Thinking about relocating your UK company to the EU?
As a key member of the EU and the EEA, Ireland is ideally placed for access to the biggest trading market in the world, not to mention the superb way of life it affords directors.
With the disruption caused by Brexit, it’s no surprise that many UK companies are looking to set up an Irish limited company either to trade from or as a subsidiary or branch.
However, setting up a limited company in Ireland isn’t always as easy as you may imagine and there are some rules that you need to comply with to make the process as smooth as possible.
If you need our help, talk to our Client Services Team now. We can talk you through the requirements and what services you need to move your company to the EU.
The benefits of setting up in Ireland
As a key gateway to Europe, the Middle East and the Americas, Ireland is a great place to do business. As well as that, when you ally its location to a young and well-educated workforce, superb connectivity and business-friendly taxation, then you can see why so many companies are thinking about setting up here.
- Full access to EEA
- No customs duties between EEA and Ireland
- Simple export paperwork
- Vibrant, connected business environment
- Young, well-educated workforce
- Potentially low corporation tax
- Great lifestyle
What are the minimum requirements for UK resident directors?
Appoint an EEA-resident director or lodge a Section 137 Bond
The options for UK resident directors moving your company to Ireland.
Must have a separate company secretary
Not necessary in the UK but a requirement for Irish companies.
Will need to apply for a PPSN if not citizen of Ireland
Required for filing your Irish statutory accounts.
Must make a personal annual income tax return
A statutory requirement even if you have no Irish income.
UK directors setting up in Ireland
If you want to set up a limited company in Ireland from abroad then you need to have either an EEA resident director, lodge a Section 137 Bond or show significant ‘real and continuous’ links with the country.
In the first case, this means that UK companies wishing to relocate to Ireland must have a local EEA director willing to serve or someone who is happy to relocate to an EEA country.
Alternatively, if you have an executive team that are all based outside of the EEA you can still set up a limited company, but you will need to lodge a non-EEA residents’ bond, called a ‘Section 137 Bond’ with an insurance company.
What is a Section 137 Bond?
The bond provides €25,000 of security against non-compliance of the business with Irish tax or company law. Since this is additional paperwork, it can slow down the incorporation process but it is a necessity if you don’t meet any of the other requirements.
Accountant Online can provide you with a two-year insurance backed bond that will allow you to set up your company with no EEA-resident directors.
Real and continuous link with Ireland
If your company can show evidence of a ‘real and continuous link’ with Ireland, you or your accountant can apply for an exemption from having an EEA-resident director and securing a Section 137 Bond.
However, you will need to be able to show significant activity over a long period of time. If you can successfully prove your link with Ireland, Revenue (Ireland’s equivalent of the HMRC) will issue a certificate stating this.
Other director requirements
- Non-resident directors will also have to apply for a PPSN (Personal Public Service Number) and make an annual personal tax return, called a Directors Return and company returns, including Annual Returns and tax returns.
- It’s also important to remember that in Ireland, disclosure of the directors home address is mandatory and a matter of public record unless you can show that this may have security implications.
- All directors and shareholders have to successfully complete Anti-Money Laundering (AML) checks including proof of identity and residency.
What does the company secretary do?
Unlike the UK, Irish law requires every limited company to appoint a company secretary.
The secretary is responsible for ensuring that your company complies with all aspects of the Companies Act 2014 and must be a separate person (or professional company) from the director if there is only one. If there is more than one director, one can also act as the company secretary.
They will take charge of filing the annual accounts, called the Annual Return, with the Companies Registration Office (CRO), maintain the statutory registers and record and maintain a record of minutes of board and general meetings.
If you do not have a person suitable for the role, we have a professional company secretary service in Ireland that will give you peace of mind.
Taxation in Ireland
One of the critical attractions of setting up in Ireland is the low headline rate of taxation, with a corporation tax of only 12.5%.
It has to be borne in mind, though, that this rate is only available for companies that have significant economic activity in the state and are controlled locally.
Revenue is looking for businesses that provide significant economic benefits to Ireland rather than shell companies just looking for a low tax rate. This means that a ‘centrally controlled and managed’ business is likely to qualify for the low corporation tax in Ireland.
A Revenue inspector assesses each business on a case-by-case basis, so it is essential that you can make a strong argument for obtaining the lower rate. For companies that aren’t able to show these links then the main rate of corporation tax is 23%.
If you want to set up a limited company in Ireland then you’ll need to have a trading address in the state and this can’t simply be an accommodation address or Virtual Assistant.
The good news is that the registered office can be that of your local accountant and to help in this regard we have a professional registered address service.
Revenue is looking to identify companies that are a full part of the Irish economy and having a real rather than a virtual location is a good indicator of this.
Companies that use a fulfilment centre in Ireland but that have developed outsourced marketing, sales or administration functions elsewhere would be acceptable, but in general, Revenue is looking to see evidence of real, local trading.
Central management and control test
Revenue applies a specific test to companies to assess whether they would qualify for the 12.5% taxation rate.
Called the ‘central management and control test’ this looks at;
- Where the company policy is decided
- Where major contracts are defined
- Where investment decisions are made
- Where the majority of the directors live
- The location of the head office
The more of these that have an Irish location then the more likely your company is to qualify.
For businesses that are based in third countries, there is a requirement to register for VAT in every EU country that they trade in.
For companies that are based within the borders of the EEA, only one VAT registration is necessary. This means that there’s a valuable advantage for businesses that set up and register in Ireland.
However, VAT registration isn’t automatic; companies need to show that they really are trading in Ireland in a “VAT”-able activity and that they are a real business rather than simply looking to circumvent the regulations.
For businesses that are trading in Ireland, VAT registration is mandatory when they reach a turnover above €75,000 from the sale of goods or €37,500 from the sale of services.
Setting up a limited company in Ireland
We know that the rules around setting up a company in Ireland can sometimes seem long and complicated, but that doesn’t mean that it has to be difficult for your business.
We’re happy to discuss the options and work with you to ensure your business is set up correctly and complies with all current and future laws.
Larissa is a Fellow Chartered Accountant (FCA) and is the CEO of Accountant Online, which specialises in company formation, company secretarial, annual accounting services, bookkeeping, tax, and payroll services for micro and small companies in Ireland and the UK.