Advantages of Ireland as a business location
Ireland is one of the most popular and profitable locations for multinational corporations wishing to invest in Europe.
These corporations are involved in a wide range of activities in sectors as diverse as IT, software development, financial services, pharmaceuticals, life sciences and international services. Ireland provides investors with high returns through a combination of one of the lowest corporate tax rates in the world of 12.5%, structured tax reliefs for research and development, a highly skilled and flexible workforce and a competitive cost economy.
Historically, corporations like Apple, AOL, Dell, eBay, PayPal, Facebook, Google, Hewlett Packard, IBM, Microsoft, Xilinx, Oracle and Yahoo! have chosen to establish major European, Middle Eastern and African (“EMEA”) hub operations in Ireland. Pharmaceutical, medical device companies and other businesses such as Baxter Healthcare, Dow Chemicals, Boston Scientific, Johnson & Johnson, Pfizer and Schering have also recognised the attractiveness of the country as a base to serve the European market of over 490 million consumers, one of the largest consumer markets in the world.
During the recession, numerous corporates have taken steps to restructure their international affairs through an Irish holding company. Various economic, political and other factors caused many enterprises to dismantle structures located in Cayman, Bermuda and other tax haven locations. As the continual stream of tax anti-avoidance legislation in the US, UK and other relative high tax locations has grown, many corporates have reached a tipping point that has driven them to seek shareholder approval to restructure their affairs through a fiscally attuned holding company located in Ireland, using its low tax onshore OECD white listed and common law attributes. The publicly known groups which have restructured their ultimate holding company into Ireland include Accenture, Henderson Group, Ingersoll Rand, James Hardie, Seagate, Shire, UBM, Willis Group Holding Limited, WPP and XL. Where a merger or acquisition is anticipated, the transaction can be structured to give group tax benefits that would not otherwise accrue to the target of the acquisition. Ireland is also one of the principal global hubs for the location of investment funds and financial services investment.
The law in Ireland is interpreted and developed by the Irish Courts. The four main sources of law in Ireland are:
(i) common law;
(ii) legislation;
(iii) the Irish Constitution; and
(iv) European Union (‘EU’) Law.
Ireland has proven itself through several decades as a profitable location for corporates establishing in Europe. The key advantages are:
• pro-enterprise culture;
• low corporate tax;
- 12.5% on profits from Irish trades and certain dividends paid out of foreign trading profits
- exemption from corporation tax on dividends paid to other Irish corporates and on certain dividends received from non-resident corporates
- 25% on capital gains
- 25% on passive income and profits from non-Irish trades
- tax reliefs and enhanced tax credit system for research and development
- tax depreciation available for purchased Intellectual Property
- tax depreciation for plant and equipment available over 8 years
- full tax depreciation for certain energy efficient equipment in year of purchase
- capital gains tax exemption of disposal shares in companies resident in Ireland and certain overseas countries
- foreign tax credit pooling provisions for certain dividends and interest receivable
- domestic exemptions and treaty relief from withholding tax on dividends, interest and royalties paid to certain non-residents
- unilateral relief for foreign tax suffered on foreign dividends, interest and royalties
• no controlled foreign company (‘CFC’) rules;
• no exchange controls;
• highly skilled, English-speaking workforce;
• member of the EU and Euro currency zone providing easy access to EU internal market;
• only English speaking Euro currency zone member;
• generous cash employment and research and development grants from Government agencies, access to grants from EU agencies;
• pro-active, up-to-date business legislation and approach to regulation generally, and in particular in e-business and intellectual property; and
• easily accessible from mainland Europe and North America
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