Ireland E-Commerce

Ireland Introduction

The Irish government is strongly encouraging the development of e-commerce. In July 2000 the government passed an e-commerce bill, signed with a digital signature, which sets out a formal legal framework for conducting business electronically. Considerably less legalistic and more business-friendly than the UK's bill, it enabled electronic signatures, dealt with contract issues, and proposed a new regime for domain name registration. It also protects the rights of businesses and individuals to use software programs that encode and decode electronic documents.

More than any other European country, Ireland has acted as a magnet for high-tech companies over the last ten years, due to a combination of its highly favourable tax regime, use of the English language and availability of a well-educated young population, among other factors. Although the country's very success has led to pressure on resources, the size of the technology community is such that it now acts as a draw in its own right, and it is hard to see how significant competition will arise. American companies in particular find Ireland attractive as a jumping-off point for their EU operations.

A survey carried out in 2003 by specialist technology group Eurocom PR Network revealed that IT executives from across Europe perceive Ireland as the most likely location for a European equivalent to Silicon Valley.

The survey, undertaken in association with Irish partner Simpson Financial and Technology PR, took place in the first quarter of 2003. It interviewed 147 executives from 12 European states and found that one in five of those polled visualised Ireland as Europe's capital of technology. This placed the country above both Germany (14%) and the United Kingdom (8%).

The Government's May 2001 package of e-commerce measures included extensions to international connectivity, but also provided for improvements to regional broadband infrastructure. As a result of the first call for proposals under the E-Commerce Infrastructure Measure of the National Development Plan, approximately IR£200m worth of infrastructural investment had been implemented by the end of 2002.

In addition, a feasibility study was conducted on the establishment of a public/private partnership to build and operate an Atlantic infrastructure corridor in Ireland from North West to South West. The feasibility study also examined the extension of networks under the National Development Plan, investment in regional points of presence and support to local authorities and regional development agencies for the rollout of infrastructure.

However, Ireland was not immune to world-wide problems in the TMT sector. In mid-2001 job losses in the Irish high-tech sector included the closure of Gateway's Dublin factory (900 jobs), General Semiconductor's plant in Macroom (670 jobs) and a further 250 dismissals at Baltimore Technologies in Dublin. This totals about 5,000 jobs out of an estimated 50,000 in the sector at that time, but the silver lining to this cloud was that incoming firms found it much easier to recruit the skilled, and now experienced staff they had had difficulty in finding during boom times.

In November, 2003, Ireland's then Minister for Communications, Dermot Ahern signed into law new regulations dealing with spam, cookies, and other privacy issues relating to electronic communication. The European Communities (Electronic Communications Networks and Services) (Data Protection and Privacy) Regulations 2003 implemented the EU's new Privacy and Electronic Communications Directive.

The regulations contained provisions regulating the use of cookies and spyware, imposed restrictions on unsolicited direct marketing by phone, fax, e-mail, or SMS, and allowed subscribers listed in freely available directories to specify what personal information is listed. The new rules also require that subscribers listed in public directories are informed as to how their data can be accessed and used, and that mobile location data can only be used with an individual's consent.

In October, 2005, the Richmond District Court in Dublin handed down the first sentence under Ireland's anti-spamming law, in a prosecution brought by the Data Protection Commissioner.

Company 4’s a Fortune was found to have sent unsolicited messages to members of the public in March 2004. Since November 2003 under SI 535 of 2003 [European Communities (Electronic Communications Networks and Services) (Data Protection and Privacy) Regulations 2003] the sending of unsolicited commercial mail from Ireland has in some instances been an offence.

The company – which operates what it calls an 'online casino-like cash game' made a total of 165,000 calls, all to O2 customers. The calls were mostly by auto-diallers that hung up after two rings. When recipients noticed a missed call on their phones, some of them called back to the landline number displayed. They were then put through to a recorded message which encouraged them to call a premium rate number and play a game to win money. The Data Protection Commissioner (DPC) argued that these callbacks constituted a message and as such came under the legislation governing spam.

