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Roberts Nathan News

  Business Advice

Are you a UK Based Director of an Irish Registered Company?

The (European Union) EU and the United Kingdom (UK) finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit.  However, this does not change the fact that the UK has left the EU and therefore is no longer part of the EU single market and customs union and is now regarded as a third country.  This creates a very real issue for a number of companies and their Directors in the UK and Ireland.

In this article, Roberts Nathan Partner Aidan Scollard reviews the potential significant changes for UK resident Directors of Irish registered companies as the UK now becomes a third country.  Although there are more than 60,000 Irish Directorships of UK registered companies there are also a significant number of UK based directors of Irish companies for which Brexit now creates significant changes.

EEA Resident Director Requirement

Companies Registration Office have previously alerted service providers to the fact that under Irish company law an Irish registered company must have at least one European Economic Area (EEA) resident Director on the board on an ongoing basis or a bond in place to cover filing liabilities.

Many Directors based in the UK who are either of Irish decent or UK based companies who have established Irish entities as part of their Brexit planning will need to consider this likely change.

Where an existing Irish company has fulfilled this Director requirement by appointing a UK resident director they should now consider replacing that director or adding an additional director who is an EEA-resident.

It should be noted that this requirement is based on residency, not nationality. Thus for example, a company director of Irish nationality who lives in the UK and has done so for a number of years is unlikely to satisfy the EEA requirement in the future which is a question a number of our clients have been considering.

S137 Bond

It is possible for a company to put in place a Section 137 Revenue Bond which is an insurance policy that CRO approve in replacement of having an EEA resident individual on the board. This insurance policy covers against fines or penalties incurred to the value of €25,000 for non-compliance and covers the company for a period of two years at which point the company will either need to renew the bond or appoint a director who meets the requirement.

The bonds are relatively easy to put in place but will have a premium cost to maintain for the two year period and we have put these in place for a number of clients recently.

The Exception to the Rule – ‘Real and Continuous link’

It is possible for the Directors of an Irish Company who have no EEA-resident directors to apply to the Revenue Commissioners for a Statement under Section 140 of the Companies Act 2014 which, if granted, will relieve the company from the requirement to hold a Bond or to have an EEA-resident director.

This Statement is granted based on the company having a ‘real and continuous link to the State of Ireland’. The successful company will need to satisfy one or more of the following two conditions:

  1. The affairs of the company are managed by one or more persons from a place of business established in the State and that person or those persons is or are authorised by the company to act on its behalf.
  2. The company carries on a trade in the State.

Furthermore, a company may be granted this Statement based on either of the following two conditions:

  1. The company is a subsidiary or a holding company of a company or other body corporate that satisfies either or both of the conditions specified in 1 and 2.
  2. The company is a subsidiary of a company, another subsidiary of which satisfies either or both of the conditions specified in 1 and 2.

This Statement is granted based on retrospective activity and will generally not be granted to a company that intends to have a real and continuous link to the state.

Once the Statement is made by Revenue to the successful company, the Company Secretary can apply to the Registrar of Companies for a certificate that exempts the company from the Section 137 bond requirement or the need to have an EEA-resident director appointed to the board.

Application for this exemption to Companies registration office must be accompanied by this statement from the Revenue Commissioners made within two months of the date of the application of the Revenue Commissioners statement.

This is the common basis that we see UK parent company clients using for their Irish operating subsidiaries and we have helped a number of clients in this area where they can clearly prove that there is a real and continuous activity here in the Irish state.

Final Word

Company Directors need to consider the implications since the UK has left the EU and consider their options. As with any legal or accounting issue early advice is important.

Contact us if you wish to discuss the impacts of any of these changes to your company structures here in Ireland and any structure planning requirements or to obtain a bond.

January 21, 2021
  Audit

Brexit deal done; What next?

