Are you looking to expand your business in the European region? You should first consider Ireland. Ireland has a developing startup ecosystem supported by business-friendly government policies. In this blog, we provide a complete guide that covers all you need to know for business expansion in Ireland – incorporation, tax compliance, labor laws, IP rights and more.
Expanding to Ireland: Why does it matter?
Are you planning to expand and grow your business? We recommend you give a thought to Ireland. Ireland offers a wide array of benefits to businesses.
- Tax incentives
The corporate income tax rate in Ireland is around 12.5%, amongst one of the lowest corporate tax rates in the European Union (EU) and Organization for Economic Co-operation and Development (OECD). Businesses can benefit from other tax reliefs if they focus on innovation or in the initial years of a new business.
- Vibrant startup ecosystem
The Irish government is working on making Dublin, the capital city of Ireland, a bustling startup hub. The active accelerators and incubators in Dublin provide financial and non-financial (in form of mentoring and training) support for startups, while the government supports startups through tax credits.
- Support for foreign entrepreneurs
If you are an entrepreneur from the EU, the UK, Norway, Iceland, Switzerland or Liechtenstein, you can expand your business to Ireland without visa or immigration permission. This helps you set up your business in Ireland swiftly.
Legal steps to start business in Ireland
The process of expanding business to Ireland varies depending on your nationality. If you are from the European Economic Area (EEA) or Switzerland, you do not need any government permission to set up your business in Ireland. However, other foreign nationals must seek government approval by applying under the Immigration Investor Programme and Startup Entrepreneur Programme.
Legal steps to register and start your business in Ireland are:
- You must first determine a suitable business structure
- You must register your business with the Companies Registration Office, by providing required documents such as Articles of Association, Memorandum of Association, etc.
- You must apply for an Irish residency visa. If your business is selected under the Startup Entrepreneur Programme, you and your immediate family members are provided a 2 year residency visa.
- You must open a corporate bank account.
- Lastly, you must register for tax.
Understanding business taxes in Ireland
While you set up your business in Ireland and earn income, your business may be required to pay taxes. Hence, it is crucial that you understand the major categories of taxes that may affect your business.
- Corporate income tax
There are three tax rates depending on the nature of income.
- Trading income – 12.5% tax rate
- Non-trading income and income of expected trade – 25% tax rate
- Capital gains – 33% tax rate
These taxes must be paid annually, following the calendar year.
- Cross-border payments
The transfer pricing regime in Ireland is similar to the OECD principles. It has also adopted the Pillar Two rules, as in OECD.
- Payroll taxes
There are two major taxes under payroll:
- Employment tax: Employees in Ireland are subject to income tax. The employer must deduct the income tax of the employees while paying them and forward the same to the Irish Revenue Department.
- Employment Insurance: Irish employers are liable to pay social security insurance based on employee’s income.
Choosing the right business structure
Before registering your business in Ireland, you must choose an appropriate business structure to complement your business needs, liability, and capital constraints. The most popular business structures in Ireland are:
- Company or Corporation
By registering your business as a company, you create a separate legal entity that is distinct from its owners. There are different company types, each with a different registration methods, like:
- Private company limited by shares
- Designated activity company
- Company limited by guarantee
- Public limited company
- Unlimited company
- Investment company
- Partnership
In a partnership, two or more people come together to conduct business with a profit motive. A partnership does not create a separate legal entity besides owners. However, there are two types of partnership based on the nature of liability sharing between members:
- General partnership: Members face an unlimited liability that extends to personal assets in case of loss.
- Limited partnership: At least one member faces a limited liability, where liability is limited to the extent of one’s contribution.
- External Company
An external company is created in Ireland when the company is already incorporated outside Ireland and a branch of the company is opened in Ireland now. The procedure for registering an external company varies depending on whether or not the parent company is situated in the EEA (European Economic Area).
Where to incorporate: Best locations for business
The most suitable cities for starting your business in Ireland are:
- Cork: It is a vibrant city with a hustling startup culture and offices of big MNCs alike. The city has a large number of businesses in industries including technology, life sciences, and food production.
