As Brexit negotiations continue their rocky progress, the picture is still uncertain for UK businesses, as well as those looking to move to Europe. Concerns about tariffs and other barriers to trade have yet to be settled, jeopardising the UK’s status as a launching pad for businesses in Europe.
The UK’s loss however may be Ireland’s gain. Its neighbouring nation has many of the same advantages as the UK when it comes to business - and a few key differences. Here are the things you need to know about conducting business in Ireland versus the UK.
Until now, the economic strength of London in particular had made London an ideal entry point for businesses entering Europe. As the world’s de facto financial capital, and one of only two native English speaking nations in Europe, the UK was an ideal launching pad for businesses moving from the US.
With the departure of the UK from the European Union, however, Ireland will now be the only native English-speaking nation in the Eurozone. Ireland also currently ranks as the easiest EU country in which to start a business, with Estonia and the UK in 2nd and 3rd place respectively.
As evidenced by the Brexit fallout, Ireland’s EU membership is important for businesses. Many banks are expected to move from London to Dublin in order to retain ‘passporting rights’, which enable them to pass money between EU countries unrestricted. Others worry about the tariffs which may be imposed on the UK, and the value of the Pound, both damaging to importers.
Ireland had already enticed both corporations and startups thanks to its friendly business climate and EU presence. With the loss of its chief rival, Ireland looks set to become the new favourite destination for English-speaking businesses looking to enter the EU.
The legal structures available to businesses in Ireland are broadly similar to the UK, and will be familiar to any business moving between the two countries. However, Ireland also has a unique variant on the Limited Liability Company: the Designated Activity Company (DAC).
A DAC is essentially an Limited Company set up for a specific purpose or function, where for legal reasons the company’s powers need to be constrained. Ireland also features the Company Limited by Guarantee (CLG) structure, which is roughly equivalent to the UK’s CIC structure.
All Irish companies must designate a director and a secretary, contrary to UK requirements. However, a non-resident person or corporate entity can be installed as company secretary, provided they fulfil the knowledge requirements for the role.
Taxes and prices
The UK and Ireland have both become known for their reasonable tax rates in comparison to the rest of Europe. Both offer 0% VAT rates on a number of items and services that incur charges elsewhere, as a result of laws codified before joining the EU. The cost of living in Ireland is also far cheaper than in London, even in major cities like Dublin and Cork.
The UK offers one of the lower rates of corporation tax in the EU, currently at 20%. Ireland however offers an even more competitive rate of 12.5% for trading income. This is substantially lower than most leading economies, including the UK, France, Germany, the USA and China. Both countries also boast double taxation treaties with most of the world’s leading economies.
International businesses looking to expand elsewhere in Europe can benefit hugely from a base or holding company in Ireland. As long as your company doesn’t make money from Irish customers, you should be eligible for a complete tax exemption on international income. A three year tax exemption is also available to certain businesses offering qualifying goods and services.
While both the UK and Ireland are very accommodating to businesses, Ireland’s Parliament has proven to be more reactive to their needs. While the UK’s Companies Act was redrawn in 2006, Ireland’s Companies Act was last updated in 2014. A suite of changes helped to expedite the company registration process, and allowed limited companies to appoint a single director.
As a member of the EU, Ireland will continue to benefit from EU legislation and directives, helping to guarantee transparency and fair competition. Ireland’s implementation of EU Anti Money Laundering Directives, as well as its co-operation with the EU Competition Commission, have made it the recipient of the OECD’s highest Tax Transparency Rating.
Irish law also tends to be fairer to employers in the field of employment law. Trade unions have less power in Ireland, where businesses are not legally obliged to recognise unions for collective bargaining purposes. Ireland is also more lenient when it comes to applying Transfer of Undertakings Regulations (TUPE) regulations, making it easier to change service providers for outsourcing purposes. Paternity pay is also not a legal requirement for companies in Ireland.
Ireland should not be mistaken for a legal ‘Wild West’, however. The country is required to comply with EU laws, and has extensive protections for workers. Employees only need to serve for a year to qualify for an unfair dismissal claim, as opposed to two years in the UK. It’s also easier for employees to secure an injunction, for example to halt an unfair dismissal or disciplinary procedure.
For more help in starting your business in Ireland or opening a company in the UK, or for help in opening a business bank account or advice on tax, please contact us on 0033 (0)1 53 57 49 10 or email us from our contact page and we’d be delighted to help you.
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