4’s a Fortune entered a guilty plea. The DPC said the company had been co-operative and there had been no recent complaints against it. The company was fined EUR300 for each of four complaints from mobile phone users who had received the missed call, plus costs of EUR1,000.

The judge in the case said she was surprised that no custodial sentence was available in the Regulations – although she added that it would not have been appropriate in the circumstances of this case.

In November, 2004, Ireland’s then newly appointed Minister for Finance, Brian Cowen, announced that state aid approval had been received from the European Commission for two schemes aimed at helping new firms gain access to start-up capital.

Welcoming the EU’s approval of the Business Expansion Scheme (BES) and the Seed Capital Scheme (SCS), Cowen commented: “There is a strong business case for these schemes. Businesses, particularly small and start-up companies, often experience difficulty in accessing early stage development capital.”

He added: “It is clear that there is a shortage of such finance in the pre- and early start up phases of new enterprises. The BES and the SCS will continue to play an important role in helping bridge this financial gap for such businesses”.

However, the European Commission directed that Ireland make a small number of amendments to the legislation governing the schemes, and these changes meant that:

Qualifying companies must be Small and Medium Sized Enterprises (SMEs) within the European Commission definition in force for the relevant period;
Tax relief under the BES/SCS will be available for individual investments in companies registered in the European Economic Area but with an establishment in Ireland carrying out qualifying activities;
While a company may raise equity capital up to a general maximum of EUR1 million in the lifetime of the company, the schemes will respect the aid ceilings as set out in the European Commission's Guidelines on State Aid and Risk Capital so that a company may not raise more than EUR750,000 in any six month period from 5 February;
The following sectors will be formally excluded from the scheme: shipbuilding, European Coal and Steel Community sectors and non viable companies within the European Community Guidelines on State Aid for rescuing and restructuring firms in difficulty.

The schemes became effective from 5 February 2004 and in line with the Commission approval originally operated until 31 December 2006. On 6 September, 2007, Brian Cowen, Irish Minister of Finance, signed the Commencement Order bringing the schemes into effect from 1 January 2007 to 31 December 2013.

In summary, the Commencement Order and Regulations provide that as and from 1 January 2007, medium-sized enterprises may qualify if they are located in “assisted areas”. (Currently, the assisted areas are defined as all of the Republic of Ireland apart from Dublin, Kildare, Meath and Wicklow. From 1 January 2009, Cork City and county will be non-assisted, apart from Cork docklands). Medium-sized enterprises will benefit from the scheme if located in non-assisted areas only where they are in seed or start-up phase.

In 2003, Ireland introduced regulations governing unsolicited electronic communications, and these were updated in 2008 by Statutory Instrument No. 526 of 2008. Notable changes include:

Data Protection Commissioner, Billy Hawkes said: "The signing of these Regulations by the Minister is an important and significant step in the fight against unsolicited communications for marketing purposes. I welcome the increase in penalties which have come into effect I am confident that the strengthening of the law in this area will help me in my task to enforce the regulations concerning unsolicited communications. I want to take this opportunity to remind persons engaged in direct marketing activities that my Office continues to pay close attention to the whole area of unsolicited communications by telephone, fax, email and text message. The new regulations, together with the serving of a considerable volume of summonses by my Office in the past fifteen months, serve to send a strong message to all involved in direct marketing about the necessity of compliance with the law."

Concluding, the Commissioner said: "I want, in particular, to send a message to all involved in business to familiarise themselves with the law which applies to unsolicited communications for direct marketing purposes. Increasingly, in this period of economic downturn, my Office is receiving complaints about businesses making unsolicited contact with their past customers for marketing purposes. In many cases, such contact is unlawful and, if carried out by telephone, text message or email it may be a criminal offence. Ignorance of the law is not an acceptable excuse for non-compliance and I will have no hesitation in applying the full force of the new regulations to offenders."

See below for specific information on e-commerce in Ireland, or go to Offshore-e-com.com for an extensive analysis of the commercial possibilities and the legal background.

