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Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.

Expanding to countries such as Ireland – which is characterized by a well-educated, ambitious, and adaptable workforce, multifaceted employment and tax laws, an extensive infrastructure network linking to Europe and beyond, and leading sectors in pharmaceutical and medical technology, software, ICT, financial services, trade, agriculture, mining, and fishing – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

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Ireland – The Economy

The economy of the Republic of Ireland is a highly developed knowledge economy, focused on services in high-tech, life sciences, financial services, and agribusiness, including agri-food. Ireland is an open economy (5th on the Index of Economic Freedom) and ranks first for high-value foreign direct investment (FDI) flows. In the global GDP per capita tables, Ireland ranks 4th of 186 in the IMF table and 4th of 187 in the World Bank ranking.

Foreign-owned multinationals continue to contribute significantly to Ireland’s economy, making up 14 of the top 20 Irish firms (by turnover), employing 23% of the private sector labor-force and paying 80% of the collected corporation tax.

As of mid-2019, economic growth in Ireland was predicted to decline, especially in the event of a disorderly Brexit.

One of Europe’s major financial hubs is centered on Dublin. Ireland ranks among the top ten wealthiest countries in the world in terms of GDP per capita, although this has been partially ascribed to distortions caused by the tax inversion practices of various multinationals operating in Ireland. From 2017, a modified gross national income (GNI*) was enacted by the Central Bank of Ireland, as the standard deviation was considered too materially distorted to accurately measure or represent the Irish economy.

After joining the EC (the European Communities, the predecessor of the European Union), the country’s government enacted a series of liberal economic policies that resulted in economic growth between 1995 and 2007 now known as the Celtic Tiger period, before its subsequent reversal during the Great Recession.

Ireland’s quality of life is ranked amongst the very highest in the world and the country performs well in several national performance metrics including healthcare, economic freedom, and freedom of the press. Ireland is a member of the European Union and is a founding member of the Council of Europe and the OECD. The Irish government has followed a policy of military neutrality through non-alignment since immediately prior to World War II and the country is consequently not a member of NATO, although it is a member of Partnership for Peace and aspects of PESCO.

Small and Medium-Sized Companies

SMEs in Ireland are defined as enterprises with fewer than 250 persons engaged. SMEs are further split into micro enterprises with fewer than 10 persons engaged, other small enterprises with between 10 and 49 persons engaged and medium sized enterprises with between 50 and 249 persons engaged.

99.8 percent of all enterprises in Ireland stand within the SME bracket. SMEs are thus particularly important for the labor market in Ireland – they account for 70.1% of total employment in the ‘non-financial business economy’, exceeding the EU average of 66.6%.

In contrast, the contribution of SMEs to total value added is only 41.5%, 15 percentage points below the EU average. This reflects the more significant role played by large firms in Ireland in generating value added. The number of people employed by Irish SMEs corresponds exactly to the EU average of 3.9.

SME productivity, measured as value added per person employed, averages €88,900. This is approximately double the EU average, mainly thanks to the widespread presence of foreign firms, which have, on average, higher productivity (in 2016, double compared to Irish-owned companies, if all companies are considered) and, among SMEs, specifically influence micro firm productivity.

SMEs have also displayed a strong e-commerce performance in the last few years, according to The Digital Economy and Society Index by the European Commission – 32% of SMEs sell online and 18% sell across borders, well above the EU averages of 17% and 8% respectively. 27% of SME total turnover originates from online sales, more than double the EU average of 12%. Irish companies also rank high in the use of social media (44%), cloud services (41%) and big data (23%).

CountryRepublic of Ireland
CapitalDublin
No. of States/Provinces4 – Connacht, Leinster, Munster, and Ulster
Principal CitiesDublin, Cork, Limerick, Galway, Tallaght, Waterford, Drogheda, Swords, Dundalk, Bray
Language(s)Irish/Gaelic, English
Local CurrencyEuro (EUR)
Major ReligionRoman Catholic
Date Formatdd-mm-yyyy
Time ZoneIrish Standard Time (GMT+1)
Country Dial Code+353
Population5.04 million
Border CountriesLand border: the Republic of Ireland–United Kingdom border, sometimes referred to as the Irish border, which separates the Republic of Ireland from Northern Ireland. Maritime border: the United Kingdom.
Tax Year1 January to 31 December (calendar year)
VAT %9%
Minimum Wage€10.50 per hour
Taxpayer Identification NumbersPersonal Public Service Number (PPS No)
Tax Reference Numbers (TRNs) – for non-natural persons, which can be Companies, Partnerships, Trusts, and Unincorporated Bodies
CHY Numbers – for eligible bodies who qualify for a charitable tax exemption
VAT Number
Leading Sectorspharmaceutical and medical technology, software, ICT, financial services, trade, agriculture, mining, and fishing
Main importsPlanes, Helicopters, and/or Spacecraft, Packaged Medicaments, Blood, antisera, vaccines, toxins and cultures, Computers, and Nitrogen Heterocyclic Compounds
Main exportsBlood, antisera, vaccines, toxins and cultures, Packaged Medicaments, Nitrogen Heterocyclic Compounds, Integrated Circuits, and Scented Mixtures
Main trading partnersUnited States, Germany, United Kingdom, Belgium, Netherlands, and China
Government TypeUnitary parliamentary republic
Current Prime MinisterMichael D. Higgins (President), Micheál Martin (Taoiseach/Prime Minister)

