Company Formation in Ireland
The factors that made Ireland a prime jurisdiction for European company formations are the simple process to form an Irish company, low corporation tax rate, less bureaucratic burden and the Euro being the official currency in Ireland.
Types of Companies in Ireland
| When it comes to company formation in Ireland, the Private Company Limited By Shares (LTD) is the most frequently formed type of corporate entity within the Republic of Ireland. Small limited companies currently enjoy up to 120.000 EUR tax incentives. |
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| The company formation process for a Public Limited Company (PLC) is the same as for a limited company, apart from the fact that at least 7 shareholders and a minimum paid up share capital of 9.523,03 EUR are required to form a PLC. |
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| Curios enough a Limited Partnership (LP) in the Republic of Ireland is governed by British Law, the Limited Partnerships Act 1907. The advantages of a Limited Partnership are flexibility, no capital contribution and no annual filing requirements. |
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| International companies often prefer to form a Branch Company (also known as Foreign or External Company) in Ireland in order to explore the European markets and to benefit from low Irish corporation tax rates. |
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The Irish advantage
| An Irish company is subject to less bureaucratic burden compared to other European companies. Ireland is ranked No. 4 on the Index of Economic Freedom. |
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| Ireland is one of the old EU countries. By way of forming either a local company in Ireland or an Irish branch international clients can easily access and explore the European markets. |
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| There are no restrictions on foreign company ownership and directorship in Ireland. EU residents enjoy freedom of establishment in Ireland. |
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| The official currency in Ireland is the Euro, a save haven compared to the British Pound and the US Dollar. There are no currency exchange risks if trading withing the European Union. |
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| The Irish corporation tax rate is only 12,5%, one of the lowest in Europe. A generous 120.000 Euro tax exemption is available to small Ltd companies which start trading in 2009. |
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| Ireland is on the OECD whitelist and also benefits from an extensive network of international tax treaties. |
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| The Irish company legislation provides a secure legal framework to run an European company. |
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Irish Company Formation vs. UK Limited Company
Forming an Irish company rather than an
UK Limited helps to avoid currency losses. The Euro is the official currency in Ireland and
Irish banks allow for SEPA transactions within the European Union. An advantage for businesses with many low-value transactions (e.g. web services).
Tax rate comparison : Ireland 12,5% - UK 21,0 - 28,0%
Company in Ireland vs. Cyprus Company
Cyprus might have a slightly lower -10%- corporate tax rate as Ireland, however the annual company administration costs in Cyprus (usually through a law firm) are considerable higher, so is the regulative burden a Cyprus company needs to deal with.
Irish Companies vs. Eastern European Companies
In the new Eastern European EU countries only Bulgaria has a lower tax rate - 10%, but forming a Bulgarian company always results in extra costs for translators, local courts, notaries and law firms while an Irish company formation is straight forward and the official language here is English.
Business registration in Ireland vs. Switzerland / Offshore
Doing business within the EU using an
Offshore Company most likely results in problems the sooner or later. Even forming a Swiss company might be a bad idea, because Switzerland is not part of the EU and access to EU markets for Swiss companies is limited. The most common problem with Swiss companies is the EU import tax for products sold to the EU (which causes additional administrative issues for both seller and buyer). Usually the Swiss corporation tax rate is higher than the Irish tax rate, only the Swiss cantons Obwalden and Ausserrhoden have a similar tax rate (12,5%).
Conclusion: Ireland is the best place to form a company in Europe.
