- Republic of Ireland is a state situated in an island with the same name and embracing the biggest part of its territory. Ireland has got border with Northern Ireland (the part of the United Kingdom). The capital of Ireland is Dublin. Official languages are Irish and English. The official currency is Euro (EUR). This state is a member of the European Council, the United Nations, the European Union, OECD and FATF.
- Legal system of Ireland represents common law type of legal systems, as well as the legal system of the UK.
- Ireland is not an offshore jurisdiction and is not included in any black lists of jurisdictions that do not provide exchange of tax information.
|Registration of a partnership in tax authority||EUR 200|
|Tax return||EUR 250|
|Maintaining of accounting records||upon request|
Types of legal forms of business in Ireland
- Limited partnership (LP);
- Private company limited by shares (LTD);
- Limited liability partnership (LLP);
- Company limited by guarantee (CLG);
- Public limited company (PLC);
- Designated activity company (DAC);
- Unlimited company (UC);
- Societas europaea (SE).
Company incorporation in Ireland.
Limited Partnership (LP) in Ireland. Incorporation and other services
The main features of LP in Ireland are the following:
- The process of incorporation is regulated by the Limited Partnerships Act 1907.
- LP does not have the status of legal entity in Ireland, but has got some distinct features of legal entities, e.g. it can open a bank account, act at its own name in transactions.
- At least one general partner (EU resident) and one limited partner (of any residence) are required.
- LP doesn’t have directors or secretaries. General partner is responsible for managing LP and acting at its name in transactions, as well as attorneys empowered by general partner in accordance with general Power of Attorney.
- The minimum size of LP’s assets is not established. Contributions of partners can be formed by money as well as by any other property.
- General partners are liable for all debts and obligations of LP. Limited partners are liable for debts and obligations of the LP within the amount of their contribution to LP’s assets.
- The revenue received by LP is to be distributed among its partners.
- LP is obliged to prepare and keep accounting records. If all general partners are legal entities (residents or non-residents of Ireland) LP will have to file its accounting records to Companies Registration Office. If all general partners are private individuals, LP must not file its accounts.
- LP is not separate taxpayer itself (unlike company, for instance). It is not obliged to file annual return. However, LP itself and all the members resident in Ireland must file tax return to Revenue and Customs.
- Non-resident partners of LP do not have tax obligations in Ireland. Resident partners of LP must declare the part of LP’s income that was distributed to them as their own income and pay taxes from this amount. Non-resident partner files tax return and pay taxes in the state of its residence.
- Private company limited by shares (LTD) is a standard form of entity where all the members are liable for debts and obligations of a company only within the amount of their contribution to company’s assets.
- The main statute that regulates incorporation and activity of LTD companies is Companies Act 2014.
- LTD companies possess general legal capacity, that is they are entitled to choose any type of commercial activity, except those that require special license.
- Any legal entity or private individual of any residence can be a shareholder of LTD company. Company has to have at least 1 shareholder and 149 shareholders maximum in its structure.
- A company must have at least one director. At least one of the directors must be a EU resident.
- Generally, at least 1 secretary is required in LTD company, but if there are 2 or more directors in its structure, any of directors can be a secretary also.
- The assets of the LTD company are divided into shares that have to be distributed among the members. There has to be at least 1 share of any value.
- LTD company always has registered office address in Ireland in order to be able to receive official correspondence from Companies Registration Office and Revenue and Customs.
- LTD companies are obliged to prepare and keep accounts, file accounts and tax returns, as well as file annual return to Companies Registration Office.
- Audit of accounts is required if at least 2 of the following conditions are met:
- Annual return of company exceeds 12 million Euro.
- Total assets value exceeds 6 million Euro.
- The number of employees exceeds 50 persons.
- For legal termination of activity LTD company has to pass official procedure of striking off the Register or liquidation (voluntary or involuntary).
Taxation in Ireland
There are several types of taxes in Ireland: corporation tax, value added tax (VAT), income tax, withholding tax, local property tax.
