Starting a business in Ireland

Ireland’s corporate tax rate stands at 12.5% for trading income being the lowest in Western Europe. The company must meet the substance requirements. Passive income – income other than the broadly defined trading income - is taxed at a rate of 25%.

For large multinational corporations with a global turnover exceeding €750 million, the rate is 15% in line with the EU's Minimum Tax Directive and the OECD's global tax reform. Regardless of business size, Ireland's tax regime remains highly attractive, particularly when compared to rates exceeding 20% in many other European nations.

There are other attractive reliefs available to lower the effective rate of tax including (but not limited to) the small companies relief, a 25% research and development tax credit, a 6.25% knowledge development box tax rate, a 32% digital gaming tax credit and a 100% tax relief on the purchase cost of qualifying intellectual property (IP).  This makes Ireland a very attractive jurisdiction to develop and hold IP. 

Ireland has, at the time of writing, 78 double taxation agreements (DTAs) with countries such as Australia, Canada, China, Italy, Germany, Singapore and the United States. These treaties are designed to prevent double taxation, ensuring that income generated is not taxed both in Ireland and abroad.

Where an Irish company is in receipt of dividends from foreign companies, the Irish tax regime gives credit for foreign taxation already paid. This relief is by way of unilateral relief, or the EU Parent Subsidiary Directive or the provisions of double tax treaties.

Basically, if tax has already been paid on trading income in another jurisdiction at 12.5% or higher, and dividends are received by an Irish company, there should be no further additional tax payable by the Irish company.

The same applies to non-trading income. If profits have already been taxed at a rate of 25% or more in a foreign jurisdiction, no further taxation should be imposed on dividends paid to Ireland. 

As part of the European Union (EU), Ireland enjoys unrestricted access to the other member states like France, Germany, Italy, Spain, and Sweden. This means trading without facing tariffs and complex customs procedures. Common standards and regulations enable businesses to operate under a unified framework, reducing the complexity and cost of regulatory compliance. This is particularly beneficial if you are looking to expand into other EU markets.

Ireland is also a member of the Eurozone, having adopted the Euro as its official currency in 1999. Presently, 20 of the 27 EU member states use the Euro. With expansion in mind, this may simplify future transactions and make it easier to consistently price your goods and services. 

Ireland is generally regarded as a politically stable, competitive, secure, transparent and pro-business country. Regardless of which of the two main centre leaning political parties form the Government, each has an objective of continuing to develop Ireland as a great country in which to do business. This continuity of office provides assurance that the rule of law will not change rapidly or without notice and provides considerable stability for businesses seeking to plan for the long term. 

Situated between Europe and the United States, Ireland offers companies a highly advantageous entry point into two of the world’s largest economic markets. Its strategic location allows businesses to easily access both the EU’s single market of around 450 million consumers and the expansive North American market, making it a prime hub for global operations.

Many leading multinationals, particularly in technology and pharmaceuticals, have chosen Ireland for their European headquarters. Firms such as Apple, Google, Pfizer and GSK have substantial operations here.

Additionally, Ireland’s well-developed transport links, including international airports and major shipping routes, further solidify its role as a key gateway for trade and investment between the important markets.  

Ireland recognises both English and Irish as official languages, though English is much more widely spoken. As the de facto language for professional and social interactions, this presents a huge benefit for businesses coming from English-speaking countries.

The ease of communication can reduce potential misunderstandings and simplify many aspects of starting and running your business in Ireland. This may be useful when you are hiring talent, negotiating deals, and liaising with local partners and government bodies.

With a rapidly growing globally mobile population and a large presence of multinational companies, Ireland now boasts a highly diverse, multi-lingual workforce. With an increasing non-Irish workforce, languages from across the globe can be heard in all parts of the country.

Ireland has a special assignee relief programme (SARP). If a new or existing Irish company were to transfer or recruit a foreign tax resident person into Ireland, 30% of their relevant employment income above €100,000 is not subject to income tax for the first five years. This is subject to a cap at an income level of €1million.

In addition to SARP, if part of their remuneration package is made up of the grant of share options, there is a key employee engagement programme (KEEP).

Under this scheme, Irish income tax is not chargeable on the grant or exercise of such share options. Instead, when the gain is realised, capital gains tax is charged in respect of the gain on exercise. An income tax saving of 40% applies to the difference between the market value of the shares on acquisition and the acquisition price that applies under the terms of the option. 

Starting a business in Ireland means you can tap into a skilled and diverse talent pool. Ireland continues to have one of the most educated workforces in the world, with over 50% of people in the key 25-34 age group having a university degree or other third-level qualification.

In addition to cultivating a highly educated domestic workforce, Ireland is also actively attracting talent from overseas. For example, its Global Citizens 2030 initiative aims to boost the number of international higher education students by 10 percent and draw in outstanding PhD students for research and innovation.

Combined, this may provide you with a steady stream of domestic and international talent to tap into for your business growth in the years to come.  

A private company limited by shares (LTD) is a popular type of structure for businesses looking to set up in Ireland. For this, your company name must end with “Limited” or “Teoranta.”

Ireland's regulations allow an LTD company to have a flexible governance structure. The company can operate with a single director, provided a separate company secretary is appointed. This is unique to LTD companies, a feature that can better support small businesses and sole entrepreneurs in Ireland.

This company setup is also attractive as it limits members' liability to the amount unpaid on their shares, ensuring that personal assets are protected. A LTD company may have up to 149 members, which allows for a broad base of ownership. Should your LTD company have only one shareholder, it will be referred to as a single member company. 

A designated activity company (DAC) can be either a private company limited by shares, or a private company limited by guarantee with share capital. When compared to an LTD company, a DAC will have more specific regulations to which it must adhere.

As such, for entities incorporated for specific purposes like joint ventures, the requirements of the DAC structure can enable more control and governance. Special purpose vehicle (SPV) companies for financial activity often opt for this company setup in Ireland.

A DAC will require at least two directors, and its name must end with “Designated Activity Company” or “Cuideachta Gníomhnaíochta Ainmnithe” unless it qualifies for an exemption.

For a DAC limited by shares, members liability during winding up is restricted to unpaid share amounts whereas in a DAC limited by guarantee, members are liable for unpaid share amounts as well as any promised contributions to the company's assets if it is wound up. 

If you are planning to list your business on the stock exchange and raise capital, you may consider the public limited company (PLC) structure. As a PLC, your shareholders can enjoy limited liability. However, as you might expect, a PLC brings with it more significant share capital requirements.

You must ensure that your PLC has a minimum nominal value of allotted share capital amounting to €25,000, with at least 25% paid up before you start business or exercise borrowing powers in Ireland.

As part of business registration requirements, you will need to appoint at least two directors, and your company name must end with “Public Limited Company” or “Cuideachta Phoiblí Theoranta.” 

Unlike other company types, an unlimited company does not provide limited liability protection to its members. This means that if the company incurs debts or has other financial obligations, your members' personal assets may be used to meet these liabilities.

You may establish an unlimited company as either a public or private entity. A public unlimited company can either have share capital (PUC) or operate without share capital (PULC), while a private unlimited company is required to have share capital (ULC). This flexibility allows you to choose the most suitable form based on your financial and operational needs.

For the incorporation, you will need at least two directors, and your company name must end with “Unlimited Company” or “Cuideachta Neamhtheoranta.”