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Business management in Ireland


Ireland consistently holds stable positions in world rankings, whether it is a list of countries ranked according to the ease of doing business (13th place, 2015) or simple registration of the enterprise (19th place, 2015). Moreover, in 2013 the Forbes magazine recognized this country as the best for the entrepreneurs, that is quite naturally, since Ireland stands out among its competitors due to the economic and political stability, progressive legislation, a large number of highly qualified professionals and a flexible taxation system.

The favorable business climate made it possible to attract investments of the largest international companies and to interest a lot of promising start-ups, that gave Ireland the opportunity to gain the reputation as a technological center. The government actively supports design and scientific research, stimulates the development of the innovative technologies. Currently, the most important branches of the economy of this state are IT technologies, the pharmaceutical industry, the production of medical equipment, electronics and engineering.

The last quarter of the century has been marked in Ireland by the most real economic and technological boom that has allowed the country to take the leading position in the EU in the sphere of high technology and financial services, as well as to become an important link between Europe and America. It is here where many large international cash flows intersect. The global economic crisis of 2008-2009 slowed, but it did not stop the intensive development of this country, and for this moment, Ireland is a strategically important bridgehead for the foreign companies wishing to enter the world market.

Ireland is ideal for high-cost production. Pharmaceuticals, biotechnology, medical technology, ICT, trade, consumer and industrial goods, entertainment, digital media and financial services - these production sectors are the foundation of the country's industry.

Legal system of Ireland

Ireland is one of the most independent parts of the United Kingdom. The status of the dominion (that is, in fact, an autonomous state) was given to the republic at the beginning of the last century. In 1949, it proclaimed independence and announced coming out of the British Commonwealth, and yet, in the 70's entered the European Economic Society. The legislative acts of Ireland are based on the system of English "Common law". The functioning of Irish firms is regulated by the Companies Act of 1963 and 1990, including the supplements and by-laws of 1963-2012. The activities of the Irish partnerships are governed by the Limited Partnership Act from 1890 to 1907.

Advantages of Ireland?

The Republic suits well to those who conduct international commercial activities or work in the sphere of IT services.
The Irish partnership (LP) may be an alternative to English and Scottish partnerships, since, in comparison with the last one, the information about the beneficiaries of the companies in Ireland is not in the public register.
Ireland is a part of the EU, which allows you to take the advantages specified in the EU Directives.
The country provides for the possibility of VAT registration for trade with the EU.
Ireland is considered to be the first country in the world to attract the investment in the terms of quality and efficiency and the best country in the Western Europe for the investment.
Ireland offers, in fact, unlimited opportunities for dynamic growth and business development.
International agreements of Ireland in the tax area
The agreements on avoidance of double taxation are signed with such countries:
Australia Austria Albania Armenia Bahrain Belarus Belgium
Bulgaria Bosnia and Herzegovina Botswana United Kingdom Hungary Vietnam Germany
Hong Kong Greece Georgia Denmark Egypt Zambia Israel
India Iceland Spain Italy Kazakhstan Canada Qatar
Cyprus China Korea Kuwait Latvia Lithuania Luxembourg
Macedonia Malaysia Malta Morocco Mexico Moldova The Netherlands
New Zealand Norway United Arab Emirates Pakistan Panama Poland Portugal
Russia Romania Saudi Arabia Serbia Singapore Slovakia Slovenia
United States Thailand Turkey Uzbekistan Ukraine Finland France
Croatia Montenegro Czech Republic Chile Switzerland Sweden Estonia
Ethiopia South Africa Japan
Types of companies in Ireland
Such types of enterprises are used for doing business:
Private Limited Company (Private Company Limited by Shares) - analog LTD
Limited partnership (Limited Partnership, LP)
Private company with limited liability (LTD):

• Statutory fund - the standard size is 100 euros and it is not necessary to pay it. • Only registered shares are allowed, which are not subject to free alienation. • There must be at least one director in LTD, and only individuals, residents of the EU can be directors (no legal persons are appointed to this position). If two or more managers are appointed, one must be an EU resident (nominal), the rest are real leaders. • There must be at least one shareholders (physical / legal entities), and their residency does not matter. • The secretary in LTD is responsible for the register of the shareholders of the company, his position is mandatory, and in any case it should be a resident of the republic.
• The legal address of an open company must be within the state. • The data on the directors and shareholders are kept publicly available. • The companies must maintain a register of beneficiaries and keep it at the place of registration, without giving them public access. • LTD annually submits statistical and financial reports. The first statistical reporting is provided 6 months after the registration of the enterprise. Yet, within 9 months after the end of the tax period (in Ireland this is 12 months), the companies are required to file a tax return. • VAT declarations of the firms are submitted quarterly.
Partnership with limited liability (LP):

