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. Sixteen 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, and Pfizer all availing of the substantial benefits of doing business on Irish soil.
While the global giants may grab the headlines, over 1,200 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?
1 – Very much a ‘pro-business’ environment
Ireland is viewed as a progressive, pro-business environment. A recent Economist Intelligence Unit (EIU) report placed Ireland 11th out of 82 countries in ‘Business Environment Ranking’.
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 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.
2 – Ireland’s corporate tax regime – a huge benefit for holding companies
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:
- Income Tax
- Universal Social Charge
- Corporation Tax
- 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.
3 – 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.
4 – A highly educated and 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 52%, compared to an OECD average of 43% and it’s ranked 14th in IMD’s, World Talent Ranking.
Ireland is ranked 5th in the same report for its ability to attract overseas talent, an increasingly important factor for firms setting up here.
5 – Brexit proofing
With Brexit looming, many UK companies are looking to ‘Brexit proof’ their interests.
Just this week, Reuters reported that Barclays has begun shifting ownership of its French, German, and Spanish branches to its Irish entity—and will ultimately move all its EU-based entities to an Irish holding company.
With other banks like Lloyd’s and Bank of America doing likewise, it’s seen as another significant endorsement of Ireland’s status as a place to do business. For many companies, the decision to setup a holding company in Ireland will them adapt more easily to post-Brexit regulations and policies and provide them with new opportunities.
6 – If more evidence were needed…
Further reasons to setup a holding company in Ireland include:
- 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
- Political stability
- EU membership and proximity to EU markets
- Growing economy – GDP growth of 4.4% is forecast for 2018
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. You’ll find all our contact details here.