How do I expand my existing business to Ireland and avail of the 12.5% Corporate Tax Rate?
Company Bureau Formations
10 April, 2018
Ireland offers a start-up friendly environment with minimal bureaucracy and one of the lowest corporate tax rates in the EU. If you are looking to expand your business in Europe, Ireland is an ideal choice. The Irish Government is welcoming of foreign-owned business by promoting a pro-business economic policy. Ireland has received praise as one of the easiest locations in the European Union to start a business with the most business-friendly tax regime in Europe. Ireland's attractiveness includes a low rate corporate tax rate of 12.5%, extensive double taxation treaties with more than 70 countries as well as a 25% R&D tax credit.
What Company Type Should I Choose?
If you are operating a successful business and wish to expand your operations in Ireland, there are a few options available to you. The most common options are an independent Private Limited Company, an Irish Branch, Subsidiary or Holding company structure. The right structure for your business will depend on the ownership, type of business, or the existing company structure and tax implications.
What is Required?
Similar criteria will need to be met for each option. Irish companies must have a registered office address within the Republic of Ireland and appoint at least one director who is a resident in the EEA. If an Irish Company does not have at least one EEA-Resident Director, it must take out a Section 137 Revenue Bond. The bond acts as a type of insurance to the sum of €25,000 to cover potential charges such as non-filing of accounts, etc. Another option is to appoint a local Irish resident Director, but this can be costly. For more information, please click here. https://www.companyformations.ie/company-formations/non-resident-companies/.
In Ireland, generally, only the activities of a branch company are subject to local corporate tax. A branch company is viewed as an extension of a parent company, A branch is seen as lasting 'place of business' and is required to have a local agent in the Republic of Ireland. A branch company must be registered with the Companies Registration Office (CRO) within 30 days of establishment in the state as either a Branch EEA or a Branch Non-EEA depending on the location of the parent company.
For an overseas company to be eligible to form a branch company in Ireland it must have Limited Liability within their jurisdiction of incorporation, according to the Irish Companies Act 2014. For example; a Limited Partnership (LP) in the UK would not be permitted to register a branch company in Ireland.
To register a branch the following information must be submitted to the CRO:
- A copy of the company's Certificate of Incorporation and any certificates of change of name (if applicable).
- Information on the Directors and Secretary
- The address of the place of business in the State
- A certified copy of the company constitution, memorandum or articles of association with a certified translation (if not written in English)
- Name and address of at least one person appointed to act on behalf of the company who resides within the State
Upon incorporation, an Irish subsidiary company can apply for corporation tax to avail of the 12.5% tax rate. A subsidiary company has limited liability, meaning that the parent company's liability is limited to the share capital invested. The process to incorporate a subsidiary company is the same as registering a new Irish Private Limited Company (LTD) where the overseas parent company is the majority shareholder (51% or more). The subsidiary can appoint additional shareholders with up to 49% ownership. Having a Parent company as the shareholder means that all existing shareholders of the Parent company have the same percentage stake in the new Subsidiary.
To register a subsidiary company, certain information will need to be submitted to the CRO. For anti-money laundering purposes, you will need a letter from a lawyer which includes an official company document outlining the structure of the company and confirming who the ultimate beneficial owners are stating; full name, date of birth, passport number and percentage of ownership.
Irish Holding Company
Irish holding companies are also eligible to apply for the 12.5% corporation tax rate. A holding company is a parent company that typically exists to hold shares in another company. An Irish holding company would become the majority shareholder (holding 51% or more) of the overseas company which would become the subsidiary. Under the Companies Act 2014, an Irish holding company can be either a Private Company Limited by Shares (LTD) or a Private Unlimited Company (PUC).
There are many benefits to forming an Irish holding company for an overseas incorporation. Some of the benefits include.
- Capital Gains Participation Exemption- Tax exception on profits arising from the sale of shares
- Generous foreign tax credit system- Tax credits for investment income from a foreign source
- Access to trade within the European Union, the largest Single market in the world
- Double taxation treaties with more than 70 counties
No matter which company structure you choose, it is recommended that you use a local company formation practice to avoid making costly mistakes. The experts at Company Bureau have 20 years' experience in company formations, company secretarial and corporate services. They offer the fastest service in Ireland and a Turnkey solution for companies looking to establish an entity on the Emerald Isle. To learn more about forming an Irish company, please click here. https://www.companyformations.ie/company-formations/your-first-company-ireland/
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