Starting a business in Ireland – Guide
The green island, a great place to live, is also a great place to start a business. Ireland, because this is what we are talking about, is opened for people with ideas who want to start their own company. It is not only easier than you think – setting a company in Ireland as a foreigner can give you a lot of other opportunities. Lower taxes and a “pass” to the other European countries is just a few of them. But where to start with it? With this article, we will answer this question.
1. Starting a business in Ireland – base information
Before we definitely choose Ireland as the direction of our business expansion, we need to know some facts about the process. Here is some useful information:
Let’s begin with one of the most basic but still important facts in our article. As everywhere in the world – if you start a company in Ireland you are obliged to pay taxes. The good info for you is: tax rates in Ireland are very low. That’s the reason why a lot of companies decide to start a fork in this country.
Firstly – you don’t need to worry about paying CIT tax in Ireland for the first three years of running a company in this country. By the law, you are exempt from the payment for this amount of time. After three years you have to begin paying your taxes, based on your business, income, and situation.
The base CIT tax in Ireland for resident and non-resident companies is 12,5 percent of the entire income. This, in fact, is one of the lowest income taxes in the world. The second stage of income tax (“Higher rate of income” or “passive rate”) applies to a business carried entirely outside Ireland but registered in Ireland. It is also applied to land dealing, mining, and petroleum extraction businesses and its rated at 25% of entire income.
There are also some possible additional taxes on petroleum businesses and other businesses, and they can range from 25 to 40%.
What’s great for any company is that Ireland does not levy local or regional taxes on income.
Also, you need to remember about Value Added Taxes (VAT), which are still much more lower in Ireland than any other countries. Here are the rates of VAT in Ireland
- 23% – a base rate of VAT
- 13,5% – VAT for some goods, like petrol or coal, and some services, like renovation services.
- 9% – some services related to tourism,
- 5,3% – whole agriculture,
- 4,8% – marketing of farm animals,
- 0% – some goods like food, pharmaceutics and shoes and clothing for kids.
There are also some very special payments and taxes. To get information about them you will need to call or email appropriate offices.
To pay taxes in Ireland you will need the following documents:
- PPS Number (Personal Public Service Number),
- P45 or P60 forms filled by your employer (if you don’t get any of them you can show the last three payslips as evidence to pay taxes).
The company registration process is pretty easy, but before you go do to it, you have to decide which form of business you want to start in Ireland. By the law, there are three base forms of company you can choose:
- Sole trader,
- Company (i.e. Limited company).
Let’s describe them shortly.
Sole trader – this is the simplest way to start a business in Ireland. You can register it under your name or business name. If you are a sole trader you don’t need to file annual returns with the CRO (Companies Registration Office). Although, you have to keep proper books and records, file taxes to Revenue and pay VAT if it is applicable to your business. There are also some cons for sole traders. First of them is that you are completely liable for all the debts. This means that all your personal are at risk if there is a claim against your business. The second one is that as a sole trader tax is also applicable at personal tax rates which can be up to even 55%.
Limited company – is very different from a sole trader model, and also more profitable. The main benefit of this form of business is that you will get a corporate tax rate of 12,5% on profits, which is much better than getting a 55% personal tax rates as a sole trader. You also still need to pay a personal tax for any salary you drew from the company, but it is still lower than a sole trader taxes.
As a limited liability company, you will also look more credible as a business, which will give you more opportunities for startup supports.
In comparison to a sole trader model, there is also less liability on claims against your business. It is because by the law personal assets of directors and shareholders cannot be seized to pay off company debts.
What is important to remember – to register and run a limited company you will need to take more steps than a sole trader, and more statutory requirements are involved to keep your business compliant.
The last one Partnership is similar to the Limited company but differs a little in rules of registration.
1.2.1 Where to register
When you decided which business model you want to begin with you can now fill the appropriate forms and leave them in a proper office. As a sole trader, you will need to register with the Revenue Commissioners for taxes and PRSI purposes as soon as you’ve decided to start working for yourself because it will affect your tax situation. If you decide to start a limited company you need to register with the CRO as the first step. Incorporating in Ireland usually takes 4-5 days. When the incorporation process is finished you can register with Revenue for the tax. An additional thing you will need is the bank account registered under the name of the company.
Depending on the type of business and the type of work you want to offer you may sometimes need permission or license from the local authority or country council. After finalizing the registration process and your company is in, you can start working and making money.
Believe or not – branding is more important than you think. If you run a limited company you will have to choose a company name. It is good to plan this step carefully. You want to look as professional as you can, but you have to remember that your company will also have some space online. Also, you have to remember about registering a domain name. Check if it is not taken already by using the Irish Domain Registry.
There are a lot of opportunities for funding and investment options in Ireland. Check them out and find the one that is most suitable for you. For example, if you are a limited company you can receive up to 15,000 EUR and training in areas of business planning and marketing from New Frontiers development program.
Funding is a great option to boost your business at the very beginning, you should consider getting it.
1.5 Setting up a company in Ireland
The last point of our guide covers the setup topic. After you register your company everywhere it is required you can start working. From now on you can employ people (if you have chosen a limited company or partnership) and start making money. Of course, you will need some things to be done like finding a location for your office or the entire business etc. But it is definitely worth it, and some of these things should be done even before you go to register your company.
After all, you can enjoy your new company and a new chapter of your life.
In this article, we tried to portray the way to get started with a company in Ireland. We described all the most important steps you need to take if you want to set up a business in this country. To make it even easier you can consider buying a database of Irish companies, which will help you getting partnerships and customers. We hope that our article is useful for you, and your business. Thank you for reading and paying attention, see you next time.
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