Choose Ireland for Business 2021 - Fitzgerald & Partners - Doing Business in Kinsale
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Choose Ireland
for Business
2021
Fitzgerald &
Partners
ADDING VALUE TO YOUR BUSINESS 1
Ireland – An Ideal Location
12.5% 3rd highest
corporation tax quality
of life in the world 5
workforce The top 10
global pharmaceutical
Ireland has youngest population
companies 3
in Europe 1
25% R&D tax credit The top 5
global
4th highest software companies 3
international workforce
in the EU 2
12th most
Effectivezero competitive
tax rate economy in the world and
5th for business efficiency 6
for foreign dividends
14 of the world’s 15 top
1st in
medical tech the World
for high-value foreign
companies 3
direct investments7
Most educated
Dublin population in Europe
ranked 5th
for digital innovation
Over half 30-34 year olds have a third level
& transformation 4
qualification. EU average of 40.7%3
1
Eurosat 5 UN 2019 Human Development Index
2
Proportionate to population 6 IMD World Competitiveness Yearbook 2020
3
IDA Ireland 7 OECD
2 Tholons 2020 Services Globalization Index
4
Welcome
I am pleased to introduce “Choose Ireland 2021” which has
been prepared to act as a guide for those interested in living
and working in Ireland.
Kinsale offers a combination of a highly Ireland’s prosperity is a product of it’s
educated, skilled and flexible workforce, an success as a trading nation. The IMD World
advanced infrastructure and a pro-business Competitiveness Centre consistently rank
environment. Furthermore, it has a transparent, Ireland as one of the most competitive
common-law-based legal system and it’s economies in the world, recently ranking it fifth
membership of the EU ensures unrestricted for business efficiency.
access to EU markets for companies based
in Ireland. Kinsale remains one of the most Ireland has the youngest and most educated
welcoming places in the world for international workforce in Europe and the UN 2019 Human
business and foreign direct investment, and it is Development Index placed Ireland third for its
a great place to invest, do business, work and quality of life.
live.
These are some of the reasons why Cork has
Cork continues to attract a significant level of been able to attract many of the leading global
foreign investment and has experienced strong organisations. The OECD recognises Ireland as
and consistent growth in a number of key the top destination for foreign direct investment.
sectors such as:
As one of the leading professional services firms
· Life sciences in the area, Fitzgerald & Partners can provide
· Information and communications technologies you with the reassurance and expert advice you
· Consumer and industrial products require to maximise the return on your move to
· Financial services the area.
Cormac Fitzgerald FCPA
Managing Partner
Cork offers a combination
of a highly educated, skilled
and flexible workforce and it
is a great place to invest, do
business, work, and live.
3
Why Ireland?
As the only native English-speaking member left in the European
Union post-Brexit, Ireland is ideally positioned to access the
the internal EU market of 500 million people.
Irish workforce Access to key markets
The success of a business is ultimately Ireland is now the only native English-speaking
determined by the strength of its human EU and Eurozone member. Ireland’s EU
capital. The Irish workforce is productive, membership ensures the free movement
capable and highly adaptable. We have of goods, people and capital within the
the youngest population in Europe with one EU area to companies established in
third of the population under 25 years old Ireland. Located between the USA,
and one of the most educated workforces
in the world. The Paris-based Organisation heart of the Eurozone as well as a natural
for Economic Co-operation and Development gateway to the EU and the rest of the world.
(OECD) reports that 70% of Irish 25-35 year
Taxation system
to 45% on average across OECD countries.
The latest OECD PISA (Programme for
International Student Assessment) results ranks tax system are as follows:
Ireland 4th out of 36 OECD countries and • A low statutory corporation tax rate for trading
3rd out of 27 EU countries for reading literacy. companies of 12.5%
Ireland’s education system is amongst the best •
in the world. According to IDA Ireland, it ranks years of trading subject to certain limits
in the top 10 globally as an education system • An attractive intellectual property regime
that meets the needs of a competitive economy. • Generous research & development tax credits
Almost a third of third level students are enrolled
• A growing double taxation treaty network with
in science, technology, engineering and maths
74 treaties signed
(STEM) courses.
• A favourable holding company regime
Proportionally Ireland has the third highest
international workforce in Europe with 15%
of the workforce being international.
4
Competitiveness Advanced infrastructure
and flexibility Ireland continues to invest in its infrastructure.
Ireland is a dynamic business location, In particular, there has been an ongoing
offering competitive operating costs and high level of investment and consolidation in
quality services. The 2017 IMD World order to create a reliable ICT infrastructure
Competitiveness ranking puts Ireland as 2nd that delivers exceptional quality services
for most competitive country in the Eurozone to businesses. This has resulted in one
and 6th overall globally. In 2017, for the sixth of the most advanced and competitive
year in a row, Ireland tops the IBM Global telecommunications infrastructures in Europe.
Location Trends list, highlighting its continued Ireland also has a fully developed road
ability to attract high-value investment projects network and extensive port facilities, along
in key sectors, such as ICT, life sciences, with four international and five regional
and financial and business services. airports meaning that travelling to and within
Ireland is fast, practical and economical.