• LP does not have starting statutory fund. • The founders - at least two of them are individuals or legal entities of any residence, that are partners. At least one general partner and one partner with limited liability are appointed. The general partner is responsible for the firm's obligations in full, and the partner with limited liability - only proportionally with his share in the LP. To simplify the registration, we recommend assigning an individual as an individual partner, the second - a legal entity. • The functions of the director are usually performed by the general partner. • LP is established by signing a partnership agreement (it must be registered with the Irish Register of the Companies). • The secretary is not needed.
• All Irish partnerships must have a registered office in the Republic of Ireland. • The partnerships are exempted from the annual filing of a financial report and audit. If business in Ireland is not conducted and the partners are located outside the state, a zero tax return is submitted. • Non-resident partners are not eligible to receive a certificate of the status of the tax resident of Ireland. They are also not subject to the agreements on the avoidance of double taxation. • The LP tax number is not issued automatically, it must be requested additionally. The period of receipt is about a month after the receipt of the relevant request by the state bodies.
The partnerships of Ireland are not considered separate legal entities, i.e. the owners of the capital are not legally themselves, but their partners. Although in practice, this does not prevent them from doing business freely both with the countries of Europe and with Great Britain. LP in Ireland are exempt from taxation, that is, the company's profits are distributed among the partners who pay the tax in the country of their registration. If the partners are non-residents of Ireland and the profits are received from abroad, they do not pay tax in Ireland.
Taxation in Ireland
According to the general rule, a legal entity is a tax resident of Ireland, if the management and control over its activities is carried out on the territory of the country. Yet, if the company is registered in Ireland, it is its tax resident. However, there is one important exception from this rule fixed by the Finance Act 2014: if, according to the provisions of the Double Tax Agreement (DTA) with the other country, the Irish company is considered a tax resident of this country, it is not recognized as a resident of Ireland.
Income tax (corporate tax)
The corporate income tax (corporate tax) on trading in Ireland is 12.5%. The qualifying criteria for applying the rate of 12.5% are the following (applied together):
• The company must have a real presence in Ireland, with the office and employee (s) performing (s) the key management functions of the company. • The director must be a resident in Ireland. • The company should be able to demonstrate that it functions independently without a constant reference to
a foreign parent company in order to obtain instructions, decisions and indications on routine matters. • The meetings of the Board of Directors, at which the key decisions on the company are taken, should be held on the territory of Ireland and be formally documented.
VAT
The Irish company is required to be registered as a VAT payer if its annual turnover in respect of goods exceeds 75,000 euros, and in respect of services - 37,500 euros.
• The standard VAT rate in Ireland is 23% and it has been applied since January 1, 2012. • The rate of 13.5% is applied to the transactions with land and real estate, short-term car rent, the sale of certain types of fuel, repair and construction works. • The 9% rate is applied to the newspapers and
other periodicals, restaurant business, hairdressing services, cinemas, museums, art galleries, etc. • The 4.8% rate is applied to the livestock and horse rental. • The 0% rate is applied to the export of goods, books, dental services, clothing and footwear for children.
Transfer pricing
The transfer pricing legislation in Ireland have been developed in accordance with the recommendations adopted by the OECD.
The persons are recognized as interdependent if the share of direct or indirect participation of one person in another person is more than 50%.
The methods used to determine the market price between the interdependent persons are the general methods developed by the OECD.
According to the existing recommendations of the Irish government bodies, the documentation containing the information on transfer transactions should be prepared by the time the annual tax return is filed.
The documentation on the controlled transactions is provided to the tax authorities within 21 days after the receipt of the relevant request. The requirements for the mandatory provision of such information along with the tax return are absent.
The documentation on the controlled transactions must be prepared in English or Irish.
Rules OF CFC (CONTROLLED FOREIGN COMPANIES) In Ireland
Absent
Foreign exchange control in Ireland
Absent

On July 18, 2017, the Irish government approved the drafting of a Bill on reforming the structure of partnerships with limited liability. This innovation will be an important step in the development of the financial services sector and it will contribute to the growth of the popularity of Ireland as the preferred jurisdiction for the registration of investment funds.