Aidan Scollard, Partner at Roberts Nathan, provides his view on what Irish businesses dealing in cross-border trade with the UK need to consider following the recent Brexit agreement between the European Union and United Kingdom of the Free Trade and Cooperation Agreement.   The Deal The (European Union) EU and the United Kingdom (UK) finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit and the risks of duties and tariffs under WTO rules. However, this does not change the fact that the UK has left the EU and therefore is no longer part of the EU single market and customs union and is now regarded as a third country. This status has significant consequences for businesses in different areas such as cross border trade, the imposition of VAT on transactions and the free movement of people. At 1,246 pages and affecting over $900 billion worth of goods and services, the TCA is the most ambitious and far-reaching trade agreement ever concluded by the EU. Irish businesses will need to fully comprehend the effect of the TCA on cross-border trade between the EU and UK. A new Partnership Council, co-chaired by the European Commission and the UK government, will oversee the agreement’s implementation and management. A large number of committees and working groups will be established to oversee the details of new arrangements at a more-granular level, including resolving any technical issues arising from the agreement or ensuring proper functioning of new rules. The new UK-EU relationship is fluid, and these bodies will be making judgments and issuing guidance that will have the potential to change market access and frameworks. In short, things are likely to change and there will be an extended period of adjustment. Highlights Further review of particular aspects of the TCA will be required in the coming months, but in the meantime we set out some highlights of the main initial impacts of the TCA:  TARIFF AND QUOTA FREE TRADE OF GOODS
  • The TCA establishes zero tariffs or quotas on trade between the UK and the EU, where goods comply with rules of origin requirements.
  • Notwithstanding the tariff and quota free trade enshrined in the TCA, certain technical barriers to trade continue to apply and address issues related to technical regulation, conformity assessment, standardisation, accreditation, market surveillance and marketing and labelling.
  • While Brexit ends the EU ease and simplicity of moving goods freely, the TCA adds administrative burdens and no duty or tariff taxes.
TRADE IN SERVICES
  • The TCA includes well-established provisions on cross-border trade in services that will secure continued market access across a broad range of sectors, including professional and business services, financial services and transport services, and will support new and continued foreign direct investment.
  • In relation to financial services, although the TCA provides for “continued market access” the details have been left for later. The EU and the UK are yet to discuss “specific equivalence determinations” which will eventually be codified in a Memorandum of Understanding.
  • The UK and the EU have agreed a framework for the recognition of professional qualifications which is based on the EU’s recent free trade agreements.
  • The effect of Brexit and the TCA on cross-border trade in services differs from sector-to-sector. For example, UK resident financial services firms previously possessed “passporting rights” which allowed them to sell financial services into the EU. The TCA has not granted equivalent rights meaning that on 1 January 2021 UK resident financial firms will (as expected) lose their right to sell financial services in the EU.
SUBSIDIES AND STATE AID
  • One of the key issues of concern of the EU was ensuring that the UK could not grant subsidies (tax or otherwise) to UK businesses which would effectively allow them to undercut similar businesses in the EU.
  • The EU and UK are free to determine their own rules relating to the granting of subsidies but are bound by broad principles which must inform the contents of the rules which must ensure that the granting of a subsidy does not have detrimental effects on the trade between the EU and UK.
  • The EU and UK shall each establish independent bodies which will design and oversee these rules and which are subject to the review of their respective domestic courts.
  • The EU and UK have agreed on a reciprocal dispute resolution mechanism (an accelerated arbitration procedure) where a party is of the opinion that a subsidy is causing, or is at risk of causing, significant harm to its industries.
  • Whilst part of the EU, the UK was bound by EU laws related to state aid and government subsidies and was subject to oversight by the European Court of Justice (EUCJ), a sore point for the UK public. Brexit effectively removes the applicability of these laws and jurisdiction of the EUCJ.
  • There is also a ‘most-favoured nation’ clause, which ensures that, if either the UK or the EU gives more-favourable terms to another country in future, those terms will automatically extend to the UK/EU deal.
  • However, these provisions are subject to a long list of exceptions, which vary from one member state to another.
PEOPLE AND MOBILITY
  • Residence rights in existing cases in the UK and EU will continue to be respected as long as the residence situation remains unchanged. New residency applications after the transition period will likely be subject to the same procedures as for third countries.
  • Existing (frontier) workers will have the right not to be discriminated against on grounds of nationality as regards employment, remuneration and other conditions of work and employment. In addition, they will have the right to take up and pursue activities and assistance by employment offices in the same way as offered to own nationals as well as rights to tax, social advantages, housing benefits and access to education for their children.
  • Prior to Brexit, UK citizens (like all other EU citizens) were granted unrestricted rights to live and work in the EU, and vice versa. Post Brexit, closer consideration will be required for non-EU workers and transfers, however the UK / Ireland Common Travel Area provisions allow for continuation of citizens of each of those countries to live, work and retire to each other’s jurisdiction.
Conclusion While many potential immediate difficulties have been avoided the devil will be in the detail. The implementation of the trade and cooperation agreement (TCA) in the coming months will require ongoing review by Irish companies trading with the UK (and vice versa) as practical issues arise on the movement of goods and supplies of services.  Particular changes around taxation and accounting treatments will likely arise as the UK changes its relationship to having a third country status with the EU. We will provide ongoing updates and can assist your business as circumstances change. If you require any assistance on these matters please contact your usual contact Partner in Roberts Nathan.   Document References:
EU-UK_Trade_and_Cooperation_Agreement_24.12.2020 (1) Brexit agreement summary
January 8, 2021
  Audit

