Foreign companies making a move into Ireland will be taking their place in one of Europe’s fastest growing and buoyant markets. Ireland’s projected nominal Gross Domestic Product for 2021 was US$476 billion, putting the island state 29th in the world.
Ireland has become a business magnet for multi-nationals drawn towards the capital Dublin, which accounts over 40% of the country’s GDP and is home to the highest-spending consumers. IT, high-tech, financial services, pharmaceutics, and medical technology lead the way for foreign investment and the economy’s growth rate almost doubled the European average in 2020.
There are speedier and cost-effective alternatives, with Bradford Jacobs opening the door to a hassle-free route into the French economy for your company. Work alongside our Professional Employer Organization (PEO) recruitment specialists, then our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Germany, its work culture and business practices.
Here we have set out some basic summaries of what you need to make the transition into the Irish market, whichever sector you operate in.
Starting a Business in Ireland
Geographically located off the coast of Western Europe, Ireland is an obvious gateway into the European market, with its 450 million consumers, and is the only English-speaking member of the European Union’s Eurozone.
Company tax incentives are another potential bonus. However, incoming companies will find these attractions balanced by having to comply with the complexities of employment, tax, payroll, and corporate legislation while ensuring their employees are working productively and efficiently.
Foreign companies establishing an entity in Ireland typically choose a subsidiary operating as a private limited liability company. This is a smart move but brings compliance issues with a number of legalities.
The subsidiary must comply with requirements under the Companies Act (2014), Irish employment laws and European Union directives, which together provide the framework for all companies operating in Ireland, whether domestic or foreign-owned.
The Companies Registration Office (CRO) is responsible for incorporating and registering companies and ensuring they follow the requirement of the Companies Act. Once foreign companies have taken the first step of registering the subsidiary’s name with the CRO, they must follow a set procedure and meet specific requirements.
- At least one director should be a resident of the European Economic Area (EEA)
- A Non-EEA Residents’ Bond must be obtained if none of the directors are EEA residents
- A company secretary must be appointed if there is only one director
- The company must have at least one shareholder, which cannot be a corporate body
- Register the office and business address
- Articles of association should detail business activities and company shareholders, directors, and other officers
- Once all documents are signed, obtain certificate of incorporation from CRO, or register online with the Companies Online Registration Environment (CORE)
In order to operate payroll, other measures apply. These include:
- Registering for Employment Taxes (PREM) with the Revenue by completing Form TR2 and submitting to the local Revenue Registration Unit for the relevant location
- Completing Form TR2 (FT) to obtain PREM tax registration for non-resident companies with no physical presence in Ireland
- Obtaining a Personal Public Service (PPS) number, which acts as a national tax registration number for company directors
- Ensuring tax liability is reported to the Revenue on or before employees are paid, and due payments are made by the 23rd of the next month
- Registering with the Social Insurance Fund for Pay Related Social Insurance (PRSI) deductions for employees
Expanding Business into Ireland
Ireland has one of the fastest-growing economies in Europe and is becoming one of the major players in the European Union and Eurozone. The projected nominal Gross Domestic Product for 2021 of US$476 billion, put the island state 29th in the world. Impressive for a relatively small nation.
Ireland is a front-runner for attracting Foreign Direct Investment and 2018 was the sixth successive year IBM’s Global Trends report named their economy No. 1 for attracting high-value international investment. Ireland is dubbed a ‘knowledge economy’ and this is supported by its hi-tech cutting-edge sectors such as IT, software development, financial services, life sciences, pharmaceutics, and medical technology.
Ireland plainly welcomes foreign investment, but incoming companies have to toe the line in terms of compliance with employment laws and collective agreements affecting benefits and entitlements for employees. There are other questions too: where will you find distributors, manufacturers, and offices? Before you make your move – speak to Bradford Jacobs.
