When registering a company in Ireland, what are the most important legal considerations that should be taken into account?
When you start a Limited Company in Ireland you need to guarantee that you meet all the legal requirements. Together with selecting a distinguishing name for your company, the things that need to be taken into consideration include: the company needs to have at least one director who’s a resident of the EEA as otherwise, a non-EEA resident bond needs to be provided; have a secretary; have at least one shareholder; have a registered office address and you’d also need to decide on how many shares will be allocated and issued. After your company is registered, the main on-going compliance requirements are as follows: All companies must submit and file an annual return every year, together with abridged accounts to the Registrar of Companies. Failure to do so will result in substantial penalty fees and possible strike-off proceedings, as well as loss of the audit exemption for two years if applicable. The first Annual Return is due six months after incorporation (no accounts required). The only exception to this are Unlimited Companies in certain circumstances.
Every company whose turnover or group turnover exceeds €8.8 million must prepare and file audited accounts. Most registered charities (Companies Limited by Guarantee) must also file audited accounts.
A Corporation Tax Return must be made every year and if the company is VAT registered, VAT returns must be made every two months.
Ireland has one of the lowest corporate tax rates in the world at 12.5%.
How can non-residents avoid difficulties when attempting a company formation in Ireland? Why is it important to contact a specialist?
Getting the correct advice from a specialist is a must when selecting the correct structure of the company to be able to avail of the Irish preferential corporate tax regime. The type of structure you choose depends on the kind of business you are running, with whom you will be doing business and your attitude to risk. It is advisable to get the advice of a company formation specialist like Fidutrust Formations Ltd when considering the structure for your business. Another important aspect is whether the beneficial owner is an EU resident or not. If a non-EU resident wishes to set up a company in Ireland, they need to have an EU resident director in the structure. If they cannot provide one, a non-resident director bond must be put in place. Many of our non-EEA clients ask what a non-resident bond is and why it is required and the explanation is quite simple - it ensures the company for a sum of €25,400 and its purpose is to make sure that it completes the required submissions with the Revenue Commissioners and the Companies Registration Office.
Our company could assist in obtaining this bond or could provide a nominee director to comply with the regulation of having an EU resident in the structure.
Why should people consider registering their company in Ireland? What makes the country attractive?
Ireland is attractive because it has one of the lowest corporate tax rates in the world at 12.5%. Additionally, a thriving research, development and investment sector, with strong government support for productive collaboration between industry and academia, is present in Ireland too. Other benefits are a strong legal framework for development, exploitation and protection of intellectual property rights; a strategic location with easy access to the European, Middle-East and Africa (EMEA) region; excellent IT skills and infrastructure; and an advanced telecommunications infrastructure, with state-of-the-art optical networks and international connectivity. Ireland also offers strategic clusters of leading global companies in life sciences, ICT, engineering, services, digital media, and consumer brands.
Ireland came 11th (out of 82 countries) in the recent Business Environment Ranking of the Economist Intelligence Unit’s ‘Most attractive business locations in the world’ ranking. The country is politically stable, has a respected regulatory regime, is considered to be a low bureaucracy and offers a low-tax environment that is very supportive of entrepreneurs. The World Bank’s ‘Doing business’ report rates Ireland as the easiest place in the European Union to start a business due to having the most business-friendly tax regime out of any country in Europe or the Americas.
Tell us about the tax-efficient structures that are available to businesses in Ireland?
One of the most beneficial elements available in Ireland is a range of specialist tax vehicles. These entities are set up to take advantage of beneficial tax rates and relaxed reporting standards, allowing companies to avoid certain public declarations of funds and profits. These vehicles known as Qualifying Investor Alternative Investment Funds (QIAIF) can come in five different formats, with the Irish Collective Asset-management Vehicle (ICAV).
The World Bank’s ‘Doing business’ report rates Ireland as the easiest place in the European Union to start a business due to having the most business-friendly tax regime out of any country in Europe or the Americas.
Qualifying Investor Alternative Investment Funds (QIAIF) were created to counteract some of the bad press previous tax saving schemes in Ireland had obtained and to compete with other offshore jurisdictions.
Some QIAIF vehicles select the tax transparent Limited Partnership type. However, since their introduction in 2014, the Irish Collective Asset-management Vehicle (ICAV) has been the preferred choice for both US-based or linked investors, outperforming options in several other jurisdictions.
Would an investment into a new company formation in Ireland guarantee a residency permit for non-EEA nationals?