RN Podcast: 2020 – The Year that was, and 2021 potential for business growth

As we close out on 2020, we have produced a podcast where we take a look at the year that was, and provide our view on what businesses might expect in 2021. Aidan ScollardBrendan Kean and Derek Dervan, partners with Roberts Nathan discuss three main areas likely to impact Irish businesses as well as some tips when planning for 2021:
1. The implications of the Covid vaccine on Irish businesses. Cashflow and succession planning have become very important for business owners, however some good has come from Covid in terms of the opportunities it has created for doing business in a new way. It may also bring about potential M&A and real estate activity, and possible increased consumer spending in the year ahead.
2. Brexit and planning around UK businesses setting up operations in Ireland.
3. Budget 2021 Capital Acquisition and Gains taxes, Entrepreneurial Relief, Pensions and Retirement Relief.
Roberts Nathan podcast discussing 2020 the year that was, and why 2021 has potential for business growth for Irish SME businesses
We hope you enjoy listening to our podcast and if you have any questions regarding any of the points raised please let us know.
 
December 17, 2020
  Audit

Roberts Nathan Welcomes New Audit Director

Roberts Nathan has announced Eilish Haughton as a key senior appointment to provide and oversee audit and advisory services for entrepreneurial led and SME companies in Ireland and the UK. Eilish Haughton is an experienced accountant with over 18 years’ experience gained in two of the top six accountancy firms in Ireland. Eilish is a Business Studies and Accountancy graduate of TU Dublin and a Chartered Accountant. Welcoming Eilish to her new role, Brendan Kean, Dublin Managing Partner said: "I am delighted Eilish has joined us, not only will she bring very strong functional experience to enhance further our audit and advisory services, but her addition will also grow our capabilities as a key full-service accountancy firm supporting Irish business and entrepreneurs.” Eilish Haughton added, “Providing an attentive client service, combined with a strong reputation for excellence is what is different about Roberts Nathan – I’m very excited to join the team here and look forward to us delivering on our ambitious plans and building life-long partnerships with our clients.” Established in 1997, Roberts Nathan has grown significantly since inception. With offices in both Dublin and Cork the firm has grown to become one of the most trusted professional practices in Ireland with a team of more than 50 professionals. Pictured (Pre-Covid) L/R: Eilish Haughton, Audit Director; Brendan Kean, Dublin Managing Partner; Aidan Scollard, Partner; Derek Dervan, Partner.  
December 2, 2020
  Uncategorized