Flexibility is a key factor in Ireland’s ability to
react quickly to international trends and the
global marketplace. Ireland was one of the A pro-business environment
first countries to rebound from the recent
Ireland is a progressive and open economy
economic downturn and, in 2017, the Irish
with strong ongoing cooperation between
economy entered its sixth consecutive year
government, industry and universities. IDA
of economic expansion.
Ireland is the government agency responsible
Quality of life for the development of foreign industry and
enterprise in Ireland and specialises in assisting
People living and working in Ireland can enjoy companies involved in research, development
our renowned scenery, a thriving cultural scene, and innovation, high end manufacturing and
a wide range of sports amenities, peace of global services (including financial services).
mind, security and, above all, hospitable people.
Ireland combines an internationally competitive
business environment with a pleasurable and
balanced way of life.
5
www.cowe.ie
Business Structures
Introduction Private limited companies
The majority of companies registered at
You can conduct your trade or business in
Ireland in one of several organisational forms,
including: private companies limited by shares.
• A private limited company A private limited company may be a single
member company. These companies are popular
• A public limited company
for a number of reasons including the fact that
• A company limited by guarantee a shareholder’s liability is limited to what they
• An unlimited company have subscribed for their shares in the company.
• A branch of a foreign company There are two types of private limited company:
• A partnership
• A limited liability partnership constitutional and governance structures, and
• A unit trust/UCITS (Undertaking for Collective a designated activity company (“DAC”) which is
Investment in Transferable Securities) similar to traditional private limited companies.
• A sole proprietorship
Key features:
Each business entity listed above is subject
LTD DAC
of overseas companies are subject to tax at No requirement to Required to have
the corporate tax rate. Individuals, including have objects clause objects clause
partners of partnerships and sole proprietors, One-document Two-document
are subject to tax at progressive marginal constitution constitution
income tax rates.
Min of one director and
a separate company Minimum of two directors
Companies secretary
Ireland is a dynamic business location, offering
A DAC only has the capacity to do those acts
competitive operating costs and high quality
or things set out in its objects clause and
services. The 2020 IMD World Competitiveness
will have certain regulations in its constitution
ranking puts Ireland as 12th most competitive
country in the world and 5th for business
limited company constitution.
efficiency. Ireland was the single biggest
recipient of foreign direct investment in the
world in the first half of 2020, according to the
Organisation for Economic Cooperation and
Development, highlighting its continued ability
to attract high-value investment projects in key
sectors, such as ICT, life sciences, and financial
and business services.
Flexibility is a key factor in Ireland’s ability to
react quickly to international trends and the
global marketplace. Ireland was one of the first
countries to rebound from the recent economic
downturn and continues to be one of the fastest
growing economies in Europe.
6
6
company. Unlike a limited company, the
Public limited companies
members of an unlimited company are liable
A public company may be limited by shares to contribute their personal assets in order to
if it has at least seven members. A public satisfy its obligations in the event of insolvency,
limited company has access to capital i.e. there is no limit on their liability exposure.
markets and may be able to offer its shares
for sale through a Recognised Investment
Exchange (RIE), the Irish Stock Exchange.
Partnership
A partnership is a relationship between
The Irish Stock Exchange also offers listings
persons carrying on a common business
to unit trusts and UCITS. These listings on the
with the intent to make a profit.
investment fund market are available to both
Irish and foreign funds. The Irish Stock Exchange A partnership can be formed by simple
is a global leader for investment fund listings. agreement. Substantial formation expenses are
not required. A partnership is not a separate
Companies limited by guarantee legal entity. Partners are jointly and severally
liable for any debts of the partnership and
Companies limited by guarantee are usually
used by charitable or non-profit-making usually take an active part in the business.
organisations. They typically have a low
commercial risk and may be formed with or Taxation obligations of a partnership
without share capital. This type of company A partnership is not a taxable entity in its own
must have at least seven members who, in right; instead, the partners are subject to tax
effect, are the guarantors. A guarantor agrees on their share of partnership profits. Partners
to contribute a nominal amount that typically is that are companies are subject to corporate
quite small upon the winding up of the company tax on their share of the profits. Partners
in the event of a shortfall of assets at that time. who are individuals are subject to individual
income tax on their share of the profits.
Unlimited companies
Even though a partnership is not a taxable
An unlimited company is subject to the same entity in its own right, it is required to register
rules concerning its capacity to enter into for taxes and to file an annual tax return.
transactions and incur liabilities as a limited
7
Taxation of Companies
A company that is resident in Ireland is taxable on its worldwide
profits. A company that is trading in Ireland through a branch or
agency is only liable in respect of the profits that are attributable to
that branch or agency.
A company is deemed to be resident if it is Calculating trading profits
managed and controlled in Ireland. Generally, a
company is managed and controlled in Ireland Profits are calculated for tax purposes by
if key decisions affecting the company are reference to the profits reported in the financial
made at directors’ meetings held in Ireland. accounts. Profit is calculated by reference to
the income of a company less its expenditure.
