02 Mar 23
5 reasons to establish a business in Ireland
Ireland is home to over 1,000 multinational businesses but why is it such an attractive location?
In its Winter 2023 Economic Forecast, released earlier this month, the European Commission predicts the economy in Ireland will grow in GDP terms by 4.9%, compared to its Autumn forecast of 3.2%. Growth for 2024 has been revised upwards to 4.1% compared to an earlier forecast of 3.1%. The Commission also says a 92% increase in investment, predominantly by multinationals, in the third quarter last year compared to the previous quarter contributed to "much stronger than anticipated" growth.
Over the past five decades Ireland has become one of the EU’s foremost locations of choice for multinational groups with many of the world’s most successful companies having operations here.
As a long-standing member of the European Union, Ireland has strong trading links both within Europe and with the rest of the world. It also boasts a unique relationship with the US, which has resulted in significant rates of foreign direct investment over recent decades.
The proof, as always, is in the figures with many companies availing of the substantial benefits of doing business on Irish soil, these include:
The top 5 global software companies
The top 5 industrial automation companies
8 of the top 10 global financial services companies
14 of the top 15 global medical technology companies
(Source: Irish Development Agency (IDA))
The IMD World Competitiveness Yearbook 2022 ranks Ireland as the 3rd most competitive country in the euro area and the 11th most competitive economy in the world (out of 63 economies)
While the global giants may grab the headlines, Ireland is home to over 1,000 multinational businesses that are taking advantage of the pro-business culture and ease of access to EU markets that Ireland provides.
So, what are the advantages of setting up business operations in Ireland.
A ‘pro-business’ environment
Ireland is viewed as a progressive, pro-business environment and is consistently ranked as one of the best countries for doing business in.
The country’s political stability and respected regulatory regime are key contributing factors. Furthermore, Ireland is considered to be low on bureaucracy with the Irish Development Authority (IDA) and Enterprise Ireland providing extensive support for entrepreneurs and start-up operations.
The World Bank’s “Doing Business” Report rates Ireland as 24th out of 190 economies in respect of the ease of doing business.
Ireland’s corporate tax regime
Ireland’s tax regime is a huge attraction for companies looking to setup here. With a corporate tax rate of 12.5% and an extensive network of international double tax agreements (DTAs), Ireland is an excellent location for setting up operations in Europe.
To date Ireland has signed 76 DTAs, including agreements with the US, Canada, Australia, China and all EU member states and OECD countries.
In the past 20 years, Ireland’s focus on the knowledge economy, its best in class intellectual property (IP) protections and extensive range of grants and financial support for R&D activities has made the country a natural location for global organisations to develop new and innovative products.
The Knowledge Development Box (KDB) scheme, targeted at companies involved in research and development, means a company qualifying for KDB may be entitled to a deduction equal to 50% of its qualifying profits. This means its qualifying profits may be taxed at an effective rate of 6.25% currently. The government is taking steps to increase this to 10% (subject to a commencement order) in line with the OECD Pillar Two.
It enables Ireland to offer long-term certainty to innovative industries planning their research and development investments. Qualifying assets for KDB include patented inventions (plus patents pending) and copyrighted software.
According to the IDA, the number of global companies centralising their IP management in Ireland has made it one of the largest exporters of IP in the world. Irish companies involved in R&D activities also benefit from a tax credit of 25% on expenditure.
Ireland is a common law jurisdiction with a reputation as a safe, and politically stable country to hold IP rights. Its court system strongly protects owners’ IP rights including patents, copyright, trademarks, and designs.
Highly educated, skilled workforce
Ireland’s highly educated workforce provides a strong talent pipeline for companies setting up here.
The share of 25-34 year olds with a third level qualification is 63%, compared to an OECD average of 47% (or EU average of 46%). Ireland is ranked 15th in the 2022 Institute for Management Development (IMD) World Talent Ranking.
Gateway to Europe and beyond
As a gateway to the European markets, Ireland is the ideal location for those looking for a European base. As a committed and long serving member of the EU, it offers direct access to a market of 500 million consumers.
Ireland’s geographic location as the most westerly EU country offers ready access to mainland Europe, the Middle East and beyond with strong air and sea transport networks supporting global business. Ireland is also the closest EU country to the US and Canada with multiple daily flights across the Atlantic and a time difference of just 5 hours with the east coast of North America. It also has the added advantage of being the only EU country with US immigration preclearance.
It’s certainly easy to see why Ireland has become one of the most attractive locations to setup and do business from. It’s an environment tailormade for success, enabling organisations of all sizes to optimise their operational and fiscal performance.
If you would like to explore what opportunities Ireland offers your company, please get in touch with Henry Barrett.