Ireland Facilities

Telecommunications Providers

In 1999 the Irish Government entered an agreement with Bermuda-based international communications company Global Crossing for the provision of high speed, competitively priced communications links to 26 European cities and to New York. In May 2001, under an extension to that agreement, the government secured links to 40 European centres and to Los Angeles, San Francisco, Dallas, Washington, Chicago and Boston. In addition, it has also secured high-speed links to Tokyo and Hong Kong and agreed in principle on links to Singapore.

Eircom had been the republic's largest telecommunications company. The Government privatised Eircom in 1999, but after a short and turbulent independent life it was acquired in late 2001 by the Valentia consortium led by well-known Irish businessman Tony O'Reilly.

Eircom's comfortable presence was challenged by Esat, BT's Irish subsidiary. In 1999 Esat took over Cablelink, Ireland's state-owned cable operator with plans to introduce a 16 channel television service, two free phone lines and unlimited acess to the internet for a flat fee of IR£20 a month.

In March 2001 the then Minister for Public Enterprise, Mary O'Rourke, announced that the government would provide funding to the tune of EUR75 million with the aim of developing broadband networks around the country to give faster Internet access to all areas of Ireland.

Ireland's progress in this area was however called into question by the EU's 'Seventh Annual Report on the Implementation of the Telecommunications Regulatory Package', which outlined problem areas including the level of fees for access to mobile networks, the practice of Digifone and Eircell Vodafone of maintaining artificially high charges, and the reputation of Eircom's leased lines' performance as one of the worst in the EU.

In addition, the report revealed Ireland to be the only EU country at that time not to have launched any DSL lines or to have unbundled a single local loop. The Commission recommended that the Office of the Director of Telecommunications Regulation (ODTR) lowers currently over-priced telecommunications charges.

Ireland's own Advisory Committee on Information and Communications Technology made similar criticisms in March 2002, saying that Ireland would need to implement a new regulatory regime if it is to develop its reputation as an e-commerce hub.

After finally resolving a long-running argument about broadband pricing in May, 2002, Telecoms Regulator Etian Doyle had to step in to direct Eircom to allow other operators to interconnect to its network at additional network points of presence.

Eircom offers services to other operators under a document known as the Reference Interconnection Offer (RIO), which amounts to a catalogue of the services that Eircom offers to other operators. Eircom's RIO is under constant review by the Regulator, prompted by a stream of complaints from OLOs about Eircom's behaviour.

Chairman of the Association of Licensed Telecom Operators, Iarla Flynn, said that the change would mean increased efficiencies and lower costs for operators. "OLOs have been looking for such a change for quite some time," commented Flynn. "Up until now, OLOs could only interconnect with Eircom's network at a limited number of switches. This ruling will mean that OLOs will now be able to interconnect with Eircom at an expanded number of points of presence, which will enable them to save money and be more efficient. These savings can then be passed on to consumers."

Regulator Etain Doyle also decreed that all future changes to the RIO would have to be approved by him. "Eircom's RIO is a living document and will change with the requirements of the market," said Mr Doyle, in a statement. "I believe these decisions bring the Irish RIO into line with best EU practice and the version control will help improve the transparency of Eircom's RIO for other operators."

Other aspects of the RIO reviewed by the regulator included routing and capacity issues, billing and payments, management aspects of the RIO, new services, and service level agreements for interconnection links.

The long delay in rolling out high speed internet connections to the Irish residential and business market, which have only become available in recent years, and which has caused Ireland to lag behind other EU countries, has resulted as much as anything from the high fees which the telecommunications giant proposed charging other firms for permission to resell the service to consumers.

In June, 2005, telecoms operator Eircom launched a new 'sometimes on' broadband product, but it was slammed by lobby group IrelandOffline as a backwards step.

Earlier in the year the company announced that it was extending broadband rollout to 200 more exchanges in Ireland and it also set a new target of 500,000 high-speed Internet users by the end of December 2007.