There are two ways in which non-EEA nationals can invest or start a business in Ireland and receive a residency permit or a business visa. The first one is called an Immigrant Investment Program that provides a range of investment options which allows approved non-EEA investors and their immediate family to enter Ireland on multi-entry visas and remain here for up to five years with the possibility of ongoing renewal. The client would have to have a net worth of at least €2MM and be able to invest in one of the categories under this scheme.
The second one is called a Startup Entrepreneur Program and it allows a non-EEA national with a high-potential startup and minimum funding of €75,000 to come and set up a business in Ireland. If you are enrolled in this program, you will receive a 12-month business visa that could be extended after it expires. We would be happy to provide more information on these programs to anyone interested in finding out more
Do you provide assistance with business bank account openings in Ireland or other jurisdictions?
We do and this is our main specialisation. There is a huge demand on the market for bank account opening services, given recent issues in Latvia and Cyprus, and we are proud to be one of the leading agencies in Europe that provide operational, holding, crypto and transactional business bank accounts in the major EU, US, Asian, Swiss and off-shore banks for companies domiciled all over the world. We can open bank accounts for all types of legal entity structures and for most countries of residence of the beneficial owners.
About Fidutrust Formations Ltd & Apex Fidutrust AG
Fidutrust Formations Ltd provides assistance on a wide range of consulting and legal services in Ireland in the field of registration and administration of companies, partnerships, trusts and funds as well as consultancy in Irish civil and business law. Apex Fidutrust AG is a fiduciary and financial intermediary firm providing corporate, banking, asset and wealth management services in Switzerland.
Fidutrust Formations Ltd
19 Charnwood Court, Clonsilla, Dublin 15
Contact number: +353 1 559 39 08
Mob: + 353 86 896 82 79
Ever since the UK’s decision to leave the EU was announced, there has been a lot of speculation surrounding what will happen to the Irish border. Northern Ireland is part of the UK, which would leave the EU when Brexit goes through, but the Republic of Ireland will remain in the EU. This has led to many calls for border controls between the countries. It’s generally agreed that customs checks on goods will be required, yet whether passport checks are needed remains debatable. Recently the Chancellor of the Exchequer has suggested using blockchain to solve the issue.
In this post, we assess whether implementing blockchain will solve the Irish border issue. We conclude that it’s highly unlikely that blockchain alone will solve the problem, but a solution that incorporates blockchain as part of the process is more likely.
The current line from the Treasury according to one source is that they are ‘actively considering technologies that could help facilitate trade over the Northern Ireland – Ireland land border.’ This was confirmed by Chancellor Phillip Hammond, who, when asked about how the government could achieve smooth trade after Brexit announced “there is technology becoming available ... I don’t claim to be an expert on it, but the most obvious technology is blockchain.”
Yet there are a few theories as to how blockchain could be involved practically. That’s not so surprising, as the only real major use of blockchain so far has been to power the cryptocurrency bitcoin.
What Could Blockchain Do?
Essentially, blockchain is a decentralised ledger which stores a digital record of transactions which is tamper proof. There have been a number of companies that have started to apply blockchain technology to their supply chains, with the most common reason to keep track of goods. One such example is of a start-up that used blockchain to track its tuna stock, every time it changed hands from net to supermarket the blockchain was updated.
This could be applied to the Irish border for documenting the movement of British goods through the supply chain, as a way to verify compliance with the EU’s rules. Checking blockchain certifications should be more efficient than paper ones, but it will be slower and it’s still unclear what other benefits this could hold.
Are There Any Other Options?
Presumably there are other options, given that the Treasury has revealed barely any details as to how blockchain might be applied. Especially as research into dealing with 6,000 heavy goods vehicles per day crossing the border has shown that using blockchain as a solution is ‘untested or imaginary’.
There’s still a chance that there won’t be a hard border and no technological solution will be required. Until the logistics and exact requirements are sorted out, it remains to be seen what will happen in terms of a solution.
Will it Be Successful?
According to most experts who have thought about the logistics of using blockchain to solve the Irish border issue, probably not. However, a solution that includes blockchain in part could be possible.
Indeed, in an interview with Cointelegraph, Vili Lehdonvirta, an associate professor and senior research fellow at the University of Oxford stated that “in my assessment there is zero chance that blockchain technology will help deliver a ‘frictionless’ border between Northern and the Republic of Ireland.”
Added to this, Nick Nick Botton, an expert on trade affairs and digital economies at Landmark Public Affairs stated that “The Northern Ireland issue is sadly not one that will likely ever be solved via technology, it's strictly a political issue at this stage.”
