Business in Brazil

Ireland : The Gateway to The European Union

Why use Ireland as a base for European investment?       

In excess of 1,000 international companies operate their European market from Ireland in activities and sectors including technology, pharmaceuticals, biosciences and manufacturing.

The attraction of Ireland as an investment location can be attributed to the proactive strategy of the Irish government enabling the development of inward investment, its membership of the European Union (EU), a very favourable corporate tax rate of 12.5% and a skilled and flexible labour pool.

 

Ireland has succeeded in attracting some of the world’s largest companies to establish operations here. The list of multinationals currently operating in Ireland includes some of the largest companies in the worldwide technology, pharmaceutical, biosciences, manufacturing and financial services industries. Pfizer, Apple, Pepsi etc.

 

The reasons for this success can be outlined as follows:

  • Ireland’s low corporate tax rate – corporation tax on trading profits is 12.5 % which does not breach EU or OECD harmful tax competition criteria

  • Regulatory, economic and people infrastructure of a highly developed OECD jurisdiction

  • Benefits of EU membership and of being an English–speaking jurisdiction in the euro-zone

  • As a common law jurisdiction, the legal system in Ireland is similar to that of the US and the UK

  • Provision of a specific tax credit for research and development activity

  • Very limited transfer pricing rules; and

  • An extensive and expanding double tax treaty network with close to 50 countries, including the UK and the US.

 

Ireland is an island situated off the north west of the European continent. Dublin is the capital city and has a population of over one million people. Dublin is on the east coast and is one hour by air from London and 90 minutes from Paris and Brussels. Cork, Limerick and Galway are the other major cities.

 

C:\Users\Brendan\Pictures\Cork\Cork downloaded photos\721px-Location_Ireland_EU_Europe.pngIreland is a stable parliamentary democracy with a written constitution and two houses of parliament. While the President is the constitutional Head of State, the powers and functions of the Presidential office are largely ceremonial. The Government is elected for five-year terms and controls the legislative and political process. Ireland is a member of the EU and the United Nations.

 

Irish law is based on common law, legislation, the Irish Constitution and EU law and we have a very similar legal system to the United Kingdom and the USA. Northern Ireland, as part of the United Kingdom, operates in a separate political system.

 

Irish law is based on common law, legislation, the Irish Constitution and EU law and we have a very similar legal system to the United Kingdom and the USA. Northern Ireland, as part of the United Kingdom, operates in a separate political system.

 

Ireland is among the richest, most developed and peaceful countries on earth, having the fifth highest Gross Domestic Product per capita, second highest Gross Domestic Product (Purchasing Power Parity) per capita and having the fifth highest Human Development Index rank. The country also boasts the highest quality of life in the world, ranking first in the Economist Intelligence Unit’s Quality-of-life index. Ireland was ranked fourth on the Global Peace Index. The state also has high rankings for its education system, political freedom and civil rights, press freedom and economic freedom; as a result it was ranked fourth from the bottom on the Failed States Index, being one of the few "sustainable" states in the world.  
Ireland has a developed, modern, knowledge economy, focusing on services and high-tech industries. The state is a member of the EU, the OECD and the UN.

 

The Economy

The economy of Ireland has transformed in recent years from an agricultural focus to one dependent on trade, industry and investment. Economic growth in Ireland averaged an exceptional 10% from 1995–2000, and 7% from 2001–2004. Industry, which accounts for 46% of GDP, about 80% of exports, and 29% of the labour force, now takes the place of agriculture as the country's leading sector.

 

Exports play a fundamental role in the state's robust growth, but the economy also benefits from the accompanying rise in consumer spending, construction, and business investment. On paper, the country is the largest exporter of software-related goods and services in the world. In fact, a lot of foreign software, and sometimes music, is filtered through the country to avail of the state's non-taxing of royalties from copyrighted goods.

 

A key part of economic policy, since 1987, has been Social Partnership which is a neo-corporatist set of voluntary 'pay pacts' between the Government, employers and trades unions. These usually set agreed pay rises for three-year periods. The state joined in launching the Euro currency system in January 1999 (leaving behind the Irish pound) along with eleven other EU nations. The 1995 to 2000 period of high economic growth led many to call the country the Celtic Tiger. The economy felt the impact of the global economic slowdown in 2001, particularly in the high-tech export sector — the growth rate in that area was cut by nearly half. GDP growth continued to be relatively robust, with a rate of about 6% in 2001 and 2002. Growth for 2004 was over 4%, and for 2005 was 4.7%.

 

Skilled Workforce - Science and Technology graduates per thousand in the 20-29 age group.

Ireland             23.2
France             19.6
UK                    16.2
USA                  10.2
Germany          8.2
Portugal           6.3
Netherlands    5.8

 

Grants and Fiscal Incentives

The Irish government actively encourages overseas companies to choose Ireland as a European base. Part of the incentive package offered can be the availability of state financial assistance, in the form of grant assistance, to defray start-up or other costs.

What types of Corporations are available under Irish law?

Essentially there are two basic types of company in Ireland, private companies and public companies. The vast majority of companies registered in Ireland are private companies limited by shares and they are by far the most popular form of business entity for inward investment projects. The shareholders of a private limited company have limited liability. The other principal form of company is a public limited company, which is typically used where securities are listed or offered to the public. The recently introduced European Company or Societas Europea (“SE”) is treated as a public company under Irish law but is not yet widely used in the EU.

 

Resident Director

At least one of the directors of an Irish company must be a resident of a Member State of the European Economic Area (EEA). Member States of the EEA comprise all member states of the EU and Iceland, Liechtenstein and Norway. In so far as it is the person’s residence in Ireland that falls to be determined, a person must have been present in the State for a period amounting in aggregate to 183 days or more during the 12 months or 280 days over the 24 months (excluding 30 days or less in any one year) preceding the date of incorporation of the company in order to qualify as “resident”.

Branch operations

Any foreign company trading in Ireland that has the appearance of permanency, an independent Irish management structure, the ability to negotiate contracts with third parties and a reasonable degree of financial independence is considered a branch under Irish company law. There are certain procedures set down for the registration of branches in Ireland involving the submission and authentication of memorandum and articles of association, and in certain situations, the filing of annual accounts. In some cases it may make sense from a tax perspective to establish a foreign branch in Ireland, rather than incorporate a separate legal entity. If trading losses are likely to arise following the initial establishment in Ireland, such losses may be capable of being offset against the profits of the parent company in the parent company's home state. If it is envisaged that the operations in Ireland would continue to be loss making, then a branch may be preferable until such time as the operation becomes profitable. The most advantageous structure will only be identified after careful consideration of the proposed business, its relationship with the business of the foreign parent company and the projections for the profitability of the business in the future.

Place of business in Ireland

A foreign company doing business in Ireland from a fixed address, not being a branch, must file a copy of its constitutional documents, together with a list of directors of the company and the address of its established place of business in Ireland, with the CRO.