Ireland Business Facts
- Capital city – Dublin
- Population – Around 5 million
- Major cities – Dublin, Cork, Limerick, Galway, Waterford, Swords, Drogheda
- Official language – Irish and English
- Economy/GDP (2021) – $US476 billion, world ranking 29th
- World ranking: Ease of Doing Business – 24th out of 190 countries (World Bank, 2020)
- Leading sectors – Service sector (54.4% GDP); industry sector (39% GDP); agriculture sector (1% GDP). Largest industries within sectors: IT, software development, financial services, life sciences, pharmaceuticals, and medical technology
- Main exports – Pharmaceutical and medical products; scientific apparatus; organic chemicals; electrical machinery; essential oil and perfume
- Main imports – Transport equipment; organic chemicals; pharmaceutical and medical products, electrical machinery, and appliances; office machines; petroleum,
- Main trading partners – USA, United Kingdom, European Union (primarily Germany); China.
- Government – Parliamentary republic system, Unitary state, liberal democracy
- Currency – Euro
Advantages and Challenges of the Ireland Market
Advantages of expanding into the Irish economy include:
- Corporate Tax: The standard trading rate of 12.5% is among the lowest in the world and 10% lower than the European Union (EU) average, with incentives to bring the rate lower
- Politics: Ireland is a parliamentary, representative democratic republic and a member state of the European Union
- Economic Attitude: Welcomes international investment from multi-nationals and offers various corporate taxation incentives, especially for research and development
- Logistics: Good global connections. There are four international airports – Dublin, Cork, Shannon, and Knock. Dublin has the largest port
- Trade Links: Direct trading access to Europe as a whole and its EU members, with access westwards to North and South America
- Ease of Business: The World Bank Report ranked Ireland 23rd for ease of starting a business and fourth for ease of paying taxes out of 190 nations
Challenges of operating in Ireland:
• Uncertainty over how UK’s exit from EU will affect relationship with Irish markets
• Ongoing compliance with changing health and safety, employment, social insurance, and taxation laws
• Skills shortage in the digital economy
• High cost of living for arrivals
Limited Company / Subsidiary or Branch in Ireland
A subsidiary established in Ireland is a separate legal entity from the parent company, with independent management and can have a different company name and follow its own business activities. The subsidiary can use this freedom to explore markets and build credibility throughout Ireland and the European Union.
A branch, however, is an extension of the parent company, operates on its behalf and is not considered a separate legal entity.
Main characteristics of a Subsidiary:
- The subsidiary stands alone from the parent company, which has no obligation for any debts or liabilities of the subsidiary
- Statutory documents and constitution registered with the Companies Registration Office (CRO)
- Has a separate board from the parent company with minimum of one director
- At least one director should be a European Economic Area (EEA) citizen
- Has a registered office and trading address in Ireland
- Has register of directors, shareholders, and officers
- Are obliged to pay corporate tax on its worldwide profits
- Files annual returns and financial statements
Main characteristics of a Branch:
- The parent company is fully liable for the debts or liabilities of the branch, which must register in Ireland with the same business name
- Requires parent company documentation such as constitution, accounts, and incorporation certificate
- Appoints local representative to accept official and legal documents in Ireland
- Has a trading address in Ireland
- Does not need to file financial statements or maintain statutory registers
- The branch may bring Corporate Tax liabilities onto the parent company
Legal Structures for Ireland Market Entry
All companies in Ireland operate under the Companies Act (2014), Irish employment laws and European Union directives where applicable. Together they lay down the regulations for the operation of all companies operating in Ireland, whether domestic or foreign-owned.
Additionally, The Companies Registration Office (CRO) is responsible for incorporating and registering companies and making sure the requirements of the Companies Act are followed.
Legal structure or a limited liability company:
The legal structure allows the subsidiary to operate independently from the parent company, under its own name. It has a separate board from the parent company. At least one European Economic Area (EEA) citizen should be on the board, with a legal requirement for only one director. The board must be separate from the parent company. The subsidiary must have a registered office and trading address in Ireland and is legally required to file financial statements and annual returns.