For businesses whose model relies on importing and/or exporting over the Irish border, seeking out financial options in case plans to use blockchain or other technology to sort out the issue fails is a good idea. Currently, it seems like there isn’t much of a plan, but that should all change in the near future.
Finance Monthly speaks to James Butler – experienced practitioner, business adviser to SMEs and Consulting Partner at GBW – an Irish company that wants to make sure that a choice exists for those smaller businesses that require a more hands-on approach than that offered by the larger firms.
What are the key services that GBW offers to clients?
We are a mid-tier firm of accountants and business advisers with varying specialties and backgrounds. Our services range from assisting with Audit, Assurance, Taxation and Accounting, through to Business Advisory and Corporate Recovery. Our cross-border service offering, business approach and sector expertise is primarily designed to support Small and Medium-Sized Enterprises, or organisations of equivalent scale, with existing or planned international operations.
GBW is an independent member of TGS – a global accountancy and legal network of independent firms specialising in the provision of accounting, audit, tax, business advisory and commercial legal services.
Tell us more about TGS?
Not all networks that are part of the group are the same. TGS member firms are all independently owned and share an entrepreneurial approach to their own and clients’ businesses. We have a shared commitment to the highest levels of technical expertise and professional standards. Our clients enjoy a rapid access to quality assured in country experts across the world, via a single point of contact.
We recognise that every client is unique and our cost-effective solutions are tailored to our clients’ unique requirements. Whether they require a full suite of accounting and business solutions or a one-off specialist service, TGS Global can provide precisely what our clients require, no more and no less.
You have extensive experience in Insolvency & Corporate Restructuring, and have acted as liquidator in both creditor and member voluntary liquidations. What does your role within GBW entail?
In my role within GBW, I deal with banks and financial institutions in all areas concerning distressed property and non-performing loans. I’ve also been involved in debt management and refinancing for both companies and individuals.
Additionally, I am also an experienced practitioner in taxation and business advice for businesses in the area of the licensed trade, professional services and medical practitioners.
Audit and Accounting
We aim to help our clients see the audit process as a benefit to their business, not just a cost.
Our taxation department has expertise in all categories of taxation, both our corporate to personal clients.
Business Advisory Services
All businesses require planning – form start-ups to mature businesses. Our business advisory experts can assist with the planning and execution.
Our Accounts department provides all types of assistance, whether be in-house or out sourced, we have the expertise.
If you are selling, buying or merging a business. If you are making an investment or raising finance – we can help with the decision making process.
Forensic and Litigation Support
In today’s changeable economic environment, business disputes are becoming more frequent and litigation is on the increase. At GBW, we draw on the firm’s wide expertise of our accounting professionals to advise our clients in claims assessment and provide independent expert accounting witness services.
Recovery and Restructuring
We are leaders in the provision of insolvency and restructuring services. Our team comprises of insolvency experts, forensic specialists and support staff who work together to provide a comprehensive and complete solution to any restructuring or insolvency project.
Catriona Coady provides tax and financial planning services to a wide variety of clients within Goodbody Stockbrokers. Her client base includes several HNW individuals and her role involves assisting those clients with their domestic and overseas tax affairs and addressing their tax planning needs. This tax technical expertise is on hand to assist with the financial planning and investment process.
Goodbody, part of the Fexco Group, is Ireland's longest established stockbroking firm with roots dating back to 1877. As well as being one of the leading institutional brokers and corporate finance houses, it is one of the largest wealth management firms in Ireland. Here Catriona tells us more about the company and her role.
What is your previous experience and how do you draw on this in your current role in Goodbody?
Prior to joining Goodbody I worked for a Big 4 firm. I started out my training with PwC and up to two years ago had spent a number of years working for EY. Although I was trained to understand all tax heads, my specialism has always been tax for HNW individuals and the specific tax issues affecting individuals working across multiple jurisdictions.
In my current role, my experience has proved invaluable to clients wishing to understand the tax implications of their financial plans and goals. This covers a wide range of issues which tax impacts such as clients’ succession plans, business exit plans, tax issues for entrepreneurs and cross border tax planning. It is an important service as it assists clients with understanding the tax implications of their financial plans and to enable clients to determine where further advice may be needed.
The tax implications of specific investments is also an area that I assist clients with. For example, not dissimilar to the UK, Ireland has a tax regime for investments in non-Irish funds which can be complex. The input I provide into the tax implications of investments helps clients to design their portfolios with tax efficiencies in mind while also aiming to achieve their desired investment return.
As a Private Client Tax & Pension Specialist, what are the typical challenges that clients approach you with? What are the most common day-to-day challenges that you are faced with?