Temporary Covid-19 Wage Subsidy Scheme

Phase 1 - March – 20th April 2020     What is the Scheme?  
  • The scheme will operate to refund employers up to 70% of the net wage paid to employee subject to the thresholds detailed below.
  • Refunds under this Scheme will be issued to employers with 2 working days.
  • It replaces the previous €203 refund scheme and any employer who opted to operate this scheme will be contacted by Revenue to transfer to this new scheme.
  • Employers are encouraged, but not obliged, to top-up the subsidy to bring the net wages of employees as close to 100% as possible.
  • The Scheme can be applied even if an employees working hours have been reduced.
  • The Scheme will operate in 2 phases:
Phase 1 – March to 20th April 2020 (this document only deals with Phase 1) Phase 2 – 20th April 2020 onwards (awaiting further guidance from Revenue)   Who Qualifies for the Scheme?  
  • The Scheme is available to employers who are:
experiencing significant negative economic disruption due to Covid-19 able to demonstrate a minimum of a 25% decline in turnover unable to pay normal wages and normal outgoings fully, and retain their employees on the payroll. The Scheme is only available to employees who were on the employer’s payroll as at 29th February 2020 and for whom a payroll submission has already been made to Revenue in the period from 1st February to 15th March 2020. The employer is not to pay in excess of an employee’s usual net wages. Employers who avail of the Scheme will be published on Revenue’s website.   How will the Scheme Operate?   Phase 1 - For March and up to 20th April 2020 (Transitional Period)  
  • During this period the Scheme will refund employers a maximum of €410 regardless of the employee’s income.
  • However for administration purposes the employer is being asked to return the following information on the payroll:
Set PRSI Class J9 Enter a non-taxable amount equal to 70% of the employee’s Average Net Weekly Pay to: maximum of €410 per week where the average net weekly pay is less than or equal to €586or maximum of €350 per week where the average net weekly pay is greater than €586 and less than or equal to €960.
  • The Scheme does not currently allow for any refund where the employees average net weekly pay is greater than €960 per week.
  • No IT, USC or PRSI is to be levied on the subsidy payment through payroll. The subsidy will be liable to IT and USC on review at the end of the year. Revenue have yet to announce how this will operate.
  • Employer’s PRSI at a rate of 0.5% (down from 11.5%) applies to any top-up amounts.
  • IT and USC should be applied on any top-up amounts.
  • It is likely that the Scheme will trigger tax refunds for employees and employers can pay over the tax refunds to employees. Revenue will reimburse the tax refunds to employers.
  Phase 1 Examples                                                                                               (a)   Average Net Weekly Wages €210   Anna’s average net weekly wages is €210. In Phase 1 the refund will operates as follows:   On the payroll submission the Covid-19 refund amount will be declared as €147 (i.e. €210 @ 70%). Revenue will refund the employer €410 regardless.   The over-refunded amount €263 (i.e. €410 - €147) will be due back to Revenue. Though we are awaiting guidance on how that will operate in practice.   (b)   Average Net Weekly Wages €550   Tom’s average weekly wages is €550. In Phase 1 the refund for Tom’s employer will operate as follows:   On the payroll submission the Covid-19 refund amount will be declared as €385 (i.e. €550 @ 70%). Revenue will refund the employer €410 regardless.   The over-refunded amount €25 (i.e. €410 - €385) will be due back to Revenue.       (c)    Average Net Weekly Wages €586   Jack’s net weekly wages is €586. The refund scheme will operate as follows:   On the payroll submission the Covid-19 refund amount will be declared as €410 (i.e. €586 @ 70%) and Revenue will refund the employer €410 regardless.   There will be no ‘over-refunded’ element in this case.   (d)   Average Net Weekly Wages €675   Jane’s average net weekly wages is €675 (as this is above the €586 threshold above, Jane’s maximum subsidy under the Scheme will be capped at €350). The refund will operate as follows:   On the payroll submission the Covid-19 refund amount will be declared as €350 (i.e. the maximum threshold for this wage amount). Revenue will refund the employer €410 regardless.   The over-refunded amount €60 (i.e. €410 - €350) will be due back to Revenue.   (e)    Average Net Weekly Wages €1,110 Mark’s net weekly wages is €1,100. He breaches the €960 net weekly wage maximum and therefore is not entitled to avail of the scheme.   Phase 2 – 20th April 2020 Onwards   We are awaiting further guidance from Revenue in respect of this phase.   Kind Regards,   Vivian E. Nathan Managing Partner
March 27, 2020
  Business Advice