A company is also regarded as resident if The main adjustments to accounts profit
it is incorporated in Ireland. There is one to arrive at taxable profit are as follows:
exception to this rule where Irish-incorporated
companies are resident in two countries but • Expenditure not wholly and exclusively
are not resident in Ireland by reason of the incurred for trading purposes
tie-breaker under Ireland’s Double Taxation • Capital expenditure
Agreement network. A tie-breaker determines • Certain types of interest and patent royalties are
the country of residence where an entity is a tax adjusted on a paid rather than an accrual basis
resident of both Ireland and another country.
• General accounting provisions
• Entertainment expenditure (unless spent on staff)
Rates
The most important of these adjustments are
There are three main rates of corporation tax:
discussed in greater detail below.
• 12.5% for trading income
• 25% for non-trading income Non-trading expenditures
(e.g. investment income, rental income) Expenditures not wholly and exclusively
• 6.25% for profits earned from patented incurred for trading purposes, such as certain
inventions and copyrighted software charitable donations, are not deductible.
8
Accelerated capital allowances of 100% may
Expenses directly related to a source of
be claimed on capital expenditure incurred
non-trading income are not deductible against
trading income but should be deductible against
the non-trading income source. Non-trading
lighting, heating etc. The allowance has
income is passive income such as interest
recently been extended to end of 2023.
or rental income. For example, if a company
incurs an insurance cost in respect of a Industrial buildings
rental property, this is not deductible against An annual allowance of a minimum of 4%
trading income but is deductible against rental based on the cost of the building can be
income arising from the relevant property. claimed over a 25-year period. “Industrial
buildings” are generally manufacturing
Capital expenditure premises but hotels will qualify where they
Expenditure on capital items is not deductible for are in use for the purposes of a trade of
Irish tax purposes. Capital assets are normally hotel keeping and have been registered with
assets which are capable of lasting for longer Fáilte Ireland, the Irish tourism agency.
than twelve months and are accounted for by a
The capital allowances due on buildings are
based on the cost to the original owner rather
Instead, Ireland allows capital allowances for than the cost to the purchaser. Special rules
depreciation of equipment and other assets apply where the building is purchased
at the following rates: second-hand.
Plant, machinery and equipment
An annual allowance of 12.5% on a straight Interest deductibility
line basis in respect of expenditure incurred on
Interest incurred wholly and exclusively for the
plant, machinery and equipment (net of grants
purposes of a trade generally is deductible on
received) must be taken. The 12.5% annual
an accounts basis. However, certain types of
allowance also applies to commercial vehicles
interest are deductible only on a paid basis.
and private cars. However, the maximum
For example, interest on borrowings used to
allowable cost for private cars is €24,000.
acquire shares or lend money to certain related
companies may be deductible on a paid basis.
9
Taxation of Companies (continued)
Interest paid to a non-resident parent or fellow • A company that is under the ultimate control
group company by an Irish-resident company of persons resident in an EU/treaty country
will be deemed to be a distribution and is • A listed company or a 75% subsidiary
not tax-deductible. However this rule does of a listed company
not apply if the recipient is tax-resident in an
EU member state or a treaty country (and
where the paying company so elects).
Withholding tax on interest
Withholding tax is applied to interest payments
Trading losses at the standard rate of income tax of 20%.
Companies are obliged to deduct withholding
Losses generated from trading activities may tax on payments of interest to residents and non-
be offset euro for euro against other trading residents of Ireland. There are various exclusions
income (taxable at 12.5%) and on an equivalent from the requirement to deduct withholding tax
tax value basis against non-trading income on payments of interest, including interest paid to
(taxable at 25%). Losses may be carried forward banks or to a company in an EU member state or
tax treaty country, as authorised by Irish Revenue.
accounting periods.
In respect of the offset of losses against non- Withholding tax on royalties
trading income, the tax value of the losses must
Royalties in respect of registered patents also
equal the tax value of the income sheltered by
attract withholding tax of 20%, except where
those losses. For example, if a company has
the recipient is resident in a treaty country and
losses from a trading activity taxable at the 12.5%
the relevant treaty provides for a reduction
tax rate and has rental income taxable at the 25%
or elimination of withholding tax. Royalty
tax rate, it takes €2 of trading losses to offset €1
payments to related companies in the EU may
of rental income.
be exempt from withholding tax in accordance
with the EU Interest and Royalties Directive.
from Ireland Foreign source income
Foreign source income is normally liable to Irish
payments. Dividends paid by Irish-resident holding corporation tax, as there is no territorial concept
companies are subject to a 25% dividend of taxation. This also applies to the income of a
withholding tax (DWT). There are a wide number foreign branch of an Irish company. Foreign taxes
of exemptions that enable dividends to be paid paid on such income can be credited against the
free from DWT. For example, dividends paid to corporation tax liability where a tax treaty applies.
any of the following persons are exempt from
DWT:
• An individual recipient resident in an EU/treaty
country
• A company resident in an EU treaty country
which is not controlled (more than 50%) by Irish
residents
10
10Treatment of foreign Taxation of Irish branches
dividends received An Irish branch’s taxable trading profits and
capital gains are calculated on the same basis
Ireland does not have a full participation as for an Irish-resident company. The branch’s
exemption in respect of foreign dividends. tax liability is limited to corporation tax at 12.5%
However, the effective utilisation of the on its trading profits arising from its Irish branch.
available foreign tax credits can result in little
or no Irish tax arising on foreign dividends. Should the non-Irish company have other Irish
source income arising that is not connected
Foreign dividends are subject to tax at either with the branch, such as interest, royalties,
12.5% or 25%. An election for dividends rents, etc, these will be liable to Irish income
to be taxed at 12.5% can be made where tax at the standard rate of 20% (but subject to
the dividends are paid from EU or tax reduction under a double tax treaty with Ireland).
treaty countries out of trading profits.
