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News Brexit

  Brexit

Recent Changes in Director Residency Requirements for Irish Companies (BITA Article June 2021)

Brexit continues to cause issues for companies and especially UK based Directors of Irish companies. Roberts Nathan Partner, and Dublin Chair, Aidan Scollard, explains. While the EU and the UK finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit in late December 2020 there were uncertainties created around the impact on UK resident Directors of Irish registered companies.   As the UK had left the EU and is therefore now regarded as a third country this created a significant impact where there was no other Irish or EEA resident Director on the Irish company board (even if this was a subsidiary of the UK parent company). While 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.  EEA Resident Director Requirement Companies Registration Office (the Irish equivalent of Companies House) had previously alerted 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 put a bond in place to cover filing liabilities.  Where an existing Irish company had fulfilled this Director requirement by appointing a UK resident to the Director role up until 31st December 2020 this will no longer qualify.  They should now consider replacing that Director or adding an additional Director who is an EEA-resident unless exempted.  The CRO had initially muted that they would require a B10 for every UK Director stating a change in details from being an EEA resident to being a non-EEA resident but this is now confirmed as only requiring to be declared at the next annual return. The Director requirement is based on residency, not nationality and so, 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.   Companies and their officers must self-assess their compliance with the requirements of company law Options There are a few options available for those companies now:
  • Appoint an EEA resident to your Irish company board
  • Put a bond in place - an insurance policy that CRO approves in replacement of having an EEA resident individual on the board
  • 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 Irish Revenue Commissioners for a Statement under Section 140 of the Companies Act 2014
How will this be enforced? CRO have now confirmed that where a company has only UK resident directors and requires a bond to be put in place due to the UK no longer being part of the EEA, that a form B10 will be required to be filed noting the change in particulars for the directors and attaching the bond.  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. Where no such bond is needed (under the exemptions) the company will not require the filing of a form B10 and companies can instead update the classification of the UK Directors from EEA to non-EEA resident Directors on the next filed form B1 annual return.   For most Irish companies the Annual Return Date is at end of September and so companies should now start to plan for these changes.   Final Word Company Directors need to consider the implications on their Irish companies since the UK has left the EU and consider their options.  As with any legal or accounting issue early advice is important as failure to deal with this is a company law offence. Contact us if you wish to discuss the impacts of any of these changes to your company structures here in Ireland or any planning or bond requirements. (aidan.scollard@robertsnathan.com / www.robertsnathan.com). To see the article in full, follow the link: BITA Article June 2021
August 4, 2021
  Brexit

Six Months Since Brexit – Is the Dust Finally Settling?

It’s been over six months since the UK left the EU single market. We now know that many small (and not so small) exporting businesses in the UK have experienced multiple issues that have affected their businesses arising from new customs and vat treatments. Operating an export business in the UK since Brexit has become a lot more challenging. It’s been widely reported that moving part or all of their business activities from Britain to the EU has been successful and that they are “benefitting from abundant skilled labour and the ability to continue to avail of the freedoms of movement of labour and goods within the EU’. As a result of Brexit, additional challenges have come into play for UK businesses to continue their trading activities with their old EU customers. Many owners have experienced severe delays in the shipping of goods into Europe, due to changes in customs and export documentation as a result of being a third country and in addition, resulting higher processing costs to continue supplying their European customers. Several UK clients have restricted their trading initially with their EU customers as their profit margins have diminished or have been reduced significantly or eliminated entirely.  Other UK clients have sought advice from us on the requirement involved in setting up an additional EU location for their business in Ireland, in order to remain within the EU trading block as they had before December 2020 and so effectively ‘turning back the clock’.  In this way they can also avail of deferred Vat accounting on bringing goods into the EU and no potential for double duty costs on moving goods via the UK. Meanwhile other clients have approached us to seek our advice to establish an Irish subsidiary company (of their UK parent company) that allows them to continue to effectively service their European client base by conducting operations from Ireland and remain as an EU trading entity.  The solution remaining inside the single market in this way benefits those businesses with a more extensive client base as it allows the company to transfer goods in bulk, avoiding customs processing costs and delays on individual items that have otherwise resulted in higher costs and lower profit margins and potentially defer the VAT cash flow cost of bringing goods into the EU until ultimately sold on.  The Financial Times did a recent survey which found that of those UK based companies that continue to trade within the EU, over a third of businesses have experienced significant negative impacts on their exports to EU customers. Now that the dust is settling somewhat, if you are an advisor to affected clients, or are a business owner, whose business has been impacted since Brexit, we at Roberts Nathan are here to provide any help and assistance you may require. We have already helped many UK businesses in this evolving situation. If you would like to explore further options around your business, please contact Peter Roberts or Tomas O’Leary in our Cork office or Aidan Scollard in our Dublin office who would be delighted to assist you. Peter Roberts: peter.roberts@robertsnathan.com  or Tomas O’Leary: tomas.oleary@robertsnathan.com Tel: +353214217940 Aidan Scollard: aidan.scollard@robertsnathan.com Tel:   +35318764550 +353 86 2523 026  
July 22, 2021
  Business in Ireland