In March 2006, the European Commission announced that it had authorised a programme to boost broadband availability in Ireland.

The aid approved by the EC pertained to plans by the Irish Government to create open-access Metropolitan Area Networks in over 120 Irish towns at a cost of EUR170m, with support from EU structural funds.

This funding is for Phases II and III of the MANs programme. Phase I has already been completed, with networks built in 26 towns.

The Commission concluded that the aid was not likely to distort competition within the EU significantly, as the Irish authorities have implemented a number of safeguards to ensure that this is the case.

“I am pleased to endorse this expansion of the Irish Metropolitan Area Network programme. The open networks will enable all operators to offer high-speed broadband services to businesses and citizens in the towns concerned. The project will boost competition in the area and is fully in line with the Commission’s policy to promote broadband in areas which would otherwise miss out.”

Meanwhile, early adoption of 3G services in the Republic has been slow, with Vodafone being first off the mark. November 2007 showed a strong per-capita subscriber growth over the year in Ireland, broadband services added more than 5 subscribers per 100 inhabitants during the previous year.

In September, 2008, Magico.ie, a leading Irish ecommerce firm, announced that web sales in Ireland are now exceeding EUR12m a day. Paul McGurran, Director of ecommerce at Magico.ie announced:

"Although traditional high-street retail activity is suffering a downturn, Internet sales in Ireland are likely to smash all previous records this year as more and more drop the high street for the super information highway."

"For example, according to Realex Payments online sales in Ireland reached EUR12.7m on December 4, 2007, last year, declining to EUR7.3m in subsequent days during the Christmas period. In 2008 average daily Web sales in Ireland are now exceeding EUR12m per day," he added.

Mr McGurran pointed to recent research in the UK showing that Internet sales will continue to grow and the web channel will claim more than half of the retail market pie by 2026.

"This increase in online retail activity is being stimulated by numerous factors including greater broadband penetration across Ireland, and time-poor and price conscious consumers. Furthermore, the rising price of fuel is the main reason behind consumers’ inclination towards web shopping, with users spending an average of 1.6 hours each week buying on the Internet," he added.

There is a well-developed ISP sector in Ireland. ISPAI (The Internet Service Providers' Association of Ireland) had 21 members as of 2008, with some of the better-known providers being:

ANU Internet Services
Club Internet
DNA Internet
e-live
Eircom
Esat Clear
Gateway
Indigo
IOL
Irish Trade Web
Ocean Free
UUNet

The cost of a basic package per annum varies significantly, although some bottom-end ISP services are available free.

As with ISP services, there is a wide range of hosting possibilities. In the following list of hosting service providers, many of the providers offer more advanced services such as co-location and technical support at various levels.

ANU Internet Services
Digiweb-BaseStation
DNA Internet
Eircom
e-live
Esat
Indigo
Irish Trade Web
Sixnet Limited
Via-Net-works Expresso Web
Web World

Given the rapid growth and substantial size of the Internet sector in Ireland, there have been a number of initiatives to create 'server hotels' in Dublin. AboveNet, a US Internet co-locator company owned by Nasdaq-listed Internet infrastructure and optical network company Metromedia Fibre Network, invested US$75 million in an Internet services exchange in Dublin.

Servervault, a US-based data hosting and management company, invested around $150 million (EUR172 million) in a fully managed Internet hosting centre in Dublin.

As would be clear from the presence of many large international high-technology companies, there is an extensive network of service and support firms in Ireland for Internet operations, covering consultancy, software and hardware.

The Irish Internet Association has more than 800 members, of whom a good proportion could be classified as Internet support.

Applications

As previously mentioned, more than any other European country, Ireland has acted as a magnet for high-tech companies, due to a combination of its highly favourable tax regime, use of the English language and availability of a well-educated young population among other factors. Although the country's very success has led to pressure on resources, the size of the technology community is such that it now acts as a draw in its own right, and it is hard to see how significant competition will arise. American companies in particular find Ireland attractive as a jumping-off point for their EU operations.