Dividends paid by the non-Irish company,
Unilateral credit relief for foreign withholding even out of its Irish branch profits and capital
tax and underlying taxes on all dividends is gains, are not liable to withholding tax. This
available subject to a minimum 5% shareholding tax is limited to dividends and distributions
requirement. The foreign tax is available as a paid by Irish-resident companies. By way of
credit against Irish tax and where the foreign contrast, withholding tax must be withheld,
tax exceeds the Irish tax on the dividend, or authority must be received from the Irish
the excess can be pooled and offset against Revenue to make payments gross, in respect
Irish tax on other foreign dividends received of interest, patent royalties and certain
in the same accounting period. Any balance other trade payments to non-residents.
not used can be carried forward and used
in subsequent accounting periods.
11
11Taxation of Companies (continued)
Transfer pricing Section 110 special-
Irish transfer pricing legislation applies to purpose vehicles
trading transactions entered into between A Section 110 company is an Irish-resident
connected parties and seeks to ensure that
special-purpose vehicle (SPV) which holds and /
such transactions are carried out at “arm’s or manages qualifying assets and is often used
length”. The legislation allows for an adjustment as an onshore investment platform. Qualifying
For tax purposes such transactions are treated commodities and plant and machinery.
if the transactions had been carried out under Ireland is an attractive location for establishing
similar conditions by independent parties.
regulatory and tax environment. From a tax
In order to comply, companies may provide
supporting evidence of prices based on
documentation used for other jurisdictions’
access to a wide and expanding tax treaty network
requirements. Furthermore, there is an
and allowance for corporation tax neutral treatment.
exemption that will apply for most small
and medium sized enterprises. The tax treatment of certain transactions entered into
by a Section 110 SPV, where the financial assets
Corporate tax compliance derive all or some of their value from land in Ireland,
is deemed to be derived from a Specified Property
A company must make a payment of preliminary Business, which will be taxed as a separate trade.
month before the end of its accounting period.
If a company’s tax liability in the preceding interest that may be deducted will be restricted to
accounting period was less than €200,000 it the amount of interest that would have been payable
can make a preliminary tax payment equal to had the loan been entered into on an arm’s length
basis and where the coupon was not dependent on
within nine months of the end of its accounting
period and pay the balance of any tax due
consolidated tax return for group companies.
12
12Corporate incentives
Further attractive features of the Irish tax
Ireland as a holding regime are as follows:
company location • Irish capital gains tax exemption for
Ireland has long been a location of choice for disposals of qualifying subsidiaries by an
multinationals wishing to establish a holding Irish holding company. The Irish holding
company as either their EU headquarters, company must hold at least 5% of the
or for the purposes of holding shares in subsidiary, which must be resident in an
subsidiaries and managing other investments. EU or treaty jurisdiction (such as the US,
UK and China) and pass a trading test.
Where a company wishes to form an
• A 12.5% rate for dividends sourced from
intermediate holding company in order to
trading activities.
manage overseas investments, no Irish capital
gains tax should be chargeable on a disposal • A generous system of foreign tax credits
by the non-Irish-resident parent company of (including onshore pooling) can further
shares in the Irish-resident company provided reduce or eliminate any Irish tax.
that the Irish company does not derive its • Domestic exemptions from Irish withholding
value from Irish real estate. When combined taxes on payments of dividenads, interest
with the exemptions from withholding tax on and royalties to persons resident in tax treaty
dividends, interest and royalties (see below for partner countries (and additionally, in the
further details), the result should be that the case of dividend payments, to companies
non-Irish-resident parent should not incur tax controlled by persons resident in tax treaty
at the Irish level on its overseas investments. partner countries).
The Irish tax regime also allows foreign-owned
Irish companies to exit Ireland tax-free by
transferring their tax residence to another
State. The ability of corporates to exit Ireland
in a tax-free manner has always been a key
attraction of Ireland to international investors.
13
13Corporate Incentives (continued)
• Tax relief for interest on qualifying debt Exploitation of intellectual
to fund qualifying share acquisitions
or to fund connected companies. property
• An extensive double taxation treaty network Ireland is an attractive location in which to
with treaties signed with 74 countries to develop and exploit intellectual property
date, including all EU member states as (IP). Ireland’s tax regime is one of the most
well as Australia, Canada, China, India, favourable and competitive in the world
Japan, Russia and the United States. with regard to investment in research and
• A 80% tax deduction in respect of capital development activities and the development,
expenditure incurred on most forms of commercialisation and protection of the
intellectual property. The deduction can be IP that comes from that investment.
taken in line with the accounting depreciation Irish tax legislation provides for relief in the
on the intellectual property or alternatively, form of capital allowances against trading
over a maximum 15-year period, whichever income for companies incurring capital
is the lesser. The tax deduction can be expenditure on the provision of intangible
used to ensure that tax is payable on only assets for the purposes of a trade. A maximum
purchased (discussed further below). asset capital allowances. The scheme applies
• No capital duty on the issue of shares. A to a broad range of intangible assets (e.g.
stamp duty exemption on the transfer of patents, copyright, trademarks, know-how)
intellectual property. which are recognised as such under generally
accepted accounting practice.
