Company Limited by Guarantee (CLG)
A Company Limited by Guarantee without a share capital (CLG) is usually used in circumstances that require a separate legal entity and corporate protection in organizations such as charities, trade associations, societies, sports clubs and social clubs. In Ireland, all CLGs are required to have a minimum of two directors and one member.
Branch Office is a direct extension of the parent company and can engage in core activities like sales and contracts. It is designed to help generate revenue for the company and serves a particular geographic region. Ireland offers attractive tax exemptions to external companies establishing branch offices in the state.
Public Limited Company (PLC)
A Public Limited Company is usually set up when the company intends to get itself publicly listed on the Stock Exchange. The company can offers its shares out to the general public. A PLC can have an unlimited number of shareholders but must have a minimum of 7 shareholders.
Unlimited companies are the least popular type of companies incorporated in Ireland. They are the companies with no limited liability. They must have at least two directors and one member in the panel.
As the name suggests, Sole Trader is set up by one person who owns and manages the business. To register as a Sole Trader in Ireland a person must be a resident of the Republic of Ireland.
But the government’s efforts to attract business have turned the country into Europe’s second wealthiest nation. Ireland is world’s one of the most dynamic economies. On a global scale, Ireland scores highly in many of the key areas of importance for companies looking to invest, this is why Ireland has become the headquarters for many Multinational Companies (MNC’s).
Author: Chandrawat & Partners
Date: April 2022
Topic: Doing Business in Ireland
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