Clients typically approach me initially with perhaps one or two specific investment objectives, but after discussing their personal circumstances in more detail, it becomes very clear that they have several more financial goals that they require assistance with or wish to achieve. These can range from wishing to retire early, involving detailed cashflow planning and target retirement funding to asset protection via trusts and family partnerships and suitable investments for those not domiciled in Ireland.
Pulling clients goals and objectives together into a clearly defined plan, which identifies overall net worth, detailed cashflow analysis, attitude to risk, overall asset allocation and a strategy for achieving their goals is an invaluable exercise and one that provides a guided path through the financial and investment process. While the initial challenges are in driving awareness of the full extent of our service offering and gathering the information required to compile a financial plan, the end product is a comprehensive document containing all the salient information related to the client’s financial plans and goals. This is a document that can be consulted and updated on an ongoing basis.
In your opinion, are there financial planning and investment issues relevant to both Irish and UK tax resident clients?
Given our close proximity there are numerous issues relevant to both Irish & UK tax resident clients. While not exhaustive, the following are examples of the issues that can arise:
Dual tax residence status
Many clients have dual tax residence status, meaning they are both Irish and UK tax residents. For example, Irish nationals can spend the working week living and working in the UK while also returning to Ireland every weekend and while doing so, accumulating wealth along the way. Navigating the two tax systems can be difficult, but with the right assistance and advice, it is possible to develop a financial plan which takes account of the tax regime of both jurisdictions. In several ways Ireland’s tax regime is similar to the UK - for example we have a tax regime for non-domiciled individuals for Income Tax and Capital Gains Tax (CGT). We also have similar rebasing rules for CGT purposes on certain events e.g. death. While expected to be improved, Ireland has a favourable CGT regime for entrepreneurs and an Enterprise & investment Scheme.
UK & Irish pension assets
Many clients have both Irish and UK private pensions, which can be defined benefit and/or defined contribution. They are also likely to have built up entitlements to both Irish and UK State Pension. The issues relevant to defined benefit pensions in the UK are just as much of an issue in Ireland with clients being offered enhanced transfer values (ETVs) in respect of their defined benefit entitlements. The decision whether to accept this offer is one that requires careful consideration and is an area in which we provide detailed planning and advice to clients.
There are also decisions for clients to make around whether to transfer a UK pension fund to Ireland or vice versa.
Cross-border estate taxes also play a large part in the advice provided to clients. This is because many hold assets in both jurisdictions and may be unaware that estate taxes can arise in both countries. As this is often overlooked, it is important to review a client’s asset base to determine the extent of the estate tax liability in both Ireland and the UK. Where taxes may be due in both countries, the Estate Tax Treaty should be consulted to determine whether any exemption or credit is available to mitigate the double tax charge.
When you first joined Goodbody, what were your goals in driving change within the company?
When I first joined, there was a definite need amongst the client base to have their financial plans and goals structured and delivered in a coordinated manner. This led to driving change in how we provide this service to clients. Clients respond very well to having a fully developed plan in relation to their evolving financial plans and to having a trusted advisor who is with them every step of the way in achieving their financial goals.
How would you evaluate your role and its impact over the last two years?
My role has deepened the tax expertise within Goodbody and as a result the service offering that we provide.
Seeing the benefit of the service to clients and colleagues is also very rewarding.
What do you hope to accomplish in the future?
I would like to continue to enhance the client experience at Goodbody. Many clients accumulate wealth in a variety of different ways and very often do not have access to or obtain fully rounded advice. It would be my desire for clients to have a single provider experience in relation to meeting their personal financial and investment needs.
“I think in times of significant global economic change it is vital for clients to closely monitor their financial plans and goals and to work closely with their financial advisor. It is also important to have an advisor that can provide an investment and tax offering to ensure that both are appropriately aligned.”
The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid.
Commissioner Margrethe Vestager, in charge of competition policy, said: "Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 % on its European profits in 2003 down to 0.005 % in 2014."
Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a "head office". The Commission's assessment showed that these "head offices" existed only on paper and could not have generated such profits. These profits allocated to the "head offices" were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.
This selective tax treatment of Apple in Ireland is illegal under EU state aid rules, because it gives Apple a significant advantage over other businesses that are subject to the same national taxation rules. The Commission can order recovery of illegal state aid for a ten-year period preceding the Commission's first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13 billion, plus interest.
In fact, the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to Apple's decision to record all sales in Ireland rather than in the countries where the products were sold. This structure is however outside the remit of EU state aid control. If other countries were to require Apple to pay more tax on profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland.
(Source: European Commission)