Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Irish business registration ii) business licensing iii) Irish business banking solutions iv) visa options and staff recruitment strategies and v) tax planning solutions.
Tax resident LLC
Tax resident PLC
Company limited by guarantee
Best use of company?
Global trading company
Stock exchange listing
Marketing and research
Legally tax exempt if properly structured?
Effective corporation tax rate on net profits of €500,000?
Tax resident companies of all sizes enjoy the following tax incentives:
The corporation tax rate is 12,5%, the second lowest in the EEA after Bulgaria;
For the first 3 years of operations, the first €320,000 of annual net profits are legally tax exempt;
The annual corporation tax bill is reduced by the cost of R&D expenditure in that year; max 25%;
In the first year of business, trading profits are reduced by expenditure incurred in the three years prior to the commencement of a trade;
If the Irish LLC is properly structured, investment income is legally tax exempt including i) subsidiary dividends ii) interest and royalty and patent income and iii) foreign branch profits;
There is no withholding tax on outbound payments to treaty countries and EU countries; including dividends, interest and royalties;
Capital gains tax exemption on disposal of international subsidiaries;
Trading losses may be i) carried forward indefinitely against future trading profits ii) carried back for one year or iii) allocated within Group companies or iv) offset against capital gains tax liabilities;
Small and medium-sized companies are outside the scope of the transfer pricing provisions;
An Irish LLC is exempt of all VAT, if at least 75% of sales turnover arises from the export of goods;
Ireland boasts a double taxation treaty network comprising 72 countries;
An independent statutory audit exemption for small companies with annual sales turnover less than €8m;
An Irish LLC receives a cash grants of €10,000 for each staff member hired from the long term unemployed pool. Free re-training and re-skilling courses for these employees;
The Government offers a portfolio of Business & Technology Parks in strategic locations;
The close link between multi-national companies and Irish universities encourages leading-edge research
Hedge funds are exempt from Irish corporation tax and capital gains tax. Consequently, over 40% of global hedge fund assets are serviced in Ireland; €1.9 trillion in assets are under administration in Ireland;
An Irish company is legally tax exempt and classified as non-resident if i) no business is done in Ireland ii) if the majority of shareholders and directors reside overseas iii) the entity neither has staff nor premises nor a corporate bank account in Ireland;
An international tax haven company is allowed to migrate the entity to Ireland. This is attractive to Clients’ who wish to abandon the use of tax haven companies, choosing instead to trade through reputable zero tax entities like an Irish LLC. For example, a BVI entity can elect to be an Irish resident or non-resident Irish company, keeping the same name and international corporate bank account. The BVI LLC will thereafter no longer exist;
Disadvantages to Irish business set up
An Irish LLC suffers Irish VAT on imported goods and services, ranging from 0% to 23%. Goods imported into Ireland from outside the EU suffer customs duties;
An Irish LLC suffers 25% corporation tax on annual net profits arising from passive income including i) local rents ii) local investment income or iii) income from oil, gas and mineral exploitations. A properly structured Irish LLC receiving international investment income enjoys the lower rate of 12.5%;
The employer employee relationship is complicated by:
An 11% mandatory Government employer PRSI contribution;
The existence of powerful industrial Unions;
The obligation to pay compensation to employees dismissed for reasons of redundancy;
Employees frequently force employers to attend Employment Appeals Tribunals re unfair dismissals;
Female employees are entitled to 42 week’s unpaid maternity leave;
In addition to income tax, employees of Irish companies suffer a punitive unpopular Universal Social Charge of 7% of gross remuneration;
A small tax resident Irish LLC suffers a surcharge of 20% on the undistributed investment and rental income. Professional services companies suffer a surcharge of 7.5% on undistributed trading income. Healy Consultants helps our Client legally eliminate this tax;
Unfortunately, Irish parent and subsidiary companies must submit annual financial statements to independent statutory audit; regardless of sales income levels;
VAT registration is necessary if annual sales will likely exceed €75,000 in respect of supplying goods and €37,500 in respect of supplying services;
VAT rates range from 0% to 23% depending on the type of product or service;
An Irish LLC is allowed to register for VAT if it makes taxable supplies;
Irish resident companies are liable to corporation tax on their worldwide income and capital gains;
In cases where the company is resident in a country that has concluded a tax treaty with Ireland, liability to corporate tax will depend on whether the company carries on a trade in Ireland through a permanent establishment (PE).
An Irish LLC corporation tax bill is reduced by foreign tax paid on the same income. Excess foreign tax credits can i) be carried back to the previous years or ii) claim a cash payment from the Government or iii) offset against payroll taxes;
Capital expenditure for the purchase or acquisition of patent rights may be written off in equal amounts over 17 years or the remaining life of the patent, whichever is shorter.