The Irish government was celebrating in March, 2003, when major internet search engine Google announced that it had chosen Dublin as the base for its European HQ. Google officially opened its first headquarters outside of the United States in Dublin, in October, 2004. The Irish division serves as the company’s headquarters for Europe, the Middle East and Africa.

Google co-founder, Sergey Brin explained that the quality of Ireland’s workforce, rather than its low corporate tax rate, was the chief motivation behind the move to Ireland. "We did not go with the lowest taxes but the access to young and talented people is what made our decision," he was reported as saying.

The decision was hailed by the Irish government, and then Deputy Prime Minister Mary Harney described the move as “a huge vote of confidence for our knowledge-based economy."

The move was facilitated with help from the Irish Investment and Development Agency (IDA).

In January, 2005, online retailer Amazon became the next high-profile e-business to establish a presence in Ireland, announcing that the firm would locate its European operations centre in Dublin.

Amazon’s European Systems & Network Operations Centre provides infrastructure support for the company’s systems and networks worldwide.

The move was welcomed by Minister for Enterprise, Trade and Employment, Micheál Martin, who stated that it further endorsed Ireland’s reputation as a centre for hi-tech business.

“It confirms this country's status as the leading European location for the largest Internet activities in the world,” he observed.

Mr Martin added: “It is an excellent example of the success being achieved by the Government's policy and IDA Ireland's strategy for the development of Ireland's digital media sector."

Then in February, 2005, US-based internet company, Yahoo also said it would establish its European operations headquarters in Dublin.

The new operation is responsible for Yahoo’s European business in three main areas including: a shared services centre, responsible for accounting and revenue activities and statutory reporting; a web hosting centre, supporting databases for Yahoo’s family of websites, applications and systems; and a customer support centre, comprising a centralised multi-lingual support service and website editorial team.

Welcoming the investment, Micheál Martin commented: “The extent of the activities to be undertaken and the level of investment by Yahoo, the number one internet brand globally and the most trafficked internet destination worldwide, makes the winning of this Operations Headquarters a truly outstanding achievement for Ireland.”

Mr Martin added: “IDA Ireland faced strong competition from other worldwide locations for this investment and the company’s decision to locate here proves that Ireland is a serious contender for the world’s largest Internet companies.”

Meanwhile, John Marcom, International Senior Vice President of Yahoo Inc, revealed that Ireland represented an ideal location for the firm’s new regional HQ, explaining that: “Our decision to locate the European Operations Headquarters in Ireland was influenced by several factors - the success of our existing operation in Dublin, Overture Services, which has surpassed all forecasted operating targets; the calibre and volume of graduates available in Ireland; the up-to-date and cost competitive telecommunications and data centre infrastructures and the assistance of IDA Ireland.”

Despite a major recession in the hi tech sector of recent years, Ireland can still claim to be a major player in the field of IT development.

Electronic financial services have also seen particularly strong growth in Ireland. Ireland's largest stockbroking firm, Goodbody Stockbrokers launched its online share dealing service in March 2001. The service offers share trading, portfolio valuations and transaction history online as well as a market monitor with a Reuters news information service and Goodbody's own knowledge centre.

Nearly all of Ireland's major banks have Internet banking channels although standalone offerings have fared less well. Growth has been most significant in online services provided as an integral part of Irish banks' main services. This could well be because customers are tend to steer towards established brands rather than into uncharted territory.

In the spring of 2001, Ireland's TSB Bank, the fourth largest retail bank in the Republic, launched a new 24-hour Internet banking service in Ireland called TSB online 24, which is available to all customers with telephone banking facilities.

TSB online 24 follows in the footsteps of other Internet banking services offered by the major Irish banks, including Bank of Ireland with its Banking365 venture and AIB's 24hour-online, both of which were launched in 1997.