1. Corporation tax. Resident companies are obliged to pay corporation tax in Ireland. The company is considered to be resident if it was incorporated in Ireland after 1 January 2015. Also companies that are administrated or controlled from the territory of Ireland are considered to be residents of Ireland. If any Double Tax Avoidance Agreement (DTAA) ratified by Ireland contains other definition of tax residence than the Irish act, the rule of DTAA has to be implemented as a priority.
There are 2 basic tax rates used for calculating corporation tax: 12,5 % for trading activity (except those types of trading activity explicitly exempted by legislation) and 25 % for the rest types of activity and exemptions of trading rule.
2. VAT (value added tax). In Ireland there are various tax rates of VAT for various goods and services. The standard tax rate is 23 %, also there are special tax rates explicitly established by law for certain goods and/or services (13,5%, 9%, 4,8%, 0%).
3. Withholding tax. Irish companies that pay dividends or interest to foreign natural persons or legal entities must withhold tax from the amount of payment made. Standard tax rate of withholding tax is 20 % and is applicable to transactions with non-residents, unless Double Tax Avoidance Agreement or EU Directive of parent companies and subsidiaries establish other rules. Patent royalties are taxable with a standard tax rate of withholding tax for payments to non-residents, other royalties are exempt from taxation.
4. Income tax. In Ireland taxpayers of income tax are all resident persons, that is private individuals that stay in Ireland at least 183 days per year, or 280 days during 2 consecutive years. The progressive scale of tax rates is used in Ireland, so the more revenue a person receive and state in a tax return, the higher tax rate is applicable. The incomes of single persons not exceeding 33 800 Euro are taxed at 20%. Married persons are entitled to pay tax at 20% rate if their incomes do not exceed 42 800 Euro. If incomes exceed these amounts the income tax rate 40% is applicable.
5. Local property tax. This tax is imposed on taxpayers owning real estate situated in the territory of Ireland. The tax rate is 0,18 % if the value of real estate does not exceed 1 000 000 Euro, and 0, 25% for the value above 1 000 000 Euro.
Tax legislation of Ireland does not have regulations of controlled foreign corporations or currency use restrictions. Transfer pricing rules exist in Ireland and are applicable in certain cases.
Furthermore, Ireland has ratified Double Tax Avoidance Agreement (DTAA) with 72 states and Tax Information Exchange Agreements (TIEA) with 24 states and territories.
Starting from September 2017 Ireland participates in automatic exchange of financial accounts information process in accordance with Multilateral Competent Authority Agreement on automatic exchange.
Register of beneficial owners in Ireland
15 November 2016 Ireland started the process of implementation of EU Directive on the prevention of the use of the financial system for the purposes of money laundering in aspect of obliging the companies to prepare and keep registers of beneficial owners (BOs). BOs are private individuals who ultimately own or control a legal entity through direct or indirect ownership of 25 % of the shares or voting rights or ownership interest in that entity, or through control via other means.
Starting from 15 November 2016 all legal entities residents of Ireland must prepare and keep registers of beneficial owners containing accurate and up-to-date information. In accordance with EU Directive and internal Irish act (Statute 560 of 2016) the register of BOs should include the following information:
- The name, date of birth, citizenship and residential address of all BOs.
- A statement of the nature (e.g. direct shareholding) and extent of the interest (e.g. 25 % of shares) held by each such BO.
- The date on which each private individual was entered into the register as a BO.
- The date on which each private individual was ceased as a BO.
- If all possible means to identify BOs were exhausted and provided there are no grounds for suspicion by the company, or there is any doubt that the persons identified are the BOs, there shall be entered in the register the names of private individuals who hold the position of senior managing officials of the company (e.g. director).
It is necessary to mention that Limited Partnerships are not supposed to be legal entities as companies, so LPs are not obliged by legislation to prepare and file registers of BOs (like companies are).
The procedure of filing registers of BOs will be established by the Statute of Finance Department that is supposed to be published and enacted approximately in 4th quarter of 2017. Statute would contain certain requirements to format of the register, process and terms of filing registers to competent authorities, as well as responsibility for non-compliance with the abovementioned requirements. It is expected that the first registers will have to be filed in 3 months after the date when the Statute enters into force and there will be online filing only without fees to be paid.