Legal structure for a branch:
Legally, the branch is an extension of the foreign parent company, operates under the same name and follows the same business activities. Registration with the CRO requires documentation of the parent company including accounts, constitution, and incorporation certificate. The branch must appoint and register with the CRO a local representative authorized to receive legal and official documents.
Opening a Business Bank Account in Ireland
Ireland is ‘ahead of the curve’ when it comes to attracting Foreign Direct Investment (FDI) and five out of the 10 top companies on the Forbes’ list for innovation have headquarters in Ireland, drawn by its pro-business environment.
There is no legal requirement to open an Irish bank account although it is strongly recommended. So, after deciding to establish a company or subsidiary, one of the advisable tasks on your ‘to do list’ is opening a Business Bank Account. As a foreign corporate business, the rules are complex and will depend on each case, so choose your bank carefully and discuss the process with them. If your company already has a relationship with a bank, perhaps check to see if they have a branch in Ireland. If not, consider:
- Fees - what will you be charged for?
- Facilities - what are you likely to need for your business?
- Services - do some banks give you more choice?
The documents that are needed depend on the type of account chosen. For partnerships, documents will be needed regarding owners or shareholders with a 25% interest or more. With a limited company, permission has to be obtained with a mandate from all directors to enable the ‘responsible manager’ to open the account.
Other documents required:
- Two types of ID, including a passport photo of the responsible manager with permission to open the account
- Signed bank mandate allowing responsible manager to act on behalf of owners/directors in opening the account
- Specimen signatures of those signing on the account
- Operational company address details e.g., utility receipts for previous three months
- Memorandum and Articles of Association plus Certificate of Incorporation (For limited company only)
- Proof of Partnership (for Partnerships only)
- Proof of business name
- Letter from bank regarding financial reliability plus banking history e.g., recent statements
- Deposit to open the account
Check where original documents are needed rather than copies. Accounts can usually be started online but original documents should be presented to the bank in person. Banks need to satisfy themselves regarding the beneficiaries so more Customer Due Diligence (CDD) documentation may be required - or proof or trading or intention to trade regarding money-laundering regulations.
Company Formation in Ireland
The main company types in Ireland are:
- Private company limited by shares (LTD or LLC)
- Designated Activity Company (DAC)
- Company Limited by Guarantee (CLG)
- Public Limited Company (PLC)
- Limited Partnership Company (LPC)
The most common choice for foreign companies expanding into Ireland is the private limited liability company, where the responsibility of the shareholders is restricted to their investment in shares. Registration procedures with the Companies Registration Office (CRO) include:
- Register the name of the subsidiary with the CRO
- Submit Form 1A online to the CRO via the Companies Online Registration Environment (CORE)
- Articles of association should detail business activities and company shareholders, directors, and other officers
- Appoint minimum of two directors, including at least one citizen of the European Economic Area (EEA)
- Appoint company secretary and a maximum 99 shareholders
- Register an office in Ireland
- Submit parent company’s resolution to create a subsidiary
The CRO will issue a certificate of incorporation once all documents have been approved and signed.
Finding an Office in Ireland
Apart from the mechanics of managing your business, where you locate can enhance the prestige of your company and its product - as well as being able to attract top talent and keep them. Ireland has drawn a host of multinational businesses who have put down roots in this prime destination including Microsoft, Google, PayPal, eBay, LinkedIn, and Apple.
The quality of life, a flourishing Information and Communications Technology (ICT) sector rich in innovative enterprises and a government-funded program to attract top talent all make the Irish landscape a desirable location, especially for start-ups. Maybe your first port of call should be Enterprise Ireland, which invests in hundreds of start-ups each year, and which boasts nine regional and 30 global offices.
Ireland is considered one of the top-tech capitals of the world with Dublin’s Silicon Docks a center for business clusters, as are Cork, Galway, Limerick, and Waterford. So where should you locate your office and how will it suit your company’s needs? Whether your preference is for shared space and facilities, or ‘bricks and mortar’, there are questions to ask:
- Where are business hubs or clusters located to benefit you?
