03 Sep 20
6 reasons to consider an Irish holding company
Ireland has become one the EU’s location of choice for setting up a holding company. Over the past five decades, many of the world’s most successful companies have setup 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. Nine of the top twenty global technology firms have their European headquarters here while twenty-four of the top twenty-five top biotech and pharma companies have also chosen Ireland as its destination of choice. It’s an impressive list with Google, Apple, Microsoft, Abbott, Facebook, Pfizer and LinkedIn all availing of the substantial benefits of doing business on Irish soil.
While the global giants may grab the headlines, over 1,000 multinational businesses are also 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 a holding company in the land of saints and scholars?
A ‘pro-business’ environment
Ireland is viewed as a progressive, pro-business environment. Forbes Magazine ranks Ireland as one of the best countries for business.
The country’s political stability and respected regulatory regime are key elements in this. Furthermore, Ireland is considered to be low on bureaucracy with bodies such as the IDA and Enterprise Ireland providing extensive support for entrepreneurs.
The World Bank’s “Doing business” Report rates Ireland as the 3rd easiest place in the EU to start a business with the same report citing our tax regime as being the most business-friendly in Europe or the Americas.
Ireland’s corporate tax regime
Ireland’s tax regime is a huge attraction for companies looking to setup on these shores. With a corporate rate of 12.5% and an extended network of international double tax agreements (DTAs) it provides an excellent fiscal platform for holding companies.
To date Ireland has signed 74 double tax treaties, including agreements with the US, Canada, Australia and China and all EU member states and OECD countries. These agreements cover direct taxes which in the case of Ireland are:
Universal Social Charge
Capital Gains Tax
Other key tax features include:
Remittance taxation system available for non-domiciled Irish resident individuals which provides a tax incentive to foreign individuals to locate in Ireland
No dividend withholding tax (DWT) on payments made to individual shareholders resident in either an EU or double tax treaty country
No controlled foreign corporation rules
Limited transfer pricing legislation
Global Marketing Business Collaboration International
A secure place for your ideas
The Knowledge Development Box (KDB) scheme, companies involved in Research and Development can now avail of a corporation tax rate of 6.25%.
It enables Ireland to offer long-term certainty to innovative industries planning their research and development investments. The scheme also strengthens Ireland’s standing as a location for the protection of intellectual property (IP). 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 holding companies involved in R&D activities to benefit from a tax credit of 25% on expenditure.
Ireland is a common law jurisdiction with a reputation as a safe, and politically stable place to hold IP rights. It’s 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 55%, compared to an OECD average of 45% and it’s ranked 18th in IMD’s, World Talent Ranking.
Ireland is ranked 23rd in the same report for its ability to attract overseas talent, an increasingly important factor for firms setting up here.
In anticipation of many UK companies have restructured to ‘Brexit proof’ their interests.
Barclays Bank Ireland plc, became the group’s main European Union banking entity in 2018 as it prepared for Brexit. It is known internally as Barclays Europe.
With other banks like Bank of America doing likewise, it’s seen as another significant endorsement of Ireland’s status as a place to do business. The Central Bank confirmed that it processed over 100 Brexit-related applications to authorize firms across sectors including investment management, banking, payments and insurance. For many companies, the decision to setup a holding company in Ireland will help them adapt more easily to post-Brexit regulations and policies and provide them with new opportunities.
The ability to combine trading activities with its holding company function
No ‘Controlled Foreign Company (CFC)’ or ‘Thin Capitalization rules’
Low capital start-up costs
Supportive state agencies
EU membership and proximity to EU markets
It’s certainly easy to see why Ireland has become one of the most attractive locations to setup a holding company. It’s an environment tailor made for success, enabling firms to optimise their operational and fiscal performance.
If you would like to explore what opportunities Ireland offers your company, please get in touch with us today.