Government Supports for Covid-19

Covid-19 has already caused a major disruption to businesses which has led to financial insecurity for both employers and employees. Below, we have summarised the Government supports to help both employer and employees through this difficult period. Please note that the below has been prepared based on the information available to us and we will regularly update you as new information is released.   Provisions for SMEs   The most challenging difficulty facing employers at present will be managing cash-flow, the below are some of the steps the Government and Revenue Commissioners have announced to ease the burden for employers.   The Revenue Commissioners have made the following concessions for SMEs (i.e. Irish companies with a turnover of less than €3 million):  
  • The application of interest on late payments is suspended for January/February VAT and both February and March PAYE (Employer) liabilities.
  • All debt enforcement activity is suspended until further notice.
  • The current tax clearance status will remain in place for all businesses over the coming months.
  • The RCT rate review due to be conducted on 28th March 2020 has been suspended.
  The Revenue Commissioners have advised that taxpayers should continue to make returns on time, even if the payment will not be made. They are also actively encouraging taxpayers and agents to engage with them during this difficult period.   Please note that the above concessions only apply to SMEs and all other businesses experiencing cash-flow and trading difficulties should contact the Collector General’s office on 01-7383663.   Employer Covid-19 Refund Scheme   The Department of Employment and Social Protection (DEASP) is asking employers to retain employees on the payroll to avoid a surge of applications for the Temporary Lay-Off Payment. DEASP is requesting employers assistance by paying employees the flat-rate of €203 per week,  the Revenue Commissioners will refund the payment to employers on a ‘next day’ basis for returns filed by 2pm.   Please note that if employers ‘top-up’ this amount then they will not be entitled to receive any refund from Revenue. Therefore, employers availing of this payment on behalf of employees should only pay the €203 flat rate.     Self-Employed & Employees Temporarily Laid-Off   Where a self-employed individual has ceased trading or an employee has been temporarily laid-off they can apply for the Covid-19 Pandemic Unemployment Payment. This is a flat rate of €203 per week for a maximum of 6 weeks. Employees should apply for Jobseekers Benefit at the same time to ensure that they continue to receive a payment after the 6 weeks of the emergency payments has ended. It is important to note that you do not need to go to your Intreo Centre – any employees affected by temporary layoff can process an application online, without the need to present in person at their Intreo or social welfare branch offices.   You may apply in the following ways:
  • If you do not currently hold a Public Services Card an application form for the new Covid-19 Pandemic Unemployment Payment can be completed and returned to FREEPOST PO BOX 12896, Dublin 1;
or
  Short Time Work Support Payment   This payment is available to qualifying individuals whose hours have been reduced or who have been put on short-time working. To apply for this Employees must work 3 days or less having previously been employed on a full time basis.  A person’s duration of eligibility and rate of payment for Short-time Work Support depends on their PRSI contributions, weekly earnings and the nature of the change to their work pattern.   There are 2 forms to be completed when making an application, a Jobseeker’s allowance/Benefit Application Form (UP1) and a Short-time Work Support form (UP14 STWS).   Revenue will continue to closely monitor the evolving situation regarding Covid-19 and will issue further updated guidance for businesses when required and particularly in good time before the March/April VAT returns, and other future returns are due.   If you would like any further information on the supports available to you and/or your business please do not hesitate to contact us.
March 21, 2020