Moving in the opposite direction, however, was the Bank of Ireland, which in October 2001 merged its subsidiary Isle of Man Internet bank F Sharp into BoI's offshore operation. F Sharp, which was targeted at Irish and British expatriates, had gained a mere 2,000 customers in two years, far below expectations.

Another sector which has seen much interest is Internet support services. For instance, in October 2000 a special dot.com `nursery' was launched in Dublin to help internet start-up companies get off the ground.

In his December 2001 budget, then Finance Minister Charlie McCreevy reduced the rate of betting excise duty from 5% to 2%, in an attempt to persuade the country's leading bookies not to flee to the United Kingdom, or indeed further afield to Malta or Gibraltar.

In 2002 Power Leisure, parent company of Irish bookie Paddy Power, announced interim profits more than doubled to euros 9.26 million from euros 4.32 million, with revenue jumping from 206 million to 319 million euros. The group has 129 betting shops in Ireland and the UK.

However, in January, 2004, Paddy Power announced that it intended to relocate its London-based telephone betting service to the Isle of Man, in order to take advantage of the more attractive tax regime. The bookmaker also decided to base its online casino away from the UK mainland, although it decided to locate it in the Channel Island jurisdiction of Alderney, which does not levy betting taxes.

Paddy Power plc was the first Irish bookmaker to venture into the online gambling market and is listed on both the London and Irish Stock Exchanges.

In May, 2004, The Gibraltar-based bookmaker Victor Chandler, launched a new tax-free online betting service in Ireland in order to take advantage of the Irish market's "huge potential." According to OnlineCasinoNews.com, the firm’s new internet presence in Ireland will be augmented by a “significant" bricks and mortar investment which will see up to twenty new shops opening in the coming years.

Finally, on a more mundane level, in September 2002, UK retailer Tesco reported continuing success for its on-line shopping services in Ireland, the UK and South Korea. The company's Internet division, Tesco.com, achieved sales of GBP186 million in the six-month period to 10 August, 27% up on last year, and it made a profit of UK£1.9m.

Tesco said it had been aggressively promoting its on-line shopping offering, and claims that that its UK service covers 95% of the UK population; its Irish Net shopping counterpart, Tesco.ie, is available to more than 75 percent of the Irish population. Tesco has 76 stores in Ireland and employs over 10,000 people.

Tesco Ireland recently launched a Web site for the visually impaired, in an attempt to further broaden the appeal of on-line shopping. The Web site was developed following feedback from blind and partially sighted shoppers, who used the system in its trial phase. The web site is a simplified version of its standard web site. It presents shopping information in a list format and avoids the use of tables, which make it easier for adaptive technologies to interpret the site for the visually impaired.

Tesco also launched a "Pocket Shopper" service that enables its on-line customers to make purchases from a menu of around 20,000 grocery products using handheld computers. Customers can select the products they want via their handheld computer and then complete the order by synchronising with an Internet-enabled PC or by using a wireless connection to the Internet.

Tesco Ireland says it is monitoring customer interest in such a service, but hasn't yet set a date for its introduction in Ireland.

Intel has been a major investor in Ireland, with a large plant at Leixlip. But in July, 2005, Irish heritage trust An Taisce and local environmentalists lodged objections to Intel's planning application for a Euros 1.4 bn Fab 24-2 expansion to its existing chip-making plant at Leixlip in Ireland.

Earlier in the year Ireland was forced to withdraw investment incentives which had been offered to Intel for another expansion of the plant, after the EU said they would constitute unlawful state aid, and as a result the plant went to Arizona along with its 1,000 jobs.

Intel's investment will add an additional 60,000-square-feet of manufacturing cleanroom space, plus the required manufacturing equipment to enable 65-nm technology within both Fab 24-2 and existing Fab 24 facilities. Production for the new Fab 24-2 module had been expected to begin in the first half of 2006.

In November 2006, the Irish Software Association (ISA) called upon the government to extend its investment incentive schemes, arguing that they are crucial to secure future growth of the Irish software development industry.