• Knowledge development box regime
from patented inventions and copyrighted
software, to the extent it relates to
R&D undertaken by the company.
14
14Historically, companies could claim the
The allowances are based on the amount
R&D tax credit on the excess of the current
charged to a company’s accounts for
year’s expenditure over the amount of
the accounting period in respect of the
expenditure that was incurred on R&D in 2003.
amortisation of the relevant intangible
However, recent amendments mean that
asset. However, companies can opt
R&D expenditure is granted on a full volume
instead for a fixed write-down period of 15
basis (without reference to a base year).
years at an annual rate of 7% of qualifying
expenditure, and 2% in the final year. In the case where a company does not have
sufficient corporation tax against which to claim
A company must be trading to qualify for relief
the credit in a given year, the tax credit may be
(although pretrading expenditure is eligible for
carried forward indefinitely, carried back to the
relief) and the relevant intangible asset(s) must
prior year or surrendered to Irish Revenue for
be used for the purposes of its trading activity.
cash payments (a number of conditions and
The tax deduction can be used to ensure limits apply). If surrendered for cash payments,
that only 20% of a company’s intellectual these will be received in three instalments
property trading profits will be subject to tax. over a period of 33 months from the end of the
period in which the expenditure was incurred
Research and development (assuming no corporation tax liabilities arise
in the succeeding two accounting periods).
(R&D) credit
The credit is available in respect of
A company that carries on a trade in Ireland
expenditures on:
and carries out R&D activities in Ireland or in
an EEA country (EU countries plus Iceland, • Royalties
Liechtenstein and Norway) can claim a tax • Revenue expenditures on research
credit of 25% for expenditure on research and and development activities
development activities against its tax liability
• Plant and machinery
for the period. The 25% credit is in addition
• Buildings
to the tax deduction to which the company is
entitled in respect of the expenditure incurred,
resulting in an effective tax deduction of 37.5%.
15
15Corporate Incentives (continued)
Start-up exemption Knowledge Development
A start-up trading company can avail of a three- Box
year exemption which reduces its corporation Under the Knowledge Development Box regime,
tax charge (up to €40,000 per annum) to nil.
There is marginal relief if the charge is inventions and copyrighted software can, to
between €40,000 and €60,000. In theory, the extent it relates to R&D undertaken by that
this means a start-up company can earn company, be effectively taxed at a rate of 6.25%.
divided by 12.5%) without paying tax. lower rate is determined by the proportion that
However, the relief is linked to the amount the Irish company’s R&D costs bear to the total
of employer’s PRSI paid by the claimant R&D costs incurred on the asset. The qualifying
company, subject to a maximum of €5,000 per expenditure includes the cost of R&D that is
employee, and an overall limit of €40,000. outsourced to unrelated parties but excludes
expenditure on R&D performed by related parties
The relief is available up to 31 December 2021. and the cost of acquired intellectual property.
This advantageous treatment complements
Grants the intangible assets relief and R&D tax
Grants may be available to indigenous
companies and to overseas companies setting OECD-compliant “patent box” system in
up in Ireland. The level of grants available is the world it provides long-term certainty to
dependent on the location of the project. The companies planning their Irish R&D activities.
midland, western and border regions generally
attract higher grants than the Dublin region.
The types of grants available include:
• Capital grants
• Employment grants
• Grants for research and development activities
• Training grants
16Individual taxes
Scope of Irish taxation Relocation expenses such as storage, travel
expenses, temporary subsistence while
An individual’s liability to Irish income tax looking for new accommodation and other
depends on their residence status. This status associated costs may be reimbursed tax-free.
is determined by the number of days that they
are present in Ireland in a tax year. You will be Under Irish Revenue guidelines, tax-free
resident in Ireland for a tax year in either of the subsistence may also be paid or reimbursed
following circumstances:
assignment provided that the period of
• If you spend 183 days or more in Ireland assignment in Ireland does not exceed 24
during a tax year, or months.
• If you spend 280 days or more in Ireland
over a period of two consecutive tax Special Assignee Relief
years, you will be regarded as resident
for the second tax year Programme (SARP)
Employees assigned to work in Ireland on a
Persons who are resident and domiciled in
permanent basis are exempt from income
Ireland for tax purposes are subject to tax on
tax on 30% of their employment income. The
their worldwide income.
exemption applies to employment income
Non-Irish-domiciled individuals who are resident over €75,000, with an upper income limit of €1m.
in Ireland are taxable in Ireland on Irish source The relevant employees must be assigned to
income (including foreign employment income work in Ireland from a country with which
referable to duties exercised in Ireland) and Ireland has a double tax treaty and must arrive
foreign investment income where that income for work in Ireland before 31 December 2022.
is remitted to Ireland. In order to qualify, the employee must not have
been resident in Ireland in the five years prior
Moving to Ireland to their arrival.
