Ireland

                      

Ireland is an independent Western European state, a member of the European Union. It is located in the North Atlantic to the west of the UK. In 1922 Ireland became an independent state but was divided into northern side (which is a part of Great Britain) and the state of Ireland. The attractiveness of Ireland in terms of international business planning is constantly increasing. Recent tax reforms contribute significantly to stimulate trading and holding activity of Irish companies.

Capital

Dublin

Government

President is the head of state. He is elected by direct voting for a term of 7 years. The Irish government exercises executive power. It is composed of 7 to 15 members appointed by the President. The highest legislative body is the bicameral national parliament. Senate (the upper house) consists of 60 people, 11 of whom are appointed by the Prime Minister, 49 are elected by indirect elections. In the House of Representatives (lower house) 166 deputies are elected for the same term by direct voting and proportional representation.

Official language

Irish and English

Currency

Euro (EUR)

Legal System

Based on English common law

Economy

The economy is focused on services and high-tech industry. GDP per capita is among the highest in the EU. In 2005, Ireland was recognized as the country with the highest standard of living in the world (The Economist). From 2005 to 2007 economic growth in Ireland was the highest in Europe. In 2014, inflation stood at 0.2%, unemployment was 10.7%. Main industries: pharmaceuticals, chemicals, software. Ireland differs for its highly skilled workforce.

Corporate legislation

Companies (Amendment) Act 2012

Companies (Auditing and Accounting) 2003

Companies (Forms) Order 2011

Companies (Miscellaneous Provisions) Act 2009

Income Tax Act 2007

Value-Added tax Consolidation Act 2010

Important: A new Companies Act 2014 shall come into effect since June 1, 2015, which stipulates a range of substantial changes.

Types of Companies

  • Private company limited by shares
  • Company limited by guarantee not having a share capital
  • Company limited by guarantee having a share capital
  • Public limited company
  • Unlimited company

Private company limited by shares

  • May conduct any activity not forbidden by the legislation.
  • The company name must end with Teoranta, Limited or Ltd.
  • The company must have a registered office in Ireland and the Secretary.
  • No requirements on the amount and payment of the share capital.
  • Authorized ordinary and preferred shares are used. Bearer shares are prohibited.
  • Minimum number of shareholders - one (physical or legal person, without any requirements to residence).
  • Maximum number of shareholders - 99.
  • Minimum number of directors - two. One of them shall be the EU resident. If this requirement is not met, the company has to purchase bonds issued by the Bank of Ireland, at the nominal value of € 25, 395 and maturity of 2 years and keep these bonds on deposit in the Bank of Ireland. The time of this deposit should be extended up to the company closure or appointment of Director, EU resident (starting since June 1, 2015 one director is sufficient).
  • Corporate directors are not permitted.
  • The Director may also act as a secretary of the company.
  • Annual general meetings of shareholders and directors are required (starting since June 1, 2015 the requirement that annual meetings be held is no longer applicable).

Taxation

All companies incorporated in Ireland are deemed resident and subject to taxation in accordance with the current tax rates. 

Corporate income tax rate for trading income in Ireland is 12.5%, for other types of income - 25%. When paying tax it is possible to offset the foreign tax paid in the other state against the Irish tax payable in respect of the same category of income, even in the absence of a tax treaty between the two countries. The  offset amount should not exceed the amount of Irish tax payable on the foreign income.

Taxation of incoming dividends. Dividends received by an Irish company may be taxed at a rate of 12.5 or 25% depending on the status of the foreign subsidiary. Thus, dividends received by an Irish holding company from EU companies or from countries having Double Tax Treaties with Ireland or information exchange agreements are taxed at a rate of 12.5%. The profit part of which is distributed in the form of dividends must be received from trading activities. 12.5% rate applies to dividends received from subsidiaries of the states that do not have tax treaties with Ireland, provided that the shares of these companies are traded on a recognized stock exchange. In other cases, the rate will be 25%. Dividends received from another Irish company (i.e. within the country), are not taxed.

Withholding tax on dividends. Dividends paid to a non-resident company or individual (both residents and non-residents) are subject to Irish tax at source at the rate of 20%, except for cases of lower tax rates in accordance with the Agreement or exemption from tax in accordance with EU Directive on parent-subsidiary companies.

Outgoing dividends paid by an Irish company are partly or fully exempt from withholding tax in Ireland to :

a) a company or an individual, resident of EU or countries that have agreements on avoidance of double taxation with Ireland;

b) a company under direct or indirect control of persons who are residents in EU or countries that have agreements on avoidance of double taxation with Ireland.

The Irish company is exempt from capital gains tax if its income is derived by disposal of shares of subsidiaries (with the possession of more than 5% continuously for more than 12 months) - residents of the EU or countries that have a tax treaty with Ireland.

VAT in Ireland is 23%. For some types of goods and services a reduced rate is applied.

There is no legislation on controlled foreign companies in Ireland, that excludes the possibility of enforced imposition of Irish tax on a controlled foreign company undistributed income. Moreover thin capitalization rules are not applied, which allows to provide financing of an Irish company through borrowed assets. 

Financial statements and audit 

The Company shall keep accounting. The company secretary shall keep the register of members, directors and secretaries, minutes of general meetings and meetings of the Board of Directors. All companies are required to submit annual reports (Form B1), containing information about the directors, secretary, registered office, shareholders,  equity and auditors. The first such report is filed 6 months after incorporation.

Irish companies are also required to submit annual financial statements in accordance with IFRS or accounting standards generally accepted in Ireland. These statements are subject to audit by a certified auditor. A company is exempt from the audit if it meets, inter alia, the following conditions:

1) annual turnover does not exceed 8.8 million Euro;

2) the amount of the company's assets at the end of the financial year does not exceed 4.4 million Euro;

3) The number of employees does not exceed 50 persons;

4) The Company shall not be a parent or subsidiary;

5) All reports must be filed in a timely manner.

The tax period for Irish companies is 12 months. The company is obliged to file a tax return within 9 months after the end of the tax period. Tax returns are filed electronically.

Information available to third parties

The register of shareholders and directors in Ireland is public. Information about the structure of the company is also publicly available. Information about the actual owner and banking operations is not available to third parties and can only be opened by a decision of the local court.

Agreements on avoidance of double taxation

Agreements on avoidance of double taxation are signed with 68 countries. There is a number of agreements on tax information exchange concluded.