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Ireland: E-Commerce

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.

Sales and Distribution of Physical Products 
Sales and Distribution of Digital Products 
Banking and Financial Services (including Investment Funds) 
Corporate Support Functions

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

 

 

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