The Main Sectors of the Irish Economy

Ireland focuses on the following key sectors, which all have a significant impact on the country’s economy:

  1. Environmental Resources (Agriculture, Mining, Forestry, and Fishing) – These primary industries of Ireland rely on the country’s rich natural resources. These industries account for 5% of the country’s GDP and employ about 8% of the total labor force.

    Ireland has a great potential for agriculture considering its large fertile pasture, particularly in the southern and midland regions. However, agriculture contributes only 1% of the GDP.

    With a 9% forest cover, Ireland is one of the least forested countries in Europe. It mainly relies on wood import as it tries to increase the forest cover. The country’s fishing industry only focuses on aquaculture.

    The mining industry relies mainly on the production of lead, zinc, alumina, and a small quantity of minerals such as copper, gold, limestone, and gypsum. Ireland is one of the major exporters of zinc.

  2. Pharmaceutical And Medical Technology – The pharmaceutical and medical technology industry is one of the fastest growing industries in Ireland as a result of the high demand, steep competition, and emerging start-ups.

    The medical technology and research sector has over 100 companies responsible for the employment of about 25,000 people and generating 9.4 billion euros annually. The pharmaceutical industry, on the other hand, employs nearly 50,000 and generates about 60 billion euros of export annually. Most of the pharma companies are based in Ringaskiddy and Little Island.

    Biologics is the fastest growing sector within the pharma industry with expansions and several start-ups taking place.

  3. Software And ICT – The success of the technology industry in Ireland has resulted from the increase in the number of foreign companies setting up their offices in the country, especially in Dublin. Due to the impending Brexit, more and more fintech companies are moving to Dublin.
    The ICT sector employs over 35,000 people, generating about 35 billion euros annually. Ireland has over 200 ICT companies including most of the top ten largest ICT companies. Most of these companies are based in Dublin and include Facebook, Google, eBay, Amazon, LinkedIn, Twitter, PayPal, and Microsoft.

    The software sector generates over 16 billion euros annually and employs about 20,000 people. Ireland is the second-largest exporter of software in the world. Some of the top ten global technology firms (like Apple) have their operations in Ireland.

  4. Financial Services – The sector employs nearly 35,000 people and generates an average of 2 billion euros in taxes. The country continues to attract, develop, and retain financial services, thanks to the continued foreign direct investments. Ireland is Europe’s 7th largest provider of wholesale financial services.

    Most of the financial companies can be found at the International Financial Service Center in Dublin. There are over 60 credit institutions in Ireland and the banking sector is dominated by Bank of Ireland, AIB Bank, and Ulster Bank.

  5. Trade and Exports – Trade and export are one of the main components of the economy of Ireland. All the manufactured products must be sold for the country to earn revenue. Trade in the country is worth about €165 billion, generated mainly from service and merchandise trade. Export plays a significant role in the growth of the economy.

    Ireland is among the largest exporter of software-related goods, medical devices, and pharmaceuticals. The country is also the largest producer of zinc and the second-largest producer of lead in Europe. These minerals contribute greatly to Ireland’s export earnings.

Compliance Highlights

  • Revenue (Irish Tax and Customs) – The Office of the Revenue Commissioners was established by Government Order in 1923. The core business is the assessment and collection of taxes and duties. Revenue’s mandate derives from obligations imposed by statute and by Government and as a result of Ireland’s membership of the European Union (EU). In broad terms, the work includes:
    • assessing, collecting, and managing taxes and duties that account for over 93% of Exchequer Revenue
    • administering the customs regime for the control of imports and exports and collection of duties and levies on behalf of the EU
    • working in co-operation with other State agencies in the fight against drugs and in other cross-departmental initiatives
    • carrying out agency work for other departments
    • collection of Pay Related Social Insurance (PRSI) for the Department of Social Protection (DSP)
    • provision of policy advice on taxation issues
  • The National Employment Rights Authority – is an Office of the DETI (Department of Enterprise, Trade, and Innovation) and its mission is to achieve a national culture of employment rights compliance through providing information, supported by enforcement. The NERA has three main areas:
    • Employment Rights Information Service
    • Inspection
    • Enforcement and Prosecution
  • The Health and Safety Authority – an Agency within the DETI (Department of Enterprise, Trade, and Innovation) and has the overall responsibility for the administration and enforcement of health and safety at work.

