Advantages of locating in Ireland
For many years a significant number of companies have chosen to establish operations in Ireland. While many companies set up specific function companies, such as finance companies, Intellectual Property (‘IP’) holding companies and treasury companies, others have chosen Ireland as headquarters for their European or EMEA trading activities. With so many different jurisdictions currently offering low tax rates, why is it that so many companies have chose, and continue to choose Ireland? While it is easy to see some of the factors motivating these decisions and which set Ireland apart from other low tax jurisdictions such as:
- EU member state for the past 37 years
- English speaking country
- Highly skilled workforce
- Large network of international air routes
- Excellent standard of living for employees posted to Ireland
- Historic links with the US & Europe
- A developed regulatory regime
Perhaps the key factor which sets Ireland apart as a business location however, is the sophistication of the Irish tax system. The Irish government have sought to promote and foster a knowledge economy and the Irish tax system is geared towards consistently providing the most competitive tax regime for holding companies and trading companies – particularly those operating in the financial, technology, pharmaceutical and services sectors. Ireland can provide companies in these sectors the opportunity to significantly reduce their tax costs.
Some of the key tax benefits are:
- Standard corporation tax rate of 12.5%, consistently confirmed by the government as being a key pillar of its tax strategy
- Tax relief on the acquisition and development of IP
- Significant tax credits available for R&D expenditure
- No capital duty on incorporation
- Exemption from exit charges on changing company residence to an EU/Treaty country
- Exemption for profits on the disposal of shares in a subsidiary company
- Extensive tax treaty network which is constantly expanding
- Exemptions from withholding taxes to EU and treaty countries
- Remittance basis of taxation for foreign employees transferred to Ireland and specific refund relief available for high earners.
While some ‘offshore’ jurisdictions may offer a tax free location, these are of little benefit for most multinational companies as governments introduce new rules to nullify the benefits of these ‘tax havens’. Ireland instead offers a legitimate alternative to ‘tax havens’ by providing an onshore jurisdiction with a low tax rate, and the human and technical resources required to be able to provide the necessary economic substance.
If you are an overseas company wishing to establish a business in Ireland please click here for more information.
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