Set up a company in Ireland
Factors to consider when you set up a company in Ireland
Setting up a company in Ireland can be an attractive alternative to the UK for Hong Kongese that want a base to enter the Eurozone market. Ireland is an easy place to do business; has a low corporate tax rate (12.5%); and has double tax treaties with around 70 countries, including Hong Kong.
Setting up a company in Ireland and Brexit
The Republic of Ireland is part of the European Economic Community, which means that there is free movement of goods and people across the European country borders. The Republic of Ireland is not part of the UK and there are no serious advocates of Ireland leaving the EU..
Setting up a company in Ireland – practical considerations
To set up a company in Ireland you will normally need an EEA resident director
Unlike UK companies, there is a requirement that companies set up in Ireland must either:
- Have at least one director that is resident in the European Economic Area.
- Deposit a non-resident directors’ bond of €25,000 with the Irish authorities
What type of company should you set up in Ireland
There are three main types of companies in Ireland that are commonly used for business purposes:
- Irish private limited liability company (Ltd)
- Irish designated activity company (DAC)
- Irish public limited liability company (PLC)
Like most limited liability companies, the shares in an Irish limited liability company are owned by its shareholders. If the company fails, the liability of the shareholders is usually limited to the share capital of the company. A company is a separate legal entity and, therefore, is separate and distinct from the directors that run it and the shareholders that own it.
The main factors to consider when setting up a company in Ireland are shown in the comparison table below.
Table – Factors to consider when setting up a company in Ireland
|Irish private limited liability company (Ltd)||Irish designated activity company (DAC)||Irish public limited liability company (PLC)|
|Minimum share capital||No minimum capital requirement||No minimum capital requirement||Minimum of €25,000, of which at least 25% must be paid up|
|Maximum number of directors||1||2||2|
|Company secretary||Must have a company secretary, who cannot be the sole director||Must have a company secretary, who may also be a director||Must have a company secretary, who may also be a director|
|Number of share holders||1-149||1-149||1 or more|
|Objects clause||No objects clause (can undertake any activity)||Activities limited to the objects clause in the memorandum||Activities limited to the objects clause in the memorandum|
|Annual General Meeting||Can dispense with an AGM||Must have an AGM||Must have an AGM|
|Audit requirement||Not for “small” companies||Not for “small” companies||Required for all companies|
|Other||Cannot offer shares or debentures to the public||Can offer debentures, but not shares, to the public||Can offer shares and debentures to the public|
Companies usually qualify for a “small” audit exemption if any 2 of the following apply: turnover of no more than €8.8 million; assets worth no more than €4.4 million; 50 or fewer employees on average.
Most Hong Kongese set up Irish private limited liability companies
The majority of Hong Kongese and other people who set up a company in Ireland will initially choose an Irish private limited liability company (Ltd) rather than an Irish designated activity company (DAC) or an Irish public limited company (PLC). The main reasons for this are that Irish private limited companies:
- have no minimum share capital requirements
- are more flexible
- have low annual compliance costs
- administrative running rules are not very burdensome.
Note that a private limited company can be converted into a public limited company at a later stage.
Who can run and set up a company in Ireland
Any Hong Kongese, or indeed any other person, regardless of their nationality or domicile can run and set up a company in Ireland. However, as stated above, to open a company in Ireland one needs to have either a director that is resident in the EEA or to post a €25,000 bond.
Who can work in Ireland
Anyone can set up a company in Ireland. However, to work in Ireland you will need a visa, even if you have set up a company in Ireland. Most entrepreneurs that come from outside of the European Economic Area and set up a company in Ireland will apply for a visa under either the Immigrant Investor Programme or Start up Entrepreneur Programme. In summary, there are two main visas:
- Enterprise Investment visa requires a minimum of €1 million investment into a new or existing Irish businesses for a minimum of 3 years; or
- The Start-up Entrepreneur Programme allows a non-EEA national with an innovative business idea and minimum funding of €50,000 to set up a business in Ireland.
The Visa requirements are described in more detail here
How to make sure the Irish company that you set up is taxed in Ireland
Once the Irish company is set up, the rules that govern whether it will be taxed in Ireland or Hong Kong are included in the Irish/Hong Kong double taxation agreement. Click here – Ireland/Hong Kong Tax Agreement – for a copy of the agreement.
This taxation agreement means that a company set up in Ireland by Hong Kongese, or other non-Irish citizens, will normally be taxed in Ireland if:
- It is actually managed from Ireland
- It has a real economic activity in Ireland
- It has not been established in Ireland only to avoid paying taxes in another country
If any one of these elements is not respected, then it is likely that the company will be taxed in the country where the management and control is actually exercised or where the economic activity really takes place. This means that to be taxed in Ireland, operations and management activities must be carried out in Ireland. If decisions are made in Hong Kong, or if you have an office or other permanent establishment in Hong Kong, then the company will probably have to pay taxes in Hong Kong.
If the Irish company is set up to hold an Irish property, then any profits that arise from the Irish property will be taxed in Ireland.
Comparative corporate tax rates in Ireland and Hong Kong
Irish companies pay corporation tax at a rate of 12.5%, less that the corporation tax rate of 16.5% paid in Hong Kong, and the 17% that UK companies will pay from 1 April 2020.
How long does it take to set up an Irish company
We can usually set up an Irish company (Ltd, DAC or PLC) in a day. In the case of companies that need special rules it will take longer.
What is the cost of setting up an Irish company
The cost to set up a company in Ireland is relatively low. However, as well as incorporating the company you will usually need to register it for VAT and payroll and open a bank account. These registrations, depending on the complexity of the company, can take longer.
What documents will you receive
Once your Irish company is set up you will receive a “Certificate of Incorporation”, which confirms that the Irish company is legally constituted, and a “Statute”, which establishes the rules that your Irish company and the directors must follow. In addition, shareholders will receive share certificates.
What rules must be observed once the Irish company is set up
Directors must act in the interests of the company and not in their personal interests. At the end of each fiscal year an Irish company is required to present financial statements in accordance with the rules of Ireland and pay Irish taxes.
The information needed to open an Irish company
The documents that are needed to set up a company in Ireland will depend on the type of company. However, in broad terms a Form A1 is completed and submitted together with a constitution (Only a one document constitution if the company is a LTD company, a memorandum and articles of association for all other company types). Click here for more details.