Labor Contracts Law

Ireland has no legal requirement for a formal written contract, though this offers protection for both employers and employees. Employers, though, must offer at least a written statement covering ‘core items’ of the agreement within five days of the employee starting work and the full terms within two months.

Types of employment arrangements in Ireland cover full-time permanent employees on an open-ended or indefinite contract; fixed-term employees working on a special project or defined timescale; part-time workers, seasonal and casual workers. Additionally, collective or trade union agreements may also affect contract types.

There are a variety of contracts in Ireland. The main types are:

  • Open-ended, indefinite employment contract: Most employees work under these full-time contracts, which are in force until either the employer or employee ends the agreement. The contract need not be in writing, but the employer must provide a written statement of ‘core items’ within five days of the employee starting work. These are:
    • Names and addresses of employer and employee
    • Start and end date of a fixed-term contract
    • Method of calculating pay and payment schedule
    • Normal working hours and working week

Employer must supply written statement / contract of full terms within two months.

  • Fixed-term employment contract:  These cover employment that ends on a specific date or is tied to a particular project, in which case an end date does not have to be set. A fixed-term contract can be for a number of months or more than a year. Generally, fixed-term contracts provide the same benefits as indefinite contracts under the Terms of Employment Act and the Protection of Employees (Fixed Term) Act. Restrictions apply to fixed-term contracts:
    • They cannot be renewed more than twice or exceed a total of four years, after which employees must be offered an indefinite contract
    • If an employee’s fixed-term contract ends but the individual is re-employed within three months, that is considered continuous employment

  • Trial period or probationary employment contract:  Contracted trial periods typically last between three and 12 months and can be extended. If terminated during the trial period, the Unfair Dismissal Act applies if termination is due to:
    • Trade union membership
    • Pregnancy related issues
    • Entitlements relating to maternity, parental, adoptive or caregiver’s leave
    • The Act may also apply if the probation exceeds 12 months

Employers are expected to clearly state what is expected during the trial period, give feedback on progress via probation review meetings. If the employee fails, the probation period only one week’s notice applies.

  • Temporary / agency employment contract: The European Union Directive onTemporary Agency Work stipulates all temporary or agency workers are treated the same as full-time workers as applies to working time, breaks, annual leave, and public holidays, pay, pregnancy and nursing mothers and discrimination.

    The EU Directive was absorbed into Irish law by the Protection of Employees (Temporary Agency Work) Act of 2012. Whoever pays the agency worker is considered to be their employee.

  • Part-time employment contract: Part-time workers are defined in law as those whose normal hours are less than those of a worker in comparable employment and their rights are protected under the Protection of Employees (Temporary Agency Work) Act. The Act generally applies to any part-time worker in Ireland who:

  • Has a contract of employment or apprenticeship
  • Job shares
  • Is employed through an agency
  • Are state employees

There is no legal right to change from full-time work to part-time.

  • Youth Employment Contract: The Protection of Young Persons (Employment) Act stipulates the maximum working week for under-18s is eight hours a day, 40 hours a week in total including if they have more than one job.

  • Collective Agreements: Collective Bargaining Agreements (CBAs) apply where employers or employers’ federations negotiate with trade unions over employment conditions such as pay, benefits and entitlements. Any collective agreement cannot undercut statutory minimums stipulated by Irish employment laws.

    Unlike in other European Union (EU) nations, employers in Ireland are not legally required to negotiate with unions over employment conditions. Ireland brought in the Industrial Relations (Amendment) Act in 2015 to encourage collective bargaining, but this remains largely voluntary.

    Around a quarter of Irish workers are in Trade Unions and the Irish Congress of Trade Unions has close to 50 members. A 2019 EU survey assessed less than a third of private sector companies “engage with trade unions for collective bargaining.”

Payroll – Tax Contributions and Benefits

Income Tax:

Irish residents and those domiciled in Ireland for tax purposes are taxed on their worldwide income, subject to any double taxation treaties. Non-residents are taxed on their Irish-sourced income or any foreign income that is earned for roles carried out in Ireland.