There are a number of relieving provisions
available to employees coming to work in Ireland.
17
17Individual taxes (continued)
Foreign Earnings R&D tax credit for
Deduction (FED) employees
Employees who carry out part of the duties of Companies may transfer the R&D credit to key
their employment in specified countries including employees who have been involved in R&D
Brazil, Russia, India, China, Japan, Singapore, activities, subject to certain conditions. The
Korea, Columbia, Pakistan and a number of effective income tax rate for such key employees
African countries may claim a tax deduction may be reduced to a minimum of 23%. In
known as the Foreign Earnings Deduction. order to qualify, the employee must have spent
50% or more of their time on the conception or
The relief provides a tax refund for the relevant
creation of new knowledge, products, processes,
employee provided that they spend at least
methods and systems, and 50% or more of the
30 full days working in the above-mentioned
employment cost for that individual must be
countries in a tax year and meet certain other
eligible as qualifying R&D expenditure.
conditions. Trips of at least three consecutive
full days will qualify for this relief. In order to claim the relief, the employee must
submit a tax return.
The maximum annual deduction for any one
employee is €35,000 and is calculated by
reference to the workdays spent in the
relevant countries.
18
18Other taxes
Capital gains tax There are a number of notable exemptions and
reliefs for Irish-resident persons, including:
A liability to capital gains tax will arise where
a chargeable person makes a disposal of a • Principal private residences
chargeable asset. The current rate is 33%. • Irish government securities
A reduced rate of capital gains tax of 10% • Disposals of qualifying subsidiaries by an Irish
applies to the sale in whole or in part of a holding company
business up to an overall limit of €1m in • Retirement relief on the disposal of business
chargeable gains. assets by a person aged over 55
• Tangible moveable assets with a life of less
Capital gains are calculated by deducting
than 50 years
the cost (including incidental costs) from
the sales proceeds. Losses can be offset
against capital gains arising in the same year,
Capital acquisitions tax
or carried forward against future capital gains. Capital acquisitions tax is payable by recipients
of both gifts and inheritances where the value
Persons who are Irish-resident are subject
received exceeds certain thresholds. The level
to CGT on worldwide gains while non-residents
of tax-free threshold is dependent upon on the
will be taxed only on gains of Irish “specified
relationship between the donor and the recipient.
assets”, being:
The tax rate is 33%.
• Land, buildings and minerals in Ireland
The tax applies to gifts or inheritances where
• Exploration rights in designated areas either the donor or recipient is resident or
• Unquoted shares deriving the greater part of ordinarily resident in Ireland at the date of
their value from the aforementioned assets the gift or inheritance or the assets are located
• Assets of a trade carried on in Ireland in Ireland.
19
www.crowe.ie 19Other taxes (continued)
Value added tax Businesses that are registered for VAT normally
account for VAT every two months. They must
Value added tax (VAT) is a tax on the supply submit VAT returns together with payment
of goods and services to consumers by Irish to Irish Revenue on or before the 19th of the
business entities, including Irish branches of month following the end of the taxable period.
foreign entities. It also applies to intra-community
acquisitions of goods in Ireland which are the
supply of goods by a VAT-registered entity
Stamp duty
in one EU member state to a VAT-registered Stamp duty is payable on the transfer of shares
entity in another EU member state. in Irish incorporated companies and Irish
properties.
The standard rate of VAT is 23% (this has been
temporarily reduced to 21% as part of the Stamp duty on commercial property transfers
COVID-19 provisions until 28 February 2021). is payable at 6% whereas the rate on residential
This rate applies to the supply of all goods property is 1% up to €1m and 2% on amounts
and services unless a zero rate of VAT, over €1m. Stamp duty on the transfer of shares
reduced rates of 13.5%, 9% or 4.8%, or a
and marketable securities is payable at 1%.
VAT exemption applies. VAT applies at the
normal rate to the import of goods into Ireland. Stamp duty of 6% applies to the sale or transfer
A zero rate applies to the export of goods of shares which derive the greater part of their
from Ireland. value from Irish commercial property. This 6%
Entities are required to register for VAT if they rate of stamp duty applies to corporate
exceed or are likely to exceed certain turnover entities, interests in partnerships and units
thresholds during any twelve-month period. in Irish Real Estate Funds (IREFs).
Revenue issues VAT registration numbers to
applicants carrying on a taxable business in
Ireland. The applicable thresholds are as follows:
• €37,500 for entities supplying services
• €75,000 for entities supplying goods
20
20Commercial land purchased for the development Local property taxes
of housing is eligible for a stamp duty refund.
Commercial rates are a property based source
To avail of the refund scheme, developers
of income that is levied by local authorities
will have to start the relevant development
on the occupiers of non-residential property.
within 30 months of buying the land.
Agricultural holdings are exempt from rates.
Transfers between companies are exempt
An annual local property tax (LPT) on all
where one of the companies either directly or
residential properties in the State came into
indirectly owns 90% of the shares in the other.
effect in 2013.
