If you are looking to expand globally, what criteria should you analyze when selecting your next jurisdiction?
A global pandemic has stifled economies and their normal ways of doing business. We are awaiting Brexit, where mechanisms for one way of commerce is no longer and a new way is still undefined. Here in the U.S., we have an upcoming presidential and congressional election cycle that makes the future of our international investment policy unreliable (for now).
In short, the world is an uncertain place.
As a general guiding principle for global expansion, what works best for your company is always the right answer. I’d be looking for better tax rates, supportive business legislation/ecosystems, ease of doing business, geographical proximities, language and of course, workforce talent.
Looking at all of these benchmarks from a very generalized eye, I lean towards company formation in Ireland as a favorable option to consider. Let’s take a high-level look at each criterion.
Flat Corporate Tax Rate
Ireland has a flat rate corporate tax of 12.5%, ranked top 20 in the world for lowest tax rates in 2019. (Compare this with the U.S. where the weighted average by population combined corporate income tax rate under current law is 25.7%.) Additional tax incentives may also be available for certain investments, such as a tax credit for research and development. Furthermore, Ireland has double tax treaty agreements in effect with 73 other countries.
Supportive Business Legislation and Ecosystems
Ireland is a pro-business environment. (Think of it as the Delaware of Europe!) The Irish government has provided dynamic sources of start-up funding and support programs and the country is home to world-class companies and research centers in sectors such as information and communications technology, life sciences, gaming, financial services and food and beverages. (As we’ve discussed in more detail, Ireland is also a major hub for the aviation industry.) This gives companies locating in Ireland easy access to quality staff, experienced entrepreneurs, investors, suppliers, research institutes and other support services.
In addition, Ireland has collaborative ecosystems where industry and academics work together to the benefit of society and the economy and a strong legal framework for the development, exploitation and protection of intellectual property rights.
Ease of Doing Business in Ireland
The World Bank has ranked Ireland 24th of out 190 jurisdictions in their latest annual rankings for ease of doing business. Starting a business ranked 23rd out of the same 190. One detail for your decision-making awareness is that an European Economic Area (EEA) resident director is required for Irish companies. If none, the company will need to apply for a bond called a Section 137 Non-Resident Directors Bond. Owners do not have to be EEA residents.
Ireland is optimally located between the American and European continents. A company in Ireland is also a company in the European Union with the benefits of free trade and of guaranteed access to the world’s largest trading block.
Under the Constitution of Ireland, both Irish Gaelic and English are the official languages of Ireland. However, for business purpose, English is the common language for communications. (Once the UK finalizes Brexit, Ireland will be the only English-speaking country in the EU.)
Ireland has the youngest population in Europe. The share of 30-34 year-olds in Ireland with a tertiary qualification is 53.5%, compared to an EU average of 40%. Ireland also has access to all EU workers (a labor force of 250 million people) due to the Freedom of Movement as set out in the Treaty of Maastricht.
If these factors are not reason enough for forming or registering a company in Ireland, let us not forget the luck of the Irish. They say, “If you are lucky enough to be Irish, you are lucky enough.” No doubt they were talking about corporate legal entities as well.
This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.