Ireland’s 12.5% corporate tax rate on trading income is one of the lowest onshore statutory corporate tax rates in Western Europe. In addition, Ireland has signed comprehensive Double Taxation Agreements with 73 countries, of which 72 are in effect. The Knowledge Development Box, which took effect on the 1st January 2016, is one of a suite of measures designed to incentivize companies to develop innovative technology in Ireland. It provides for a 6.25% corporate tax rate for income generated from commercializing certain intellectual property.
Holding company regime: Ireland offers an attractive regime for holding companies locating here, and for their shareholders. Many leading global companies, and private equity/wealth funds, have chosen to relocate their headquarters to Ireland. Holding company drivers include:
- exemptions for Irish tax resident holding companies from Irish tax on capital gains realized on disposals of qualifying subsidiaries; and on dividends received from other Irish-resident companies;
- favourable treatment of foreign dividend income;
- generous exemptions from Irish withholding tax on dividends and interest payments made to non- Irish residents;
- no thin capitalization rules, which allows an Irish holding company to be debt financed;
- no “controlled foreign company”, or “sub part F” rules, so the profits of a foreign subsidiary of an Irish holding company are not taxed in Ireland unless they are repatriated to Ireland; and generous reliefs for costs of acquiring IP and other intangibles.
Skilled labour force: Ireland has a skilled, multi-disciplined and English-speaking workforce. Ireland was ranked fifth in the world for availability of skilled labour and for flexibility and adaptability of workforce by the International Institute for Management Development (IMD) World Competitiveness Yearbook 20166. According to Eurostat 2016, Irish labour costs have remained relatively stable since 20087.
Ease of doing business: A company can be incorporated within five business days. Business tax registration can be arranged by submitting one form to the revenue commissioner, and there are many different financing options available.
Stability: Ireland has a strong legal regulatory framework that supports business. Ireland is a common law jurisdiction. Its legal concepts will be recognised and understood by most foreign investors, including UK and U.S. multinationals. Ireland’s court system is efficient and pro-business. The Irish Commercial Court, a specialist division of the High Court, deals quickly with commercial disputes over €1 million and disputes involving intellectual property.
Investment incentives: The Industrial Development Authority Ireland (“the IDA”) is the Irish government agency responsible for stimulating, supporting and developing export-led business and enterprise in Ireland. The IDA offers various incentives to international companies choosing Ireland as their European base. To date it has partnered with over 1,800 entities in establishing and expanding their Irish presence. Some of these incentives include:
- exemptions for certain start-up companies from tax in each of their first three years;
- R&D tax credits;
- 100% allowance on capital expenditure incurred on scientific research; and
- The Special Assignee Relief Programme (SARP) which offers a reduction in income tax to
- qualifying employees who relocate to Ireland.