Many foreign companies operate in Ireland. There is substantial state support for foreign direct investment, and Ireland has a famously low corporation tax rate. It is English speaking and common-law, and Dublin in particular has a full range of professional services for international businesses. Ireland is a very good place to do business, and it is not particularly difficult to begin operating here.
One of the main things to do is to ensure that the foreign business is correctly registered in Ireland, to ensure full ability to enter contracts and do business. Failure to correctly register the business can lead to a number of problems including an inability to be compliant with legal regulations, including tax and anti-money laundering laws.
There are two options for registering a foreign company in Ireland. The first is to form a new Irish company whose shares will be owned by the foreign company, and the second is to open an Irish branch of the foreign company. Either registration is simple enough, and the choice will depend on the needs and priorities of the owner.
The majority of foreign operations form a separate Irish Company. This company is often a subsidiary or related company of the international parent company. The main features are that the subsidiary is a distinct legal entity from its owner, and that the decision-making falls to the local directors (although the company constitution may reserve certain powers for the shareholders).
Establishing a new entity can be completed relatively quickly. The Irish company will require a company secretary and directors. These people are responsible for running the company, and taking decisions on its behalf. At least one of the directors must be EEA resident, or the company must purchase a particular insurance bond if all the directors are non-EEA resident. It can be of practical assistance to appoint an Irish resident Secretary and at least one Irish resident director, to allow for ease of signatures on compliance documentation.
The subsidiary is locally controlled, and will give the owners of the business legal separation from the liabilities of the business. The vast majority of companies in Ireland are private companies, which do not operate on the stock exchange, and are controlled by a board of directors according to the company constitution. They are subject to the Companies Act 2014, a substantial piece of legislation governing all areas of corporate responsibility and compliance. The company is responsible to its shareholders, its creditors, and its employees.
The subsidiary will be entirely subject to Irish Law, in particular the Companies Act 2014. It is advised to appoint a firm of solicitors to provide company secretarial services, and other legal advices. Both company formation, and company secretarial services are offered by Fitzsimons Redmond LLP.
The subsidiary will be subject to the payment of taxes to the Irish Revenue. It should appoint an Irish accountancy firm to maintain the books of account in the correct manner.
An alternative is to establish a branch of the existing foreign company. The branch performs the business objectives of the foreign company in Ireland. There may be management in the Irish branch, but the business will be controlled by the home office. Decisions will be taken in the home office, and carried out locally. Governance is as per the home office, but there are general obligations for the branch to comply with Irish law in dealings here.
The branch is not a separate legal entity, and the foreign owner is liable for the debts and liabilities of the branch. It is also responsible for entering and enforcing local contracts, as the branch is not recognised as its own legal entity. It will be necessary to give appropriate authorities to the local management to ensure that day to day business can be conducted efficiently.
A branch requires a business address in Ireland, and there must be an individual empowered to accept service of legal documents. We at Fitzsimons Redmond LLP would be happy to act for your business in the application to register a branch of a foreign company and thereafter.
A branch is also liable to register for with Revenue and to pay corporation tax on Irish profits. Unlike a subsidiary however, it may however, rely upon and submit the accounts and financial statements prepared for the home company. The foreign company will need to take local tax advice in respect of its obligations.
The employees of a subsidiary or a branch will be subject to Irish employment law if they work in Ireland. This includes delegates from the home office, secondees, and locally engaged employees. The subsidiary or branch must comply with obligations in withholding and paying income tax, Pay Related Social Insurance, and the Universal Social Contributions on behalf of each employee. Employment law and employee rights must be complied with; these Irish laws are based on EU law and are somewhat complex. It is advisable to take legal advice prior to recruitment to ensure the company is compliant with the various obligations. Fitzsimons Redmond LLP is happy to provide advices, documentation, and support in respect of employment law, and all aspects of business law.
The above is provided for information purposes and is not intended as legal advice. We, at Fitzsimons Redmond LLP, would be happy to talk to you about doing business in Ireland. Please contact us on 01-6763257.
By Lisa Quinn O’Flaherty
Partner at Fitzsimons Redmond LLP