Company Formation Ireland For Non-Residents
What should a non-resident director consider when setting up a business in Ireland?
Firstly, it is important to note there is 8 things to know before starting a limited company. However, for non-resident directors living outside of the EEA, there is an extra requirement for companies setting up in Ireland.
What Is A Non-Resident Director?
The term non-resident director applies to a company director who is not a resident of an EEA country. So, if you live outside the EEA and you want to form a company in Ireland, certain conditions apply. These conditions apply even if you are a citizen of the EEA who is living outside of the EEA. The rules apply to where you live, not your citizenship.
Non-Resident Director Conditions For Setting Up A Business In Ireland
Under the Companies Act, you will need to have any one of the following in place:
- At least one company Director who is resident in a member state of the EEA (European Economic Area)
- A Non-Resident Bond
- A statement from the Revenue Commissioners. This must confirm the company has a ‘real and continuous link’ with one or more economic activities in the State. Usually this statement applies once a company has already been established for many years and has previously either had a non-EEA resident director and provided a bond during this time, or had an EEA resident director who is no longer with the company.
Qualifying As An EEA Resident Director
To officially be an EEA Resident Director, you must live in one of the EEA states. The EEA is made up of the 28 Member States of the EU, plus Iceland, Liechtenstein, and Norway.
The EU states are: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
The purpose behind the bond is to make sure the Company meets all its statutory obligations. These include filing annual returns with the Companies Registration Office (CRO) and tax returns to Revenue.
The Bond basically insures the company for €25,000 against certain breaches of the Companies Acts and Taxes Acts for a period of 2 years. However, it does not cover all late filing penalties. For example, if you file your annual return to the CRO late, you will lose your audit exemption on your accounts and you may have to pay additional fines of up to €1,200.
The Directors and Company Secretary are responsible for putting the bond in place. They are also responsible for ensuring that the company complies with the Companies Act.
Directors are guilty of an offence if the company doesn’t have a resident director, bond, or real and continuous link. The Registrar of Companies can also strike off a Company if it doesn’t comply with the Act.
Other Conditions For Non-Resident Directors
Your new company must also hold an Annual General Meeting in Ireland every year. Or, if the shareholders agree, you can hold the meeting abroad once certain criteria are met.
How Do I Set Up My Company As A Non-EEA Resident?
If you are not resident in the EEA area, you will need a person who is resident in the EEA to act as a director in your company.
As above, if this is not possible, you need to put a bond in place. The bond is put in place for 2 years. The intention is usually that after this 2 years has passed, you will have begun to establish a ‘real and continuous link with an economic activity in Ireland’; this is really only possible once you have several years of trading history with your new company.
The bond is called a Section 137 Non-Resident Directors Bond and this allows companies in the Republic of Ireland to establish a company without the requirement for an EEA resident director.
Once your bond is in place, you can proceed to setting up your company in the same way as an EEA resident.
How Much Does A Non-EEA Resident Bond Cost?
Accountant Online provides a bond for a period of 2 years for a total fee of €1950. The surety for the bond is provided to us by a third party financial institution and is non-refundable.
When Does The Bond Need To Be In Place?
The bond needs to be in place as soon as you are submitting your application to form a company in Ireland. We can organise this to be in place for you in time.
Does The Bond Replace The Director Of The Company?
No. Having the bond in place does not replace the need to have a Director, it just exempts the company from requiring an EEA resident as a director.
You still need to fulfill all of the normal documentation required to register an Irish limited company.
How Long Does The Bond Last?
The bond lasts for 2 years and at this point needs to be renewed, unless you have appointed an EEA resident director or if you have managed to establish a significant economic link with Ireland in that time.
What If I’m An EEA Citizen But Not A Resident In The EEA? Do I Need A Bond?
Yes, you need a bond or you need to establish a real and continuous link with an economic activity in Ireland over time. The rules for residency are laid down by the Revenue Commissioners. They are different to the rules for citizenship.
Take this example: you are an Irish citizen and you move to the USA for 10 years. You have not returned to live in Ireland in that time, so you have not been resident for 10 years. However, you remain a citizen of Ireland. In this example, you will need to provide a bond.
Accountant Online is a firm of award winning Chartered Accountants serving Ireland and the UK. We understand how important it is to meet your compliance obligations, and minimize your tax liability. We aim to save money for our clients without compromising on the quality of our service. Get in touch for a free consultation on 01 905 9364 or send an email to firstname.lastname@example.org. Find us on Twitter, Facebook and LinkedIn.