Entering the Irish Market
Foreign companies making a move into Ireland will be taking their place in one of Europe’s fastest growing and buoyant markets. Ireland’s projected nominal Gross Domestic Product for 2021 was US$476 billion, putting the island state 29th in the world.
Ireland has become a business magnet for multi-nationals drawn towards the capital Dublin, which accounts over 40% of the country’s GDP and is home to the highest-spending consumers. IT, high-tech, financial services, pharmaceutics, and medical technology lead the way for foreign investment and the economy’s growth rate almost doubled the European average in 2020.
Starting a Business in Ireland
Geographically located off the coast of Western Europe, Ireland is an obvious gateway into the European market, with its 450 million consumers, and is the only English-speaking member of the European Union’s Eurozone.
Company tax incentives are another potential bonus. However, incoming companies will find these attractions balanced by having to comply with the complexities of employment, tax, payroll, and corporate legislation while ensuring their employees are working productively and efficiently.
Foreign companies establishing an entity in Ireland typically choose a subsidiary operating as a private limited liability company. This is a smart move but brings compliance issues with a number of legalities.
The subsidiary must comply with requirements under the Companies Act (2014), Irish employment laws and European Union directives, which together provide the framework for all companies operating in Ireland, whether domestic or foreign-owned.
The Companies Registration Office (CRO) is responsible for incorporating and registering companies and ensuring they follow the requirement of the Companies Act. Once foreign companies have taken the first step of registering the subsidiary’s name with the CRO, they must follow a set procedure and meet specific requirements.
- At least one director should be a resident of the European Economic Area (EEA)
- A Non-EEA Residents’ Bond must be obtained if none of the directors are EEA residents
- A company secretary must be appointed if there is only one director
- The company must have at least one shareholder, which cannot be a corporate body
- Register the office and business address
- Articles of association should detail business activities and company shareholders, directors, and other officers
- Once all documents are signed, obtain certificate of incorporation from CRO, or register online with the Companies Online Registration Environment (CORE)
To operate payroll, other measures apply. These include:
- Registering for Employment Taxes (PREM) with the Revenue by completing Form TR2 and submitting to the local Revenue Registration Unit for the relevant location
- Completing Form TR2 (FT) to obtain PREM tax registration for non-resident companies with no physical presence in Ireland
- Obtaining a Personal Public Service (PPS) number, which acts as a national tax registration number for company directors
- Ensuring tax liability is reported to the Revenue on or before employees are paid, and due payments are made by the 23rd of the next month
- Registering with the Social Insurance Fund for Pay Related Social Insurance (PRSI) deductions for employees
Expanding into Ireland
Ireland has one of the fastest-growing economies in Europe and is becoming one of the major players in the European Union and Eurozone. The projected nominal Gross Domestic Product for 2021 of US$476 billion, put the island state 29th in the world. Impressive for a relatively small nation.
Ireland is a front-runner for attracting Foreign Direct Investment and 2018 was the sixth successive year IBM’s Global Trends report named their economy No. 1 for attracting high-value international investment. Ireland is dubbed a ‘knowledge economy’ and this is supported by its hi-tech cutting-edge sectors such as IT, software development, financial services, life sciences, pharmaceutics, and medical technology.
Ireland plainly welcomes foreign investment, but incoming companies have to toe the line in terms of compliance with employment laws and collective agreements affecting benefits and entitlements for employees.
Irish Business Facts
- Capital city – Dublin
- Population – Around 5 million
- Major cities – Dublin, Cork, Limerick, Galway, Waterford, Swords, Drogheda
- Official language – Irish and English
- Economy/GDP (2021) – $US476 billion, world ranking 29th
- World ranking: Ease of Doing Business – 24th out of 190 countries (World Bank, 2020)
- Leading sectors – Service sector (54.4% GDP); industry sector (39% GDP); agriculture sector (1% GDP). Largest industries within sectors: IT, software development, financial services, life sciences, pharmaceuticals, and medical technology
- Main exports – Pharmaceutical and medical products; scientific apparatus; organic chemicals; electrical machinery; essential oil and perfume
- Main imports – Transport equipment; organic chemicals; pharmaceutical and medical products, electrical machinery, and appliances; office machines; petroleum,
- Main trading partners – USA, United Kingdom, European Union (primarily Germany); China.
- Government – Parliamentary republic system, Unitary state, liberal democracy
- Currency – Euro
Advantages and Challenges of the Irish Market
Advantages of expanding into the Irish economy include:
- Corporate Tax: The standard trading rate of 12.5% is among the lowest in the world and 10% lower than the European Union (EU) average, with incentives to bring the rate lower
- Politics: Ireland is a parliamentary, representative democratic republic and a member state of the European Union
- Economic Attitude: Welcomes international investment from multi-nationals and offers various corporate taxation incentives, especially for research and development
- Logistics: Good global connections. There are four international airports – Dublin, Cork, Shannon, and Knock. Dublin has the largest port
- Trade Links: Direct trading access to Europe as a whole and its EU members, with access westwards to North and South America
- Ease of Business: The World Bank Report ranked Ireland 23rd for ease of starting a business and fourth for ease of paying taxes out of 190 nations
Challenges of operating in Ireland:
- Uncertainty over how UK’s exit from EU will affect relationship with Irish markets
- Ongoing compliance with changing health and safety, employment, social insurance, and taxation laws
- Skills shortage in the digital economy
- High cost of living for arrivals
Limited Company / Subsidiary or Branch in Ireland?
A subsidiary established in Ireland is a separate legal entity from the parent company, with independent management and can have a different company name and follow its own business activities. The subsidiary can use this freedom to explore markets and build credibility throughout Ireland and the European Union.
A branch, however, is an extension of the parent company, operates on its behalf and is not considered a separate legal entity.