- Consider the demographics of potential employees, ease of travel and good transport links
- Is it attractive and functional to keep the work force happy?
- Is it affordable and does it have room for expansion?
- Are the areas around the office desirable, clean and good for mental health to attract the best workers and provide services and accommodation?
- What local support or government grants or tax breaks are available in the area?
Websites like Instant Offices are a good place to start. However, Bradford Jacobs can act as an office broker and find you the space that you need for your business to take off.
Finding a Manufacturer in Ireland
The world of manufacturing has come on in leaps and bounds globally over the past 20 years, driven by technology and emerging markets. Ireland has kept pace in attracting international companies in life sciences, Information Communication Technology (ICT), as well as engineering in such as Merck, ABB, and Apple.
To evolve, moving into the advanced manufacturing market, requires a highly adaptive and creative workforce for which Ireland has a track record within its plant and construction sectors.
Industrial production in Ireland accounted for 39% of GDP in 2020 and 94% of total exports in May 2021. Irish manufacturers remain buoyant with an optimistic outlook with rising orders and output.
This is all good news for companies with a product line to develop. The cautionary news is that care is still needed in finding the right enterprise to partner with to avoid shortages, supply chain problems or delivery delays.
Sifting and sorting the good from the bad can take time and money; however, if you need professional help – ask for it! Bradford Jacobs can assist from day one from recruiting to compliance, finding an office, manufacturer, and distributor. For those of you going it alone, here are a few suggestions and links that may make it easier:
- Do they hold the relevant quality certificates?
- Can they demonstrate a sound knowledge of your product type?
- What businesses have they worked with? Ask about current clients!
- Can they deliver direct to customers?
- Can they keep up with demand? Or do they outsource?
- Can they source basic materials?
- Are they financially stable?
- How will local customs and language impact production?
- Do they have minimum order quantities, or can they produce in bulk
- Discuss possible recompense for poor quality or late deliveries
- Payment options available
It is also important to consider:
- Market Research to avoid manufacturing a product in a saturated market
- Licensing to a company that can handle manufacturing, marketing, and distribution
- Can the manufacturer build and test a prototype
- Protecting your intellectual property
Finding a Distributor in Ireland
As a European Union (EU) and European Free Trade Association (EFTA) member, Ireland has access to 450 million consumers. As the world’s largest single market area, the EU has free trade between its members and negotiates preferential conditions and access to global markets, which makes Ireland a country with options and potential for businesses.
So, having set up your business, opened your corporate bank account, and partnered with a top-line manufacturer, the next step is finding an ideal distributor who can assist you with putting your product out into the marketplace.
As a business owner, you must be clued-up about your industry’s distribution outlets in Ireland and keep ahead of the changing face of retail, to be able to help achieve your objectives and jump start your business plans and maximize sales.
Finding a distributor is easy but finding a good one is not; and some companies reach out to the professionals such as Bradford Jacobs who can help with all stages of launching your product.
Checking out any trade missions from your home country is another option - they should have good contacts for targeting relevant companies to arrange one-on-one meetings as well as knowing the best trade fairs or conferences to attend. Joining B2B groups, accessing local directories and magazines or exploring social media are all good vehicles for networking to become familiar with the locale.
Enter New Markets with Bradford Jacobs
Bradford Jacobs opens the door for companies like yours seeking to explore new markets in your new territory. Ireland offers expansion into a variety of markets, as well as support for growth and development with tax incentives for incoming companies.
Our Professional Employer Organization (PEO) specialist teams have in-depth global knowledge of how to expand into and recruit in new territories. Our Employer of Record (EOR) services will guarantee your company complies with local registration and recruitment law, taxation, and payroll.
Bradford Jacobs also provides ongoing consultation on human resources based on our knowledge of individual cultures and customs of every country being targeted for global expansion. Work with Bradford Jacobs to expand your company and ensure the best people are on your team.