Sunday, May 24, 2009

Guide for Non-Residents setting up an Irish Company

Ireland’s Low Taxation Environment

Ireland has long been a leading choice as a base for many international businesses. Small and medium sized businesses can benefit from an Irish base as much as the large multi-nationals. The most popular and well known reason for setting up in Ireland is its low corporation tax environment. Ireland has one of the lowest corporate tax rates in both the EU and the world, at only 12.5% on trading activities.

In addition, a new incentive exists for new companies which commence trading in 2009. This is an exemption from corporation tax for the first THREE years of trading, an effective 0% rate of corporation tax. There is currently no information as to whether this incentive will be made available again for new companies in 2010. This makes 2009 one of the best times to set up a company in Ireland.

Other Reasons for Setting Up in Ireland

Of course there are a great range of other reasons to set up a base for your business in Ireland. These include:

  • Extensive Double Taxation Treaty network with countries all around the world;
  • No withholding tax on branch profits;
  • No withholding tax on dividends to EU or treaty countries;
  • Tax credits available for research and development expenditure;
  • Young and well-educated workforce;
  • Established and stable business environment with advanced infrastructure.

How Can A Non-Resident Set Up A Company In Ireland?

Forming a company in Ireland is a straight forward process. Company formation agents, including Fenero, can assist you with the necessary paperwork which enables your company to be set up and ready to use in 3-5 days.

All Irish companies are required to have a minimum of 2 directors.

At least one director is required to be Irish resident. The company can exempt itself from the requirement to have an Irish resident director by holding a bond, in the prescribed form, in force to the value of €25,394.76. The bond must have a minimum validity period of 2 years. A valid bond must be in place for as long as there is no Irish resident director in place.

What Is An Irish Resident Director Service?

If you are unable to provide an Irish resident director, you can avail of a Irish Resident Director service whereby an Irish resident director is provided to the company at a fee.

Should I Choose A Bond or An Irish Resident Director Service?

As with everything, there are cost considerations. The cost of putting a bond in place is normally cheaper than availing of an Irish resident director service.

However, if any of your reasons for setting up a company in Ireland are to avail of the low corporate tax rates, then it is crucial to be fully aware of the impliations of your choice between selecting a bond or an Irish resident director.

In order for a company to be eligible for the 12.5% corporation tax rate, it must be considered to be Irish resident. The term 'residence' was not until recently defined in law. The general rule was that companies whose 'central management and control' was exercised in the State, were treated as resident here. This rule or test emerged as a result of judicial decisions set down in case law.

Factors to be taken into account in establishing where the company's central management and control lie include:
  • Where meetings of the Board of Directors are held;
  • Where the majority of directors reside;
  • Where the company's head office is located.

Due to the above, it is highly recommended than Irish resident director and an Irish registered office be provided to any company wishing to avail of the 12.5% corporation tax rate.

Further information regarding the rules for determining whether a company is eligible for the 12.5% corporation tax rate can be found on the Irish Revenue website by clicking here.

Why Choose Fenero?

We are members of the Association of Chartered Certified Accountants (ACCA), the global body for professional accountants. Fenero is a Dublin based professional services practice offering a full range of company formation, accounting, tax and financial services. We offer a fully comprehensive menu of all services that you may require, both to ensure that your company is compliant with all legal and tax issues, and also to ensure that you take advantage of all incentives available to you in order to financially make the absolute most of basing your business in Ireland.

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