Recently, the Minister of Finance and Public Expenditure and Reforms of Ireland, Pascal Donoho, made a statement regarding the Investment Limited Partnership (Amendment) Bill 2017 (the ILP Bill). The purpose of the bill is to amend the Investment Limited Partnership Act 1994 (Law on Investment Partnerships with Limited Liability) used for Limited Liability Companies (LP) and Limited Partnerships Act 1907 (Law on Partnerships with Limited Liability), which is used for unregulated LP structures .

The amendments proposed by the ILP bill will help in bringing both regulated and unregulated LP in the line with other fund structures, and in the case of regulated LPs, with the standards set forth in the Alternative Investment Fund Managers Directive 2011/61 / EU), as well as other international standards regarding LP. The changes are aimed at updating and modernizing the current legislation on the investment partnerships with limited liability, which will further strengthen the number of legal structures of Ireland available for the formation of investment funds.

Ireland street

Ireland remains the most efficient country in the EU, in which it is possible to pay taxes for businesses, according to the latest PwC / World Bank survey of tax.

The report dealt with 189 economies around the world and take into account that all taxes was paid by companies. He analyzed the bureaucratic and administrative burdens imposed on businesses, when it comes to time spent on compliance, payment and registration of taxes, as well as the amount of tax imposed. Ireland took the 6th place in the world.

PwC and the World Bank found that a typical Irish company spends about a quarter of the total volume of commercial profit in taxes. This figure was 12.4 percent of the income taxes, 12.1 percent of labor taxes and 1.4 percent in other taxes. In addition, the company spends a little more than two weeks, on their tax affairs and makes the payment almost every six weeks.

PwC stressed that the statutory corporate tax rate in Ireland 12.5 percent, very close to the rate of "income tax" 12.4 percent.

In the report explained that within the EU and the European free trade area, company will pay 40.6 percent of its commercial profit in taxes, including income taxes of 12.6 percent, taxes on labor force of 26.5 percent and 1.5 percent in others taxes. On a world scale, the typical company spends 40.8 percent of its commercial profit in taxes, spends more than seven weeks of their tax affairs, and make tax payments every two weeks.

Joe Tynan, head of the Irish PwC tax, said: "Research shows that the presence of a simple tax systems with competitive rates of business taxation and a reliable and transparent tax regime gives Ireland a real advantage on the market for attracting direct investment. The study confirms that the tax system of Ireland continues to be one of the most effective and transparent in the EU. Despite the fact that no one likes to pay taxes, the Irish tax system makes it relatively easy to comply with the rules and less bureaucracy in comparison with other EU countries."

He added: "The transparent Irish tax regime and low corporate tax rate, together with the relative ease of paying taxes, is vital for the continuation of support for Ireland's position as a choice location for foreign direct investment. This transparency and the relative ease to pay taxes along with 72 agreements and R&D tax credit system of world class are important elements in giving us the opportunity to help multinationals to establish operations in Ireland, as well as to expand their activities here."

Author: Olena Kutova

senior lawyer of the Finance Business Service company

Irish Tax Office

Irish Tax Administration updated its local rules on property tax, taking into account the changes made to the Finance (Local Property Tax) (Amendment) Regulations 2015.

Most of the changes in the manual refer to the threshold for the various benefits that are free from the responsibility of payment of local property tax. This was the result of a three-year extension to the first period of evaluation of the situation. The period of assessment is currently ranges from 1 May 2013 to 31 October 2019, when satisfied the relevant eligibility conditions TND exceptions will now be available for that extended period.

Other changes related to the simplifications, they are available for properties occupied by individuals with disabilities. The main change relates to the simplification of operations, which applies when the value of the property increases as a result of adaptation to make it more suitable for individuals with disabilities. Since 2017, gross value of all these properties can be reduced on an annual basis of a fixed amount EUR50,000 (USD54,600). Guidelines for these simplifications - Guidance on local property tax exemptions for disabled / incapacitated persons - are published in the LPT section of website revenues have also been updated to reflect the changes.

Author: Sergey Panov

managing partner Finance Business Service

Street Ireland

Irish Finance Minister Michael Noonan put the budget 2017, which largely focuses on the reform of the income tax system and the competitiveness of the corporate tax regime.