In November 2006, Minister for Enterprise, Trade and Employment Micheal Martin described the decision by networking firm Cisco to locate its global Research and Development centre in Ireland as a "superb win" for the country.

The new R&D centre will be located in Galway in the west of Ireland and is expected to employ 200 new technical and engineering jobs at graduate level and above over the next three years.

The investment will be undertaken by Cisco subsidiary Cisco Internetworking (Ireland) Limited and is supported by IDA Ireland, the government's investment promotion arm.

"It is a further significant increase in the benchmark by which other global companies can judge Ireland’s abilities to successfully support cutting-edge highly sophisticated technological R&D and of our ability to provide the required numbers of the most knowledgeable and skilled graduates for to-day’s global businesses," he added.

Micheál Martin also announced that Digital River, Inc., a global e-commerce outsourcing firm, has established a new European headquarters at the Shannon Free Zone.

Making the announcement, Martin noted that Digital River’s decision to establish at Shannon Free Zone adds significantly to Ireland’s emerging profile as a leading e-commerce business centre in Europe.

"This investment is very welcome news for Shannon and was secured by Shannon Development against strong competition from other European locations," he explained.

"Digital River can be confident of finding highly skilled professionals and infrastructure of international standards in this part of the country. More and more companies are discovering the benefits of locating in regional centres throughout Ireland and Digital River is an example of the type of company we want to attract," he added.

In November 2006, online search engine Google also announced plans for a major expansion of its European, Middle Eastern and African (EMEA) headquarters located in Dublin, in a further endorsement of Ireland as a favoured nation in the global e-commerce industry.

Google's latest decision to invest in its EAMA HQ in Dublin will boost the work force by an additional 500 and comes less than a year after the company announced a similar expansion plan. Currently, in excess of 800 employees representing over 40 nationalities are based at Google in Ireland.

Cisco is one of a clutch of IT firms which have announced major investments in Ireland recently, Digital River and Google being the latest examples.

The ISA said in its 2007 budget submission that it is seeking an extension of the current Business Expansion Scheme (BES) and the Seed Capital Scheme (SCS), both of which are due to expire at the end of the year, until 2013. It also wants the government to increase the investment limits that the company can raise to EUR1.5 million (US$1.9 million), up from existing limit of EUR1 million, and an increase in the personal limit to invest EUR250,000 per annum (from current rate of EUR31,750).

According to the ISA over 50% of software start-ups have relied on a combination of both BES and SCS funding over the past few years.

The ISA also recommended improvements to the existing R&D tax credit scheme to help small and start-up funds grow.

Ireland Offshore Activities

The natural bonding of the Internet and offshore regimes stems from the fact that both, of their nature, manage to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore and low-tax jurisdictions; while businesses that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.

As a major low-tax jurisdiction with many thousands of enterprises already installed in beneficial tax regimes, including many trading companies, it is only a matter of time before Ireland becomes a centre of e-commerce activity. The country's geographical location, its good telecommunications links and its sophisticated business infrastructure coupled with a pragmatic and business-minded approach, add to the inevitability of an e-future. Ireland's membership of the EU is another plus point.

By locating websites in Ireland, either in the International Financial Services Centre or in the Shannon Free Zone, to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training, software etc, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation. From 2003 onwards, the newly-agreed 12.5% general rate of corporation tax allowed low-tax e-commerce services to be offered from anywhere in Ireland, although the Shannon Free Zone may retain some advantages.

In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many case it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.

For information about the impact of e-commerce on a number of the main offshore activities which take place on the island, click on a link below to go to our specialist E-commerce site Offshore-e-com.com.

To see an analysis of the current state of legal and tax issues surrounding offshore e-commerce, click here.

Ireland Case Studies

This section will contain case studies of e-commerce solutions applied to offshore business activities carried out from the Ireland. The case studies will be developed in association with

partners. Contact us to learn more.

IRELAND: E-COMMERCE

On this Page:

Ireland Introduction

Ireland Facilities

Telecommunications Providers

Applications

Ireland Offshore Activities

Ireland Case Studies