There are many advantages to doing business in Ireland, including an attractive and stable corporate tax regime and a skilled workforce. While it is not essential, the most common vehicle for carrying on business in Ireland is through the incorporation of a company.
An application to incorporate a company is made to the Companies Registration Office (CRO), signed by the first director(s), first secretary and the first shareholder(s).This is usually processed by the CRO between five and twenty days of receipt, depending on the company type. Before submitting an application to incorporate a company, the following matters should be considered:
Irish companies can be:
- Private or public
- Limited or unlimited, or
- If limited, limited by shares or limited by guarantee
For commercial trading, the private company limited by shares, “LTD”, is the most common form of Irish company. LTDs have one part constitutions as opposed to the traditional memorandum and articles of association, and unlimited corporate capacity instead of having objects clauses setting out what they can do.
A Designated Activity Company, or “DAC”, is also a private limited company with a share capital and is suited to companies that wish to outline and define specific clauses in their constitutions rather than have the unlimited powers of a private limited company. DACs are commonly used by joint venture companies incorporated for a specific purpose. Private companies carrying on certain types of trade, such as banking or insurance, must be DACs.
A Company Limited by Guarantee, or "CLG", does not have a share capital and has members rather than shareholders. This type of company is usually used for charities, sports and social clubs and property management companies.
The members of unlimited companies do not have the protection of limited liability and are required to contribute to the debts and liabilities of their company on its insolvent winding up. However, if the members of an unlimited company do not themselves afford limited liability to their members, that unlimited company will not be required to publically file its financial statements.
Directors and secretary
There is a requirement under Irish legislation that every company incorporated in Ireland must have one director who is resident in a member state of the European Economic Area (EEA). There are exemptions to this requirement if the company purchases a two-year surety bond to secure the company’s compliance with company law and tax law.
A LTD can have a single director, although must have another person acting as its secretary, whereas all other company types must have at least two directors - one of whom can be the secretary.
Tip: In the event that the UK leaves the EU after 29 March 2019, a UK director will no longer be considered as an EEA resident director. A director resident in an EEA country will be required or a surety bond purchased if it is intended that the company continue with only UK resident directors.
Private companies whether they are limited, unlimited or DACs may have between 1 and 149 members. A company can be incorporated with one share held by one shareholder, if required.
Tip: There is a legal requirement for Irish companies to establish a beneficial ownership register. Therefore the details of any individual that directly or indirectly owns or controls over 25% of the company will be required to be entered onto the beneficial ownership register. These details will eventually be made public via the CRO once a portal for the central beneficial ownership register has been established, the legislation for which is expected in early 2019.
A company incorporated in Ireland will automatically be resident for tax purposes in Ireland by virtue of its incorporation, unless it is regarded as resident in a country with which Ireland has a double tax treaty.
It is necessary to register a newly incorporated Irish tax resident company for Irish taxes including corporation tax, employment taxes and VAT registration.
Tip: Where a company is seeking to achieve and maintain Irish tax residency and avoid being tax resident in another country or having a taxable presence there, it is recommended that the company is managed and controlled in Ireland. This will involve the board of directors physically attending meetings in Ireland.
Incorporating a company in Ireland is a relatively straightforward process. However there are some considerations when establishing in Ireland to ensure the best decisions are made from the outset. It is important to choose the correct company type to meet the needs of the business and make informed decisions relating to the formation of the company to ensure compliance and robust governance for its future.
For expert legal guidance on incorporating your business in Ireland, please contact a member of our Corporate Governance & Compliance team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.