Setting Up a Company in Ireland F.A.Q’s

What are the basics I need to know? Before they became clients of ours, many business owners had the following questions they needed answers to when considering setting up a company in Ireland. As a result, we have decided to answer the most frequently asked questions we regularly receive.  
  • What do I need to consider when registering for a VAT number in Ireland?
Difficulties can arise when registering VAT due to how common VAT fraud is and therefore the authorities can be slow to issue a VAT number. It helps if you have Irish-based clients, suppliers and/or employees as well as an Irish-based office. Registering for VAT is not mandatory and can take a number of weeks.  
  • Is it possible to set up a business bank account as a non-resident and what’s required?
A face-to-face meeting with the bank and an Irish director is required and typically we would arrange this and facilitate the meeting for you. Usually, this takes about 2 weeks after you meet with the bank.  
  • How long does it take to register a limited company?
Usually we find it takes 4 working days from when we receive all the signed documents from you.  
  • What are those documents? 
  1. A copy of your passport
  2. Proof of address
 
  • What paperwork is required to be filed annually for this company?
An annual return must be filed by all companies with the Companies Registration Office (CRO).  
  • Are the company directors required to be residents in Ireland?
No, it’s not a legal requirement, however, for tax residency purposes it is advisable to have an Irish-based director on the board of your company and we are able to provide that service for you should you require it.  
  • Do I need a company secretary?
All Irish Limited Companies are required to have a company secretary. We can provide this for you.  
  • How do I get a postal address in Ireland, do I really need it?
We can provide you with an Irish address in Dublin or Cork. Yes you need it, registered companies in Ireland must have an Irish address.  
  • How much does this all cost?
That all depends on what you need and want, no two businesses are the same, but rest assured we will advise and work together with you to minimize investment.   If you are considering registering a company in Ireland and would like our help in doing so, then please contact me, Shane on +353 21 494 3977 or shane.meade@robertsnathan.com
May 13, 2021
  Legislation

Cash flow benefit for companies importing stock from outside the EU (including UK/EU trade).

As a result of Brexit and the UK becoming a third country, postponed accounting for VAT can now be applied to all non-EU imports of goods for resale since 1 January 2021.  This treatment is now available to all VAT registered traders and applies to imports from all non-EU countries and not just the UK. Trading businesses who historically have had to pay VAT at point of entry for stock arriving from outside the EU can now save the cash flow of the VAT that would have applied on the landing of this stock (23%). This scheme benefits all traders in that:
  • provides for postponed accounting for VAT on imports from non-EU countries
  • enables you to account for import VAT on your VAT return
  • allows you to reclaim VAT at the same time as it is declared in a return. This is subject to normal rules on deductibility.
The Revenue Commissioners may exclude traders who do not fulfil certain conditions and requirements from using this scheme which will include compliance with tax and customs law. A business may also be required to satisfy Revenue of the viability of their business operations and their capacity to pay their VAT liabilities. To use postponed accounting, an importer should enter a code on the import declaration. This code will allow the VAT on import liability to be accounted for by the importer in their VAT Return. The VAT Return will contain new boxes (fields) to capture this information. Talk to us on your requirements in this area and how we can assist your business. We have advised a number of clients who are now saving on their working capital funding requirements and in particular on trade in goods between UK and Ireland.
April 13, 2021
  Brexit