Customs duties LPT is based on market value bands. If a
property is valued at €1m or lower, the tax is
Customs duties are payable on the importation at a rate of 0.18%. For properties valued over
of certain goods from outside the EU. The rate
of customs duty depends on the nature of the €1m of value and 0.25% on any balance in
item and the valuation of the goods. There excess of €1m, with no banding applied.
are wideranging exemptions and reliefs.
Carbon tax
The carbon tax applies to a range of liquid and
solid fuels. The rate of tax is a charge of €33.50
per tonne of CO2 emitted.
21
21Your partners in Ireland 22
How we can assist you
We welcome the opportunity to provide you with the expert advice you need. The following
is a brief overview of the range of services Fitzgerald & Partners offers.
Audit
Company formations in in Ireland, The UK and other Providing audits of financial statements and peace
jurisdictions, and business name registration.
Annual compliance services including submission Review of your business controls and assurance
of annual returns and holding annual meetings. that they satisfy regulatory requirements.
Attendance at board meetings and minute-taking Ensuring that your business is aware of all the
by chartered secretaries. rules and regulations under current legislation.
Provision of registered office addresses and advice
on compliance and regulatory issues.
Advisory
Assisting with feasibility studies, sectoral reviews and
VAT developing business plans.
Conducting strategic, organisational, financial and
VAT compliance services including VAT registration, operational reviews of your organisation.
preparation and submission of VAT returns and Advising on financing options, due diligence and
cross-border VAT reclaims. a range of corporate transaction support.
Advising on potential exposures and ways to
minimise irrecoverable VAT.
Improving your cash-flow management for VAT.
Preparation for and assistance with VAT Revenue Accounting
audits.
Review and preparation of statutory financial
statementsin accordance with applicable financial
reporting requirements.
Assessing risk areas and implementation and
strengthening of financial accounting and internal
control systems.
Determining the most tax-efficient way to structure
Preparation of weekly or monthly management
your Irish and international operations, considering the
accounts and reporting with detailed analysis.
various tax laws and incentives in different jurisdictions.
Assisting you with your tax compliance obligations –
filing tax returns, paying tax liabilities and claiming
tax reliefs. Outsourced Payroll
Liaising with the Irish tax authorities on your behalf,
ensuring strong cooperation and open communication. Calculation of all aspects of tax, social insurance,
Extensive expatriate tax services including advising pension and other deductions.
individuals on their exposure to Irish tax depending Ensuring ongoing compliance with the Revenue
on their tax residence and domicile. Commissioner’s requirements.
Coordinating of cross-jurisdiction payrolls in
accordance with local regulations.
23Audit,
Assurance Corporate
Taxation Consultancy
and Accounting Finance
Fitzgerald
Fitzgerald & Partners&
Partners
ADDING VALUE TO YOUR BUSINESS
Private Restructuring Outsourcing Company
Clients and Insolvency and Payroll Secretarial
Crowe Ireland is an independent member of the eight-largest accountancy network in the
world, with colleagues in over 800 offices across over 130 countries. Through this global
reach we are able to offer our clients a seamless service when trading internationally.
8th
global
largest
Over
32,000
professionals
Over
Over
800
130 Over
3,900
countries
partners
24About Fitzgerald
& Partners
Fitzgerald & Partners is a leading accountancy
and business advisory firm based in Kinsale,
Co. Cork.
Throughout our history, we have developed an
unrivalled understanding of the Irish business
environment and built a national reputation in
auditing, tax and business consultancy.
We work with a variety of clients, from
owner-managed firms to multinational
organisations and some of Ireland’s leading
national companies. Our services include
Audit & Assurance, Tax, Corporate Finance,
Consultancy and Outsourcing.
Our success is the result of our exceptional
client service. Together with our clients, we work
to optimise the present and maximise the future,
tirelessly exploring all possibilities until we find
the right solution. We help clients make smarter
decisions today and create lasting value for
tomorrow.
Local in Reach - Global in Touch
Contact us
Fitzgerald & Partners
No. 9 Pearse Street,
Kinsale,
Fitzgerald & Co. Cork.
Partners
ADDING VALUE TO YOUR BUSINESS
Tel: 021 477 4500
Email: info@fitzgeraldandpartners.com
25Establishing a branch or
subsidiary in Ireland
When a foreign company is considering setting up in Ireland, a decision will need to be made
regarding the most appropriate legal presence to establish - a branch or a subsidiary company.
A branch is an extension of the foreign company and performs the same business operations.
A subsidiary is an independent legal entity that is either partially or wholly owned by the foreign
company. A range of factors need to be considered and tax advice should be sought in advance
of establishing a branch or subsidiary. Below, we set out a high level summary of the set up and
ongoing requirements attaching to both branches and subsidiary companies which may aid the
decision making process
Branch / External Company Subsidiary
• A branch requires certain legalised documents • Incorporation of a subsidiary requires the
of the foreign company including Constitution, completion of Irish Companies Registration Office
latest accounting documents and Certificate of (CRO) statutory documentation and the drafting
Incorporation – English translation of constitution of a Constitution
may be required • A subsidiary is a separate legal entity and can
• A branch is not a separate legal entity. While it carry on business independently from its Parent
can act independently, it acts on behalf of, and as Company
part of the foreign company in the home • The subsidiary must have its own board featuring
jurisdiction a minimum of one Director (two for certain
• The Directors / Officers mirror that of the foreign company types) and a Company Secretary
company • At least one of the directors must be resident
• A branch must appoint ‘a person to accept in the EEA. If none of the directors are EEA
service of documents and a person to ensure resident, the subsidiary may either take
compliance. The same individual can act as out a Bond or demonstrate that it has a ‘real and
in both capacities and must be resident in Ireland continuous economic link to the State’
• The parent entity is fully liable for the Branch and • A subsidiary must have a Registered Office
its activities Address and a trading address in the State of
• A branch must have a trading address in Ireland Ireland.