The sixth part of the Noonan's budget as Minister of Finance, includes tax reforms to "reduce the burden on taxpayers just under EUR 300 million (USD 330.6 million)." He explained that "these changes include around EUR 500 million in tax cuts, offset by measures to increase tax revenues in the amount of EUR 195 million."

As expected, Noonan decided to reduce the Universal social charge (USC), albeit at a slower pace than indicated in the government's pre-election manifesto.

Announcing the measures, he said: "Extremely high tax rates act as a brake on employment They distract people from the jobs and divert immigrants from returning home.".

Noonan admitted that he had "limited resources to change the situation," but said that it will allocate EUR 335 million to reduce each of the three lower USC rates by 0.5 percent. As a result, these bids will now be 0.5 percent, 2.5 percent and five percent. The ceiling of the band, which decreased 2.5 percentage payable rate will be increased from EUR 18,668 to EUR 18,772.

"Despite the relatively small coverage, these changes will have a significant impact on the disposable income from earnings of workers with low and middle - more importantly, it signals the Government's intention to phase out the USC for a long time, as resources permit," he said.

Author: Olena Kutova

senior lawyer of the Finance Business Service company

Street Ireland

Irish Prime Minister Enda Kenny confirmed its commitment to the 12.5 per cent rate of corporate tax "from the visual point of tax certainty."

In his speech to the American Chamber of Commerce of Ireland (AmCham Ireland), Kenny noted that the rate will not change, and acknowledged that "this is an important element to consider with US investors to come here in Ireland."

Bob Savage, president of the American Chamber of Commerce of Ireland, welcomes the statement by Kenny. According to him, the Chamber "deeply appreciates the unequivocal declaration of the Prime Minister that his government will firmly defend our reputation as a blood pro-Corporate Business of the country, which is determined by justice and the determination processing."

In his pre-budget problem, of AmCham Ireland Ireland stressed the need "to evolve a corporate tax regime in response to the post-OPP landscape, to remain competitive."

Comments Kenny later duplicated Finance Minister Michael Noonan. "We could almost put it on the flag right now, because everyone knows at the international level, that the figure is 12.5 per cent. In fact, when entrepreneurs are thinking about Ireland, they automatically think of 12.5 percent. But only if there is any doubt, I will confirm this budget again this year, "Noonan said.

Noonan added that the government is not under pressure from the European Union (EU) to change the speed as a result of the Commission's decision, which gave Ireland a selective tax regime for Apple. "The European Commission recognizes that the right to set tax rates are a matter for sovereign governments, this is not Europe or the European Commission," he explained.

Author: Sergey Panov

managing partner Finance Business Service

Street Ireland

The Irish Government has proposed that the tax authorities carried out a full review of tax decisions every five years.

In a statement to the Dáil Éireann, the lower house of Parliament on 7 September 2016, Finance Minister Michael Noonan said that the tax authorities will amend the relevant guidance and regulations that will ensure that tax regulations are to remain in force for five years without a full review.

Noonan added that the income will be published in its annual report the number of inmates each year, so as to fully ensure the confidentiality of the taxpayer.

The announcement was made shortly after the conclusion of the European Commission have been made that the two tax rulings issued by Apple Ireland significantly and artificially lowered the taxes paid by Apple in Ireland since 1991. Irish Parliament endorsed the government's motion to appeal against the Commission's decision - 14 of September.

In a statement, Noonan said that "a reaction to the decision of the Commission has, at times, an outdated and unfair caricature the position of Irish tax. It is a caricature that is contrary to the evidence in recent years. The facts show our constructive engagement of the international table, with incomparable implementation reform ahead of many of our partner countries."

Noonan added: "Reputation is not only important for Ireland's position in the world and our ability to interact with other countries mutually respectful way. Reputation as a proxy for confidence. Creating our tax system around the policies and principles which are recognized best practices at the international level, we are able to provide stability and confidence in the fact that the business at home and abroad will be in demand."

Author: Olena Kutova

senior lawyer of the Finance Business Service company

Ирландия и Apple

Irish Parliament approved the Government's request to appeal against the decision of the European Commission that the tax rules, given Apple's constitute illegal state aid.

The decision was adopted by 93 votes to 36. He stated that Parliament "supports the government's decision to appeal the decision of the European Commission that Ireland gives Apple an illegal state aid." Finance Minister Michael Noonan described the decision by the Commission and the Government of treatment as "a landmark moment for Irish tax policy and our place in Europe."

