QUESTION 1 – What are the most common structures used when international clients want to form a company in your jurisdiction? Any examples?
The most common form of company to incorporate here in Ireland is a Company Limited by Shares (Ltd). Limited companies can carry out any lawful activity they wish. There must be at least one director and one company secretary. There are no minimum share requirements. The limited company is the option which gives the directors the most flexibility to carry out activities and is why over 85 per cent of all companies in Ireland are companies limited by shares.
A second form of Company also used is a Designated Activity Company (DAC). DAC’s are similar to limited companies, in that they too are also limited by shares, however, the activities of the company are limited to those set out in their company constitution. DAC’s must have at least two directors. In general, it is companies which carry out regulated activities which are incorporated as DAC’s – examples being insurance companies or banks.
Another form which international companies use is to register a branch operation of the foreign entity here in Ireland. Here, only the Irish branch is subject to Irish taxes. Some larger multinational companies have set up in Ireland in this way for example Lidl supermarkets.
QUESTION 2 – Please detail some of the favourable and unfavourable legislation that businesses considering establishing a presence in your jurisdiction should be aware of? How can you help them to streamline the process?
The most common favourable legislative provision for companies here in Ireland is the low rate of corporation tax on trading income being 12.5 per cent. Ireland has numerous tax reliefs and incentives that are available to companies operating here, in particular, the availability of the research and development tax credit which allows against corporation tax to the value of 25 per cent of qualifying expenditure incurred on research and development activities.
The Knowledge Development Box tax relief allows for a reduction in the corporation tax rate to 6.25 per cent on income generated from qualifying patents and computer programmes. Ireland also has some favourable reliefs available to staff who are assigned from abroad to work here in Ireland. The Special Assignee Relief programme (SARP) provides relief from income tax on part of the income earned by employees who are assigned to work in Ireland. This can be an important factor when initially establishing a base here in Ireland. Ireland has comprehensive tax treaties in place with 74 countries all over the world.
One potentially unfavourable requirement under the Companies Act 2014 is the default position that companies must have at least one director of the company who is resident in a EEA country. With the uncertainty around Brexit, it is possible that UK resident directors will no longer fit that criterion. There are solutions to this issue, where a company does not have an EEA resident director. In this instance, the company can take out a bond to a value of EUR25,000 which is valid for two years, or the company can apply to the relevant authorities for an exemption on the basis that it has economic links to one or more trade in the state. The company must be actively trading here for this exemption to be allowed.
Ireland is in the process of finalising a Central Beneficial Ownership Register. All companies will be obliged to give details of the ultimate beneficial owners (natural persons) who directly or indirectly control more than 25 per cent of the company. Details of this register will be made available to specific authorities where required.
QUESTION 3 – What due diligence is required to be undertaken by company formations agents under anti-money laundering laws in your jurisdiction?
Company formation agents must carry out Know Your Client (KYC) procedures and anti-money laundering checks on all new customers. This is in the form of a risk-based approach and will include confirming the identity and addresses of the individuals involved. As part of this, they require copies of identification and at least one recent utility bill for each director or secretary of a new company being formed.
Depending on the individual, enhanced due diligence may also be required whereby confirmation of an individual’s identity or address will need to be verified by a bank or other entity in the country of origin.
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