• The branch must register with the same name • A subsidiary must maintain a number of
as its Parent but can use a different trading name statutory registers including the register of
by registering a Business Name directors, secretaries and shareholders
• There are no capital requirements for a Branch • A subsidiary is subject to significantly more
• A branch does not need to maintain statutory Irish Company Law provisions including directors
registers duties, obligation to keep proper
• A branch does not need to prepare statutory books of account, general meeting obligations
financial statements and capital maintenance requirements
• A branch can register for all taxes in its own right • A subsidiary must prepare statutory financial
• Depending on tax rules in home jurisdiction, the statements which may need to be audited
foreign company may be subject to corporate • A subsidiary can register for all taxes in its own
tax on the results of the Irish branch (generally name
with credit for Irish tax paid) • A subsidiary must pay Corporation Tax on its
worldwide profits (generally with credit for any
overseas taxes paid)
26CRO Filing Requirements
Branch Subsidiary
1. A Branch is required to file an annual Return 1. A Company is required to file Annual Return and
with a copy of financial statements of the foreign financial statements (audited in certain cases) on
company. No late penalties are currently an annual basis. Penalties apply for late filing
incurred for late filing 2. Any changes to the structure of the company
2. Branch required to inform the CRO within 30 must be notified to the CRO
days of the following: 3. The company must maintain a register of
• a change to the constituting documents of the beneficial owners and file to the public register of
foreign company beneficial owners
• a change to the directors, secretaries or other
authorised representatives of the company A company can be dissolved by strike off,
• a change to the branch’s address in Ireland liquidation or merger
A Branch can be deregistered with minimal
costs
We are here to help you
If you have any queries on this topic and would like to discuss your particular requirements in more
detail, please don’t hesitate to get in touch. We can help you with:
Registration of a Branch Registration of a
Subsidiary Company
• Advice in advance of branch set up
• Arranging (or offering guidance on) collation of • Pre-incorporation advice
certified / legalised documents from home • Advising on best company form e.g. LTD or DAC
registry through our global network or PLC
• Preparation of EEA / Non-EEA branch application • Preparation of incorporation documents
form • Provision of Registered Office Address
• Provision of third party to accept service / be • Provision of Company Secretary
responsible for compliance • Sourcing local Directors
• Provision of an address in the State • Provision of a Bond or Real and Continuous Link
• Assisting with Corporate
27Contactless
Payroll
Outsourcing How does the
Fitzgerald & Partners
Take care of administration payroll process work?
Remote data collection
Electronic payslip delivery
Payroll management reports 1. Payroll 2. Payroll
Input processing
Revenue returns and payments
Continuous
communication
Central Statistic Office reports
Electronic payroll journal production
6. Highlight Engagement 3. Payroll
memo issues management output
resolutions
Payroll advisory
Continuous
Review of current payroll procedures process review
Data analysis, testing, extraction and cleansing 5. Monthly 4. Four eye
reporting review
Streamlining payroll process process
Bespoke financial information
Recommendations for process improvements
A high quality payroll service
Other services at all times, delivered by
qualified professionals
Advice regarding Revenue audits (PAYE reviews)
Advice regarding employment tax related issues, e.g. Our team have produced a Covid-19 Irish Business Supports
tax aspects of pensions, redundancy, executive Summary which is up to date with all the range of measures
aimed at supporting businesses, which is regularly changing.
compensation and benefits
We are working with businesses in terms of employment
Shadow payroll support for international assigned supports, supports for small businesses and please contact a
payrolls member of our team if you would like to see how we can help
you and your business navigate these support mechanisms.
Dealing with EWSS
Payroll Outsourcing Service
What are the main benefits of outsourcing your Irish payroll function
to Fitzgerald & Partners?
Increased efficiency by having your valued Ensure compliance with current tax legislation, by
employees focus on other core areas of the having qualified tax professionals with a wealth of
business, while we handle your payroll. experience in employment rax, take care of your
Enhanced confidentiality around sensitive employee payroll.
and executive compensation. Access to expert Irish employment tax and legal
Employees have increased confidence in the knowledge (including a global tax and legal
accuracy of the payroll. network).
28 Ensure deadlines are met, avoiding late penalties.
No. 9 Pearse Street, Kinsale, Co. Cork | Tel: 021 4774500 | Fax: 021 4777374 Registered to carry out audit work and authorised to carry on
info@fitzgeraldandpartners.com | www.fitzgeraldandpartners.com investment by the Institute of Certified Publix Accountants in IrelandYou can also read