Liability for taxation depends on residency. Tax residency applies if an individual is resident and domiciled in Ireland for 183 days in a tax year, or 280 days in a tax year plus the previous tax year, with a minimum of 30 days in each. Ireland residents are taxed on all their worldwide income.  Non-residents are liable only for Irish-sourced income.

Different tax bands and rates apply to single or widowed individuals, married couples on one income or married couples with two incomes. Universal Social Charge (varies between 0.8% and 8%) is applied on gross income, before any pension contributions or Pay Related Social Insurance deductions. Under the ‘Pay As You Earn’ (PAYE) system, income tax is paid on an exhaustive list of categories – wages, fees, profits, pensions, tips, bonuses, overtime, and benefits ‘in kind’ such as company cars. Individual tax rules also apply to other than earned income.

Gifts or inheritances may be liable for Capital Acquisitions Tax; the sale of assets, such as property may attract Capital Gains Tax.

Health and Social Insurance: Most employees over 16 years old contribute Pay Related Social Insurance (PRSI) from their earnings. The employer is responsible for remitting the employee’s contribution to the Revenue Commissioners and both the employer and Department of Social Protection (DSP) keep records of the amounts. The employer must itemize details on the employee’s pay slip. Employers also make PRSI contributions. The amount paid depends on employee earnings and the class they are insured under.

Sick Pay: There is no mandatory right to sick pay, which can be contractually agreed between employer and employee. Individuals with sufficient social security contributions may be able to apply for illness benefit or supplementary welfare.

Paid Annual Leave: In Ireland, the norm is a minimum four paid weeks per year, usually calculated on the ‘leave year’ between April 1 and March 31 although some employers use the calendar year. Individual employment contracts can agree more than the minimum requirement. Employees can choose how their leave is calculated, as follows:

  • 1,365 working hours in a year entitles the full four weeks’ annual paid leave, as long as employment did not change in the year
  • Calculate one-third of a working week for each month where more than 117 hours were worked
  • Calculate 8% of the hours worked in the year, to a maximum of four working weeks

In calculating entitlement, the employer must include all working hours including those spent on maternity, paternity, parental, adoptive leave, other annual leave and the first 13 weeks of leave for caregiver. Holiday pay is made in advance or averaged against the previous 13 weeks if weekly pay varies.

Public Holidays: Ireland has nine public holidays:

  • New Year’s Day – January 1
  • St Patrick’s Day – March 17
  • Easter Monday – (varies)
  • Early May Bank Holiday – (first Monday)
  • Early June Bank Holiday – (first Monday)
  • August Bank Holiday – (first Monday)
  • October Bank Holiday – (last Monday)
  • December 25 – Christmas Day
  • December 26 – St. Stephen’s Day

Holidays that fall on a weekend are not moved and employees are not entitled to the next working day off. Employees who are required to work on a public holiday are entitled to one of the following:

  • A paid day off on the public holiday.
  • An additional day of annual leave.
  • An additional day’s pay (double time) or
  • A paid day off within a month of the public holiday.

If an employer fails to specify which form of benefit will be offered within 14 days of the public holiday, the employee is entitled to take a paid day off for that day.

Maternity Leave: These are covered by the Maternity Protection (Amendment) Act (2004) and the Paternity Leave and Benefit Act (2016). Women have the right to 26 weeks’ maternity leave whether they are in full-time or part-time employment, or self-employed.

At least two weeks must be taken before birth and four weeks post-natal. Claimants must generally have at least 39 weeks of Pay Related Social Insurance (PRSI) contributions in the 12 months prior to leave starting to qualify for benefits.

Benefits are €245 (US$290) each week for 26 weeks or 156 days. Benefits are taxable but the individual does not have to pay PRSI or the Universal Social Charge (USC). Mothers may take an extra 16 weeks’ leave, but this is not covered by benefits.

Paternity Leave: Paternity leave allows two weeks from work for the employed or self-employed fathers or co-parents during the six months after birth. There is no legal requirement for employers to pay paternity benefit. Individuals may qualify for state benefits from the Department for Social Protection (DSP) if sufficient PRSI contributions have been paid.

Parental Leave: Statutory minimum parental leave is up to 26 weeks for each eligible child before their 12th birthday (16th birthday for child with disability). Parents must have worked for the employer for at least one year, who must be advised six weeks in advance. Leave to be taken in one stretch or blocks of at least six weeks. Part-time workers may have their entitlement reduced pro rata. Each parent is entitled to five weeks paid leave if they have sufficient PRSI contributions over 39 weeks in the 12 months before the birth. The standard benefit is €245 (US$290) each week.

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