If you’re looking to expand globally, what criteria should you analyse when selecting your next jurisdiction?
A global pandemic has stifled economies and their normal ways of doing business. We’re awaiting Brexit, where certain mechanisms for commerce will no longer be available and a new way is still yet to be defined. Additionally, in the U.S., there’s an upcoming presidential and congressional election cycle that makes the future of their 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. Some of the factors to consider include promising tax rates, supportive business legislation/ecosystems, ease of doing business, geographical proximities, language and workforce talent.
Looking at these benchmarks, company formation in Ireland is a favourable 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% and was ranked in the top 20 in the world for the lowest tax rates in 2019. For comparison, in the U.S. the weighted average by population combined corporate income tax rate under current law is 25.7%. Additional tax incentives in Ireland 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. The Irish government has provided dynamic sources of start-up funding and support programs. The country is also home to world-class companies and research centres in sectors such as information and communications technology, life sciences, gaming, financial services and food and beverages. In one of our previous articles, we even discussed in more detail Ireland as a hub for the aviation industry. Companies located in Ireland, therefore, have 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 benefit society and the economy, as well as to provide 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 jurisdictions). One key consideration is that a European Economic Area (EEA) resident director is required for Irish companies. The company will need to apply for 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 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 purposes, English is the common language for communications. Once the UK finalises Brexit, Ireland will be the only English-speaking country in the EU.
Ireland has the youngest population in Europe. The share of 30 to 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 labour 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’re lucky enough to be Irish, you’re 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.