- Dublin: It is the capital city of Ireland. It is a well-developed financial hub, providing various funding sources to Irish businesses.
Besides these, other major cities include Galway, Limerick, Belfast, and Waterford.
Navigating sales tax and compliance
Ireland has an indirect tax system, called the ‘value added tax’ (VAT). VAT is levied on sale of goods and services for final consumption in Ireland. As a business owner, if you sell goods or services to final consumers, you may be required to collect VAT from customers and remit it to the appropriate tax authority. There are three VAT rates currently – 23%, 13.5% and 0%.
You must ensure that your business complies with the business and indirect taxes to avoid legal troubles. You can automate tax collection and reporting, using tax automation softwares like Commenda. This reduces manual errors, saves time, and ensures timely compliance. More importantly, this allows you to focus on your core business.
Hiring employees and labor laws in Ireland
You have three options to hire for your business in Ireland. These include:
- Employer of Record (EOR)
You can hire an EOR to look after payroll, payroll taxes, and labor law compliance in Ireland. They assume legal responsibilities on your behalf as an employer.
- Opening an entity
You can open a corporate legal entity in Ireland. This provides you control over all operations, including hiring. However, this choice requires significant long-term commitment.
- International contractor
You can hire a contractor to look after temporary or project-based work (in this case, hiring). They manage payroll and taxes, while offering flexibility.
Read this article on hiring choices for successful global expansion to make an informed choice.
The Irish labor laws mandate a non-discriminatory and equality-based approach to employment. It also states benefits for employees, maximum working hours, leave policy and many more. You can find more information about this on the official website.
Setting up banking and financial accounts
You need to open an Irish bank account to handle your business transactions in Ireland. You can open your bank account online or offline after identifying a suitable Irish banker by comparing different offerings.
To open a retail account, you may need to provide a valid photo ID and a proof of address. For a corporate bank account, additional documents related to your business may be required.
Protecting your brand: Trademark and IP rights
As we now know, Ireland promotes a culture of innovation. On that note, innovators and businesses can protect their innovations by registering for a suitable intellectual property in Ireland. Various intellectual property rights that you can apply for in Ireland include:
- Patents – You can apply for a patent to protect an invention.
- Industrial design – You can protect a new product design by applying for an industrial design.
- Trade marks – You can protect brand names, logos, symbols and other identifiers that help you distinguish your business from others through trademarks.
- Copyright – You can protect literary and creative art works through a copyright.
Look at the latest Irish IP laws to know more.
Overcoming challenges of expanding to Ireland
Starting a business in Ireland can present challenges to a foreign national trying to expand business in Ireland due to cultural differences and regulatory requirements.
- Cultural differences
To achieve business success in any market, there is a need to understand the customer needs and preferences. To succeed in Ireland, it is important to understand local customer needs and deliver them value.
Partnering with a local business or a consultant can help you navigate the local Irish market effectively.
- Regulatory requirements
Regulatory requirements vary across countries. For example, in Ireland, private companies must have their own company secretary to look after compliance. Besides this, your business needs to comply with tax norms and employment laws.
You can use an all-in-one platform for business tax and compliance, like Commenda to stay compliant at all times.
Final steps: Getting started with Ireland expansion
We, at Commenda, are here to help you expand your business in Ireland in a mere 3-5 days. Besides quick incorporation, we offer global tax compliance tools and access to verified legal and accounting professionals.
Quick Incorporation
Commenda helps businesses incorporate their business in Ireland in a matter of days. We get on a call to understand your needs and get it done. We handle everything – submitting incorporation applications, and opening bank accounts. All of this starting at $2000.
Simplified Compliance
Navigating tax and regulatory compliance in a new country may be stressful. Commenda handles all your tax and corporate filing. You can keep track of this in a simple dashboard and focus on your business.
Professional Support
Commenda’s Service Provider Marketplace can help you find pre-vetted accountants and legal consultants in a hassle-free manner. You can consolidate these conversations and keep a clean audit trail.
Do you have any more doubts? A free consultation with Commenda’s experts will help you. Book yours now.