Noonan said that with a call "necessary to protect the integrity of our tax system, to provide certainty for business, as well as to challenge an infringement of EU state aid rules in the public parts of the competence of the tax." He added that "it is simply not true that Ireland provides a favorable tax regime in Ireland," and warned that "it is very bad for our reputation, which has been questioned."

The Commission last month concluded that the two tax regulations issued by the Apple Ireland significantly and artificially lowered the taxes paid by Apple in Ireland in order to restore "unpaid taxes" from Apple over the years 2003-2014 to EUR13bn (USD14.7bn), plus interest. The Government will keep the amount of compensation, until the case is closed, as it may ultimately be returned in the event of a successful appeal.

Speaking during a parliamentary debate, Prime Minister Enda Kenny said that the commission's decision "is so deeply wrong and destructive that it requires immediate, clear and strong intervention."

"The government over the years have made it clear that Ireland has not concluded and enters into transactions with corporations, large or small. This is not the way we do business. It is not true that Apple's, was given more favorable treatment than other. Benefits have not been shown. The law has been fully and properly applied and Apple has paid its taxes across Ireland, "he explained.

There were three additional provisions to the movement of the government. They stated that Parliament: commits itself to "the highest international standards in the field of transparency in the taxation of the corporate sector, it decides that" no company or individual does not receive preferential tax regime ", and reaffirms its commitment" to 12,5- rate of corporation tax, the research and development tax credit, and reiterates its view that taxation is a competence for parts of the state, set out in the EC Treaty."

Author: Sergey Panov

managing partner Finance Business Service

Houses Ireland

The Irish government will make changes to the tax regime of special purpose companies established for assets to close a loophole so-called "predatory companies."

Finance Minister Michael Noonan has published an amendment to section 110 of the Law of 1997 on tax consolidation governing the taxation of such companies. He explained that "issues have been raised recently about the possible use of aggressive tax practices by some sections of the 110 companies to avoid paying tax on Irish real estate transactions." He said that the amendment was intended to address the abuse of Article 110 and to ensure the provision fenced for bona fide purposes.

Section 110 was introduced to improve the supply of Ireland as a place to conduct financial services. According to section 110, a company must be a tax resident in Ireland and do business holding or management of "qualifying assets" that should be at least EUR10m (USD11.3m). In addition to holding or management of "qualifying assets," the company can not conduct any other activity.

Gain or income under section 110 of the company subject to corporate tax at 25%. This is the norm for passive income, but taxable income is calculated using the normal rules that apply to trading activities. Under section 110 the company is entitled to the full deduction of interest expense, in recognition of their role in mobilizing funds for originator securitization.

"The proposed amendment is focused on the issues that were raised and ensures that Irish tax base is adequately protected. In addition, targeted suggestions for the use of the Irish property market is also considered," added Noonan.

If any further violation of Section 110 are identified, Noonan will consider additional measures to include Finance Bill.

"I would like to reiterate the position that Ireland has extensive safeguards to protect under our tax code to prevent tax evasion. They strengthened on a regular basis to keep up with any new threats to the tax base.

After the amendment will enter into force on 6 September.

Author: Sergey Panov

managing partner Finance Business Service

US double taxation

Department of Finance of Ireland began meeting on the changes in the tax agreement with the United States.

The Department explained that the update is seen as necessary in accordance with the decision of the United States to upgrade its model tax treaty.

The United States took into account the recommendations on the update within reduce their tax base and shift profits. For example, in 2016, the model does not reduce withholding taxes on payments to highly mobile income - income that taxpayers can easily shift around the globe through deductible payments such as royalties and interest rates - which are made by persons who enjoy low or no tax in respect of income in accordance with the preferential tax regime.

In addition, a new article obliges the partners to the extent necessary to make changes to the contract, if the changes cause a doubt one of the partners in the domestic law. Model 2016 also includes measures to reduce the tax benefits of corporate inversions.

The update also included the US regulations, which provide that disputes between countries in the application of a double taxation agreement should be resolved through binding arbitration through the "last best offer".

In announcing the meeting, the Department of Finance of Ireland said: "The reduction of the tax base, and reports on the removal of funds, published in October 2015, led to a series of recommendations to update tax treaties at the global level, countries around the world, including Ireland."

"The Department of Finance and Taxes calls upon to give written comments from interested parties under the contract renewed US tax model with an Irish point of view," he added.

Author: Olena Kutova

senior lawyer of the Finance Business Service company