An Irish LLC must file a corporation tax return within 10 months of the accounting year end;
A tax credit of 25% of the incremental R&D expenditure can be offset against a company’ corporation tax liability in the year in which it is incurred. Any remaining excess can be carried forward indefinitely for use against future corporation tax liabilities;
A tax credit is also available for construction or refurbishment work carried out on a building used for qualifying research and development activities. The credit is equivalent to 25% of the qualifying cost of construction or refurbishment and may be claimed in full in the year in which the expenditure is incurred. This additional tax benefit makes Ireland a more
Ireland’s tax legislation incorporates an exemption for income derived from ‘qualifying patents’. A qualifying patent is a patent in respect of which the research, planning, processing, experimenting, testing, devising, designing, developing or other similar activity leading to an invention was carried out in Ireland;
An Irish LLC patent income is exempt from corporation tax. In addition, the tax-free nature of such income can be passed through a company to the shareholders who receive dividends from a company that qualified for the patent income exemption;
International dividends income is free of Irish corporation tax if i) the foreign subsidiary is tax resident in the EU or ii) a Treaty Country and iii) the dividends are paid out of ‘trading’ profits of the foreign subsidiary which iv) suffered at least 13% foreign corporation tax or withholding tax;
For companies with a tax liability not exceeding EUR 200,000 in their previous accounting period, preliminary tax of 100% of the prior year liability or 90% of the current year liability is payable on 21st of the month preceding the accounting year end. The balance of the tax is payable on the date the return is due to be filed;
For companies with a tax liability exceeding EUR 200,000, the first instalment will be payable on 21st day of the sixth month of the accounting period and the amount payable will be 50% of the corporation tax liability for the preceding accounting period or 45% of the corporation tax liability for the current accounting period. The second instalment will be payable on the 21st day of the 11th month of the accounting period and the amount payable will bring the total preliminary tax paid to 90% of the corporation tax liability for the current accounting period. The balance of the tax is payable on the date the return is due to be filed.
Other tax considerations
Ireland does not have capital duty or net wealth taxes;
An Irish LLC suffers 33% capital gains tax on gains arising from the disposal of capital assets;
Stamp duty of 1% applies on the transfer of common stock of an Irish company. Transfers of most other forms of property suffer duty of 2%;
To promote renewable energy sources, an Irish LLC suffers a carbon tax rate is €20 per tonne of CO2 emitted and is added to the cost of fuel;
Group companies include i) entities in Ireland and in EU member states ii) entities in a treaty country and iii) a company quoted and traded on a recognised stock exchange. Group relief applies to subsidiaries at least 75% owned;
Small companies are exempt from having financial statements audited. To qualify for the exemption a company must have:
A turnover of less than EUR 7,300,000; and
A balance sheet total of less than EUR 3,650,000 and
An average number of employees fewer than 50.
This small company audit exemption does not apply to:
Parent companies and their subsidiaries
Banks and financial institutions
Any company that files a late annual return.
Legal and compliance considerations
As a common law jurisdiction, the Irish legal system is similar to that of the US and the UK;
Intellectual property (IP) is often a company’s most valuable asset. The intangible asset must continue to be used in a trade for 10 years to avoid triggering a clawback of the relief obtained. It comprises:
patent, registered design, design right or invention;
trade mark, trade name or trade dress;
brand or brand name;
domain name, service mark or publishing title;
authorisations to sell medicines, etc.
customer lists , except where acquired as part of the transfer of a business as a going concern;
any licence in respect of, and any goodwill attributable to, the above;
costs associated with applications for certain legal protection.
Ireland is also a member of the OECD.
Ireland is a signatory to the European Patent Convention (EPC) and the Patent Cooperation Treaty (PCT). Applications for a European patent can be filed at the Irish Patents Office and all or any of the 36 member countries of the EPC may be designated in a European patent application. A PCT application designating Ireland is deemed to be an application for a European patent for Ireland and will be processed in accordance with the EPC.
The executive powers of a company remain with the directors. They are responsible for the day-to-day running of the company and must act in the best interests of the company and shareholders. The duties of directors are widespread. On appointment, a director must acknowledge that he/she performs the legal duties and obligations imposed not only by the Companies Acts but also all other enactments, including common law. A company must have at least two directors (there is no maximum).
Basic research, namely experimental or theoretical;
Work undertaken primarily to acquire new scientific or technical knowledge without a specific practical application in view;
Applied research, namely work undertaken in order to gain scientific or technical knowledge and directed towards a specific practical application;
Experimental development, namely work undertaken which draws on scientific or technical knowledge or practical experience for the purpose of achieving technological advancement and which is directed at producing new, or improving existing materials, products, devices, processes, systems or services including incremental improvements thereto. In order to qualify for the tax credit, it is necessary to seek to achieve scientific or technical advancement and to involve the resolution of scientific or technological uncertainty.
Ireland has established a Labour Relations Commission (LRC) and Labour Court to assist in finding resolutions to labour related disputes in an effective and efficient manner.
The maximum average work week is 48 hours, but some exceptions are allowed. Although the legal maximum for basic pay is a 48-hour week, generally the standard working week in collective agreements is 39 hours. Collective agreements can also provide for rates of pay for overtime; for example, the current registered employment agreement for the construction industry provides for overtime rates of pay of time-and-a-half until midnight Monday to Friday and double time thereafter.
Did you know about Ireland?
The Irish Government is very welcoming of multi-national companies because
Almost 1,500 companies have chosen the country as their base to do business, not just those from throughout Europe, but worldwide.
Overseas companies located in Ireland at present account for approximately 88% of all Irish exports.
For additional information on our business registration services in Ireland, please email us at firstname.lastname@example.org. Alternatively please contact our in-house country expert, Mr. Petar Chakarov, directly: