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News Business in Ireland

  Business Advice

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

While the potential deal or no deal scenarios of Brexit continue to play out, a very real risk has arisen for a number of companies and their Directors in the UK and Ireland.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 will create significant changes.In this article, Roberts Nathan Partner Aidan Scollard reviews the potential significant changes for UK resident Directors of Irish registered companies where the UK becomes a third country to current EU legislation.EEA Resident Director Requirement Companies Registration Office have 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.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 BondIt 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 which we have put 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.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 WordCompany Directors need to consider the implications of the UK leaving the EU and consider their options. As with any legal or accounting issue forewarned is forearmed.Contact us if you wish to discuss the impacts of any of these potential imminent changes to your company structure and planning requirements.
July 9, 2019
  Business in Ireland

What is KEEP and when is it most effective?

Acquiring and retaining key members of staff is arguably the greatest challenge facing Irish based employers currently. Incentivising employees, whilst securing adequate levels of protection for both the business and it’s key stakeholders is a balancing act that most growing businesses face.Employee incentive plans can be structured using various methods including share-based remuneration. Tax treatment is often one of the most important considerations and a key factor to the implementation of a successful programme.The Key Employee Engagement Programme (KEEP) offers a solution to employers who wish to award employees with the opportunity to earn an incentive bonus without them necessarily becoming long-term shareholders in the company.How the programme worksKEEP applies to qualifying share options granted between 1st January 2018 and 31st December 2023.The programme entitles employers to award a bonus incentive, contingent on appreciation of the company’s share price value that is not subject to Income Tax, PRSI or USC.Instead the employee is subject to capital gains tax (CGT) (currently 33% as opposed to a potential for 52% under Income tax treatments) on the ultimate disposal of the shares.The shares must be fully risk-bearing, unquoted, ordinary shares that carry no preferential rights to dividend or value.  The employee is granted an option to acquire the shares at market value and if, by the time the employee exercises the option, the shares have increased in value, they are not subject to Income tax on the increase at that time.The option cannot be held for longer than 10 years and cannot be exercised within the first 12 months of the grant. The option must not exceed 50% of the employee’s salary or €100,000 per annum. Furthermore, the total options granted to an individual employee over a three-year period must not exceed €250,000.Qualifying CriteriaThe qualifying employee or director must be required to work more than 30 hours per week in a position that is capable of lasting for more than 12 months. In addition the employee or director cannot own more than 15% of the ordinary share capital of the company.The qualifying companies must be classified as micro, small or medium sized enterprise. While there are also some additional restrictions on certain industries and company structures.When is KEEP most effective?There is no doubt that providing employees with an option to benefit from future share price appreciation is an innovative approach which further incentivises the employees to perform.However, as with any share-based remuneration scheme, much of the success will be determined by the method used to implement the scheme and by having clear objectives in place for implementing the scheme. We can assist you with the necessary professional guidance to ensure your KEEP programme implementation is effective and successful.The most effective use of KEEP is when the objective of the employer is to extend the benefits of share-based remuneration to a wider group of employees without them necessarily becoming long-term shareholders in the company.  Once the employees exercise the option there is no requirement for them to retain the shares for a minimum period of time.In practice, employees tend to quickly sell the shares to realise their value meaning employers can continue to extend the option to a wider group of employees without greatly expanding the shareholder base.If you are thinking of developing an employee incentive scheme using KEEP or other schemes, please contact us for assistance. 
June 25, 2019
  Business in Ireland

Top 5 Reasons to Establish Your Business in Ireland

Ireland offers a flexible and competitive regime to companies who are looking for a location to structure European operations. Countless international groups use Irish holding companies to hold other subsidiaries and conduct M&A activities.With Brexit now looming, Ireland is set to thrive as the only English speaking full member of the EU. In this article we explore the top 5 reasons to establish your business in Ireland.1.Skilled WorkforceIreland has one of the most educated workforces in the world with one million people in full-time education.As an English speaking country with direct access to the EU labour force of approximately 250 million people, over half a million Irish residents now speak a foreign language fluently.Ireland is also number one in the world for the availability of senior management talent, many of whom gain employment with the multi-national companies based in Ireland.2.Tax BenefitsThere are many tax benefits for companies investing in Ireland, either with fully fledged trading operations or global holding company structures. We outline some of those benefits here.Ireland’s low rate of corporation tax (12.5%) is half the OECD average.Knowledge Development Box (KDB) 6.25% tax rate is available on development activities carried out by an Irish Company.Research and Development (R&D) benefits from 25% tax credit, tax depreciation on acquired or capitalised Intellectual Property (IP) and a competitive holding company regime combine to offer your company an unrivalled location of choice for inward investment.3.ConnectivityExtensive transport links between Ireland to Europe and the rest of the world andUS pre-clearance facilities at Dublin Airport and Shannon Airport, the only ones of their kind in Europe, make Ireland one of the most connected countries to establish a business.4.Quality of LifeWith 33% of Irish citizens under the age of 25 and almost half under the age of 34, Ireland has the youngest population in Europe. Ireland has unrivalled heritage, culture and impressive natural landscapes, all within close proximity to the busy cities of Dublin, Cork, Galway and Limerick. This is ideal for escaping the city noise after a busy week at the office.5.Government ProgrammesAdditional to the generous tax benefits on offer, government programmes are available to companies looking to establish a base in Ireland.The Special Assignee Relief Programme (SARP) provides Income tax relief, of up to 30%, to employees who are assigned to work in Ireland from abroad. This programme was designed to help companies provide key employees with incentives to relocate to Ireland.The Key Employee Engagement Programme (KEEP) offers further benefits to employers who wish to award employees the opportunity to earn a bonus based on the share price performance of the company, without them necessarily becoming long-term shareholders in the company.Ireland is home to many of the world’s leading high-performance companies including Amazon, Intel, Pfizer, Citi, Fujitsu, Apple, Dell, Twitter, Facebook and Google. The country is positioning itself to become a world leader in Health Innovation, Cloud Computing, SAAS, Big Data, ICT Skill, Sports Tech, Energy Efficiency and Internet of Things.Over 1,200 overseas companies call Ireland home
  • 1 in the world for investment incentives and inward investment jobs per capita.
  • 1 for flexibility and adaptability of people.
  • 1 for European investment from US.
  • 7 of the top 10 global software companies based in Ireland.
  • 10 of the top 10 pharma companies based in Ireland.
  • 8 of the top 10 industrial automation companies based in Ireland.
  • 14 of the top 15 global aviation lessors have operations in Ireland.
  • 19 of the top 25 financial services companies are in Ireland.
  • 14 of the top 15 medtech companies based in Ireland.
Figures provided by IDA IrelandOur Areas of International Expertise
  • International Company Structuring
  • International Strategic Planning
  • Company Formation & Maintaining
  • Annual Statutory Financial Statements
  • Preparation and Submission of Annual Returns
  • Provision of Corporation Tax Returns
  • Provision of Registered Office
  • Provision of Company Secretary
  • Maintaining EEA Directorships
  • Assistance with opening a company (Euro) bank account
  • Payroll Solutions
  • VAT Compliance
  • Other Business Advice
If you are considering locations for structuring your company’s European operations, Ireland has a lot to offer in this regard. Please get in touch with one of our International Business experts to discover how we can best assist you in this process. 
June 11, 2019
  Business in Ireland

Ireland as a base for your business

Since the UK’s unexpected vote to leave the EU there has been significant media focus on how Ireland will fare once the UK triggers Article 50 which sets in motion their exit.

While Ireland will face some difficulties in terms of exports with volatile exchange rates and the potential re-introduction of economic borders, there are also opportunities for Ireland post Brexit.

In the wake of Brexit the Irish political establishment has been vocal with regard to Ireland’s ongoing commitment to the “EU project”. Given the uncertain economic and political landscape globally, stability will be a key consideration for companies looking to establish in foreign markets. Political and economic stability coupled with Ireland’s favourable Taxation regime and its unique standing as potentially the only English speaking country in the EU, will undoubtedly give Ireland a competitive advantage.

Some of the key attractions to the Irish Taxation regime are as follows:

Corporation Tax

  • One of the lowest statutory rates in the world
  • Applies to Irish trading activities
  • Irish trading income is taxed at 12.5%
 

The Knowledge Development Box

  • Tax Rate of 6.25% on profits arising from certain Intellectual Property Assets which are as a result of qualifying R&D activity carried out in Ireland
  • In effect since 1 January 2016
  • Encourages companies to develop IP in Ireland
  • The first and only Knowledge Box/Patent box in the world to meet the OECD’s “modified nexus” standard
 

Favourable Intellectual Property (IP) regime

  • Tax depreciation on a broad range of trade related IP
  • Depreciate over accounting life or 15 years, at the discretion of the Company
  • No claw back if IP retained for at least 10 years
  • Can result in effective Irish rate of 2.5% on IP exploitation income
  • Deduction for licensed IP
  • No Irish stamp duty on acquisition of IP
 

Attractive Research and Development regime

  • Tax credit of 25% for qualifying R&D expenditure
  • In addition to 12.5% deduction - effective value is 37.5%
  • For new companies (post 2003) - relief is volume based
  • Credit used to reduce CT liability or refundable in certain cases
  • R&D tax credit may be “above the line” - directly reducing R&D cost
  • Credit can be converted into tax efficient bonuses for R&D team
 

Holding Company regime

  • Ireland frequently used as regional or global headquarters
  • Irish Capital Gains Tax (CGT) exemption for gains on sale of domestic and foreign trading companies (EU and treaty countries)
  • Tax exemption for Irish dividends
  • Effective exemption for foreign dividends (thru use of foreign tax credits)
  • Extensive domestic law withholding tax exemptions
  • No thin capitalisation or Controlled Foreign Companies (CFC) rules
 

Manageable Transfer pricing regime

  • Finance Act 2010 introduced transfer pricing (“TP”) rules to IrelandEnhances Ireland’s well regulated tax regime
  • Assists Irish Revenue challenges to Multi-National companies from other jurisdictions
  • Already has ‘wholly and exclusively’ test
  • Imposes Arms Length Pricing (ALP) to understatement of Irish trading profits and overstatement of Irish trading expenses

As well as our favourable Taxation regime Ireland is still seen as a business friendly country, as evidenced by recent studies where Ireland ranks as number four in the world as the best country to do business and number one for flexibility and adaptability of our workforce.

If you are considering Ireland as a base for your business please do not hesitate to contact a member of our team who can assist you.

Images: Shutterstock

July 14, 2016
  Business in Ireland

State Financial Supports for Small Businesses in Ireland

Small businesses in Ireland have continued to contribute to the growth and success of Ireland’s recovering economy. Many small businesses have been through some very difficult and testing economic times in recent years but remain one of the main driving forces for Ireland’s future economic growth.

Another key contributing factor to Ireland’s growth is the range of state support for such Irish small businesses. We have detailed below some of these State Financial Supports which may be of interest to small business owners in Ireland to assist them in their business and their growth.

 

Small Business Support Schemes

1. Employer Job (PRSI) Incentive Scheme

This scheme exempts employers from liability to pay their share of PRSI for certain employees for a maximum of 18 months. Employers who create new and additional jobs can avail of the scheme. While waiting for approval for the scheme, standard PRSI should be operated.

 

2. County Enterprise Board Employment grant

This grant scheme provides €8,000 to a business per new job created in respect of up to 10 employees in eligible projects and where it can be demonstrated a labour shortage does not exist. An application must be made to the Board for approval and must include details of PRSI and provide tax clearance certificate.

 

3. JobBridge - Internship Scheme

This schemes provides work experience placements to a business for a 6 or 9 month period. It offers valuable work experience for unemployed individuals wishing to learn new skills or jobseekers who are unable to get a job without experience. A business can avail of this scheme once it has a minimum of one full time employee working 30 hours or more per week and subject to Tax and PRSI. The intern receives an allowance of an additional €52.50 per week with their social welfare entitlement.

 

4. Revenue Job Assist

Employers who employ an individual who qualifies for Revenue Job Assist can make a double deduction of that employee’s wages from their company’s taxable income for up to 3 years provided that the employee remains with them. To qualify for this the position must be new, last at least 12 months and be for at least 30 hours per week.

 

5. Acumen Sales and Marketing Programme

There are a number of options available under this scheme whereby the salary of a full time sales person, part time sales person or a sales graduate can be funded by Acumen.

For example; Acumen will fund 50% of the cost of a full time Sales Person’s salary in the first year. The maximum cost covered can be up to €37,500 with Acumen paying up to €18,750.

Should you have any queries on any of the above support schemes please do not hesitate to contact us.