UK Budget

On Wednesday Rishi Sunak announced the UK budget and Irish interest was immediately drawn to the confirmation that the Corporation Tax rate would increase from 19% to 25% from April 2023 for companies with profits of at least £250k.  This can only be seen as a positive for Ireland where our continued commitment to the 12.5% Corporation Tax rate would make it an ideal location from UK businesses looking to relocate operations to the EU. Ireland’s Corporation Tax code is built on transparency and substance and we have advised many businesses on the requirements to establishing in Ireland from a direct tax, indirect tax and commercial perspective.
March 5, 2021
  Brexit

Is Brexit Having a Damaging Impact on your Profit Margin? – Solutions Considered

As an Irish based accountancy and business advisory firm, Roberts Nathan assists frustrated UK and Irish business owners who are confused, worried, and uncertain where to turn to in a bid to maintain their turnover and profitability following Brexit.   Main Challenges of Brexit Companies in the UK have been approaching us to help them find a way forward when they experience one or all of the following challenges:
  • Extra Brexit-related charges for exporting into the EU means your profit margins are eroded and now it’s far less viable to continue to trade in the EU.
  • Your customers in Europe are being asked by couriers to pay VAT upfront on the goods being shipped to them, resulting in those customers becoming disgruntled and ultimately sourcing the same product elsewhere.
  • Delays at ports which means your customers are not getting their goods on time when needed.
  • More forms and paperwork resulting in more admin and headaches. Many businesses had to hire more staff to handle the extra admin - meaning more costs.
  Options Available to Overcome the Challenges Faced with the above challenges, our UK clients are left with only three options:   1. Continue to export goods to the EU as before Brexit Bite the bullet and pay the VAT and other charges yourself - instead of your customer paying these. For many, this isn't financially viable as profit margins will be eroded significantly.   Or   2. Stop exporting to the EU altogether The majority of clients have told us that without ongoing access to the EU markets, as has been the case for many decades, their businesses will be compromised and face the risk of closure.   Or   3. There is a final option - a solution which we recommend to many of our UK clients. We can set up and register your business here in Ireland through a subsidiary company, wholly owned by its UK parent. In circumstances where products are imported from outside the EU, goods can be shipped from Ireland to your EU customers, helping you to avoid various Brexit related charges. Your customers will receive their goods on time. We can assist you in dealing with the VAT matters arising in Ireland. This solution will allow you to keep running your business at the required profit margin you need while avoiding the Brexit challenges faced above.   If you would like to explore this valuable solution further, please contact Peter Roberts or Tomas O’Leary, who would be very pleased to assist you in considering this worthwhile option.   Please contact:   Peter Roberts: peter.roberts@robertsnathan.com Tel: +353214217940 Or Tomas O’Leary: tomas.oleary@robertsnathan.com Tel: +353214217940
February 2, 2021
  Brexit

Real Brexit 1 month in – From IT services to dresses to skincare and live Horses the VAT implications

The (European Union) EU and the United Kingdom (UK) finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit at the end of December.  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. 

The first real trading weeks since the UK departure have highlighted the very real issue for a number of clients and new contacts we are assisting on VAT matters.  From understanding how VAT now applies on point of entry on the movement of goods and whether to remain as the ‘Importer of Record’ to the UK for Irish businesses.  We have been advising Irish and UK based clients from a wide range of sectors around VAT treatments on trading from ladies dresses to skincare products and from IT services to live horses all in the last few weeks as trade items start to move between the UK and Ireland.  Including assisting with potential registration for UK VAT with HMRC by Irish traders.  If your business needs advice in these areas for B2B or B2C transactions between the UK and Ireland please contact us at dublin@robertsnathan.com or cork@robertsnathan.com and we can assist.
February 2, 2021
  Brexit

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
  Business in Ireland

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 Scollard, Brendan 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