Setting up business in Ireland

iapa-conference-london-june-2012_150pxThis presentation was given by Tom Kean, BKRM Ireland at the conference of IAPA International Association of Professional Advisers on 26 April 2012 in The Hilton Metropolitan Hotel, London.

  • Use Ireland as your business’ springboard to Europe and the USA
  • Ireland is ranked as the number 1 country for business in Europe (Forbes 2011)
  • Ireland has the youngest workforce in Europe, 30% of the workforce are less than 25 years old
  • EEA employees do not require work permits or a visa to work in Ireland
  • Ireland is an English speaking country within the Euro zone
  • Daily direct flights to the USA & Middle East
  • There is free movement of goods within the EU
  • Ireland has 65 tax treaties and there are an additional 7 treaties under negotiation
  • Ireland has excellent tax treaties with China & Korea
  • A company can usually be incorporated in Ireland within 5 business days

Tax advantages of setting up business in Ireland

Corporation Tax Rate

  • 12.5% corporation tax rate, it’s one of the most favourable rates globally
  • 3rd lowest total tax rate in the EU
  • The low tax rate can maximise high rate of return on investment
  • A potential 3 year exemption from corporation tax for start-up companies incorporated after 14 October 2008

Stamp Duty

  • Stamp Duty rates have been substantially reduced in Ireland, the current stamp duty rates are;
    • o 1% for residential property
    • o 2% for non-residential property

Research & Development (R&D) Incentives

  • R&D expenditure is included in expenses when calculating taxable profits
  • A further 25% tax credit for qualifying R&D expenditure
  • Qualifying R&D expenditure includes expenditure incurred with the EEA, provided the expenditure has qualified for relief elsewhere
  • The higher of 5% or €100,000 of the R&D expenditure can be outsourced to European Universities
  • Furthermore, the higher of 10% or €100,000 R&D expenditure can be sub-contracted to other unconnected parties
  • Buildings used for qualifying R&D purposes are eligible for a building capital allowance
  • It is possible to secure a repayment of the excess R&D tax credit over a 3-year cycle, subject to certain criteria
  • The company can elect to surrender part of the R&D tax credit to key employees

Intellectual Property (IP) Tax Regime

  • Ireland offers various IP structuring opportunities
  • Amortisation of qualifying IP acquisition costs. The capital expenditure can be written off over its expected useful life or the company can elect to write off the capital expenditure over 15 years. If the IP was held for 10 years, there is no balancing charge on disposal
  • The revenue expenditure relating to the IP is allowed as an expense in the profit and loss account however this expenditure may also qualify for an R&D tax credit
  • Deduction allowed for licensed-in IP rights
  • The IP tax regime applies to:
    • Patents
    • Copyright
    • Registered designs
    • Design rights or inventions
    • Trademarks
    • Trade Names
    • Brands
    • Brand Name
    • Service mark or publishing title
    • Know-how
    • Certain software
    • Costs associated with applications for certain legal protection

Attractive to Holding Companies

  • Tax exemption for domestic and foreign gains of qualifying shareholdings (EU & treaty countries)
  • Tax exemption for Irish dividends
  • Similar relief for foreign dividends
  • No withholding tax on dividends paid to treaty countries under domestic law
  • Double taxation relief for tax suffered on foreign branch profits and pooling provisions for unused credits
  • Ireland can be an attractive location for the holding company of IP rights by multinational groups. If the activities constitute a trade, the profits would be taxed at the corporation tax rate of 12.5%. There may also be a possible opportunity to claim IP capital allowances on capital expenditure.

Special Assignment Relief Programme (SARP)

  • Income tax relief may apply to foreign employees coming to work in Ireland
  • The employment income liable to Irish tax is the greater of
    • Total employment earnings and benefits received in, or remitted to Ireland or
    • the first €100,000 plus 50% of earnings and benefits in excess of €100,000
  • Encourages key overseas talent to work in Ireland
  • Employee must become tax resident in Ireland and exercise the employment in Ireland for at least 1 year
  • Employee must continue to be paid by the overseas employer
  • Relief is available by repayment after the end of the tax year

Other advantages of setting up in Ireland

The Start-up Entrepreneur Programme

  • Participants can be given residency in this State for the purposes of developing their business. Immediate family may join the participant providing they can be fully maintained.
  • The residency permit is initially issued for a 2-year period. At the end of the period, each case is reviewed and the progress of the business is evaluated.
  • The entrepreneur programme is aimed at individuals with a good business idea in the innovation economy and funding of €75k.
  • The programme focuses on high potential start-ups.
  • The State agencies will play a key role in evaluating the suitability of proposed business proposals for the programme.

Immigrant investor programme

  • Participants and their immediate family will be granted rights of residence in Ireland
  • The residency permit is initially issued for a 5-year period. At the end of year 2, a review is carried out to ensure that the investor is compliant. After the 5-year period the investor can apply for ongoing residence in 5-year tranches.
  • The intention is that the investor would establish a permanent relationship with Ireland
  • The investment must be:
    • Owned by the investor (not borrowed)
    • Obtained legally by the investor
    • Good for Ireland
    • Good for jobs
    • In the public interest
  • The investor must make an investment of one of the following type:
    • A once off endowment of a minimum of €500,000 to a public project benefiting the arts, sports, health, culture or education.
    • A minimum €1,000,000 aggregate investment into new or existing Irish businesses for a minimum of three years
    • A minimum €2,000,000 investment in a special low interest 5 year immigrant investor bond
    • A minimum €1,000,000 mixed investment consisting of €500k in property and €500k in immigrant investor bonds

Authors: Tom Keane and Deidre Byrne; BKRM Ireland (www.bkrm.ie)


London hosts IAPA Annual Conference 2012

iapa-conference-london-june-2012_150pxOn 25/26th May delegates gathered in London and enjoyed an unexpectedly fine spell of weather for the 2012 Conference.

On the Friday afternoon a visit was arranged to the offices of the host firm, Macilvin Moore Reveres, in Harrow and later on in the evening there was a dinner at Smith’s Bar and Grill in Paddington Central where everyone enjoyed cuisine described as “modern British”.

Saturday morning was the formal IAPA conference and AGM chaired with his usual aplomb by Peter Scheller with the financial report from Hugo Schauli, a very interesting presentation by Tom Keane and various contributions from the other delegates followed by a buffet lunch.

In addition to the usual program of events many of the delegates and their partners managed to find time for some of London’s famous shopping venues and even a round or two of golf ! Having proved to be capable of hosting an IAPA conference London is now declared officially ready to cope with the 2012 Olympic Games!

We now look forward to the 2013 Annual Conference at a venue still to be announced.

Author: David Segall, Macilvin Moore Reveres LLP, London, www.mmrca.co.uk

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