 Images: Shutterstock
March 10, 2016
  Business in Ireland

Reasons To Do Business In Ireland – Skilled Workforce

In our recent blog, Ireland – A Good Place To Do Business, we looked at some of the reasons which have lead to Ireland attracting a significant level of Foreign Direct Investment (FDI). In this, our first blog in a series of blogs covering this topic, we will look at how Ireland’s skilled workforce contributes to our attractiveness for FDI. 

1. Ireland’s workforce ranking

Ireland has always been regarded as a centre of excellence for education and remains within the top 20 countries for education in the Universitas 21 Ranking 2014. More importantly, Ireland ranked 1st in the world for availability of skilled labour in the IMD World Competitiveness Yearbook 2014.Such rankings were further substantiated by Manpower’s 2014 Talent shortage survey in which Ireland received the lowest ranking of just 2% for employers having difficulty in filling position. This is a very strong position to hold, given the global average of 36%.In past years, Ireland suffered during the Euro Zone recession, which resulted in a considerable number of our skilled labour force emigrating. Despite this, companies were still in a position to source strong, talented candidates to fill positions available. At present there are over 1,000 multinational companies (MNC’s) within Ireland and they currently employ over 150,000 of our 1.9 million strong workforce. 

2. Ireland’s Demographics

Ireland’s demographics are also very encouraging when attracting FDI. With over 50% of our population under the age of 35, the level of our older population dependent on state assistance is amongst the most favourable in Europe. Ireland has a workforce which is capable, highly adaptable, mobile and committed to achievement. With a projected increase in our population by 2021 of 1.4%, the future of Ireland’s skilled workforce remains strong.While there was negative movement in Ireland’s unemployment levels during the recessionary periods, there is clear evidence that Ireland is now experiencing a strong recovery as our unemployment levels have fallen for the past 3 years and were as low as 10% in March 2015. 

3. Ireland’s Education System

Ireland’s ability to produce a skilled workforce stems from our long history of education. The Irish Government has always invested in our education system and looks to offer both relevant and varied courses, taking into account both the national and international markets and industry requirements. Universities and colleges in Ireland also ensure to provide students with courses which allows their students to develop the skills and talents necessary to peruse careers which drive the growth of Ireland’s economy.In 2013 alone, over 250,000 students enrolled in third level courses across universities and colleges. In studies conducted by OECD our education system ranked 9th in the work with their Better Life Survey indicating that 73% of adults in Ireland, aged between 25-64 years of age, have earned the equivalent of a high school degree.Such a strong focus has resulted in Ireland securing a reputation as a highly attractive location for FDI, with a significant number of Irish educated individuals holding some of the more senior and experienced roles in many of the multinational companies located in Ireland. 

4. Developing, Attracting and Retaining Top Talent

It was noted in IMD’s World Talent Report 2014, that Ireland ranked 6th in the world for its ability to develop, attract and retain talent. Such a high ranking assists Ireland in sustaining the talent pool available for enterprises operating in our economy.When conducting the above report there are three main factors which are taken into consideration:Investment and Development – This aspect takes into consideration the investment in and development of home grown talent. It reviews areas such as public investment, quality of education, pupil teacher ratios and the implementation of apprenticeships and priority of employee training for companies.Appeal – The factors taken into consideration under appeal include a countries cost of living and quality of life, along with ability of a country to attract and retain talent. It also considers the level of worker motivation.Readiness – Under this heading, the report looks at the growth of the labour force, the quality of skills available and the experience and competencies of existing senior managers. It also reviews the ability of the education system to meet the talent demands of enterprises operating within the country.Under the above report Ireland has ranked within the top 10 of the following categories:
  • skilled labour readily available
  • financial skills
  • competent senior managers
  • worker motivation
  • fit between education system and the needs of the competitive economy
  • international experience of senior managers
  • university education
 

The future of Ireland’s Skilled Workforce

In addition to the skills of our workforce, Ireland is also one of the only two English speaking countries in the Euro Zone. This is an important factor for many of the MNC’s and other businesses when looking to invest in Europe, as it avoids translation difficulties which are present in other countries which may be considered.As part of the development of Irelands education, our Government has ensured that the curriculum of both our schools and colleges include a number of languages to be studied, which again prepares our workforce to progress in a global economy. In general the natural culture and attitude of the Irish workforce has always been regarded as highly committed, dedicated and invested in the growth of business in conjunction with employers.If you would like further information or have any queries on the above you can contact us hereImages: Shutterstock
July 9, 2015