Synopsis

The Republic of Ireland is a full member of the European Community. It lies to the west of Great Britain from where it became independent in 1922. Ireland is an English speaking country although Irish is also an official language. It has a population of some 3.5 million of whom over 1.2 million reside in the capital, Dublin. It has a democratically elected parliamentary government.

The Republic of Ireland is a common law jurisdiction with its law being derived from the British system. It has excellent modern telecommunications systems. There are extensive flight connections to the United Kingdom, Europe and North America. The currency is the Euro.

IRISH COMPANIES

Previously Irish companies beneficially owned by non-Irish residents, not undertaking business in Ireland and which were managed and controlled from outside Ireland, were granted non-resident status. However with effect from October 1999, all Irish companies are liable to Irish corporation tax, regardless of where they are controlled or their owners reside. Irish companies are therefore no longer tax-free entities and have to pay Irish corporation tax on their worldwide profits, register with the Internal Revenue Commissioners and file tax returns each year.

IMPORTANT NOTES

An amendment to the Corporation Tax Act 1976 made by Section 58 of the Finance Act 1995 introduced a requirement on all Irish companies which commenced trading on or after 6th April 1995 or which are served notice by a Tax Inspector to report various matters to the Irish Revenue Commissioners including the name and address of any individuals who have "control" of the company.

These requirements may have serious tax complications for both the beneficial owners of the company and/or the company itself but we believe that careful planning can ensure that no adverse tax consequences arise.

1. Ireland has an extensive network of tax treaties and many of these provide for the exchange of information. Details of the directors and of the registered shareholders already appear at the Companies Registry but will now also be registered with the Revenue Commissioners. This increases the likelihood of those details being passed to your home tax authorities. Even if no tax treaty is in place the Irish authorities tend to be compliant in meeting requests for information from overseas tax authorities. This makes it even more important to ensure that the management of an Irish company is based somewhere fiscally neutral and is an additional reason for using our professional director services.
2. Most countries have Controlled Foreign Corporation legislation and other anti-avoidance provisions which may allow them to tax the profits of the company as though those profits had been distributed to the shareholders whether they had been so distributed or not. Thus, using a similar example, if it is revealed that the Irish company has UK resident shareholders then the UK Revenue may seek to tax the shareholders as though they had received the profits of the company even if this was not the case. In our opinion, the use of nominee shareholders would not remove the obligation to reveal the beneficial ownership as the nominee agreements make it clear that the real control of the shares rests with the beneficial owner and not with the registered nominee shareholder. To avoid this possibility we recommend that the shares are held by a discretionary trust so that the detail required to be revealed to the Irish Revenue authorities is the name and address of our licensed Trust Company rather than your own details. Please see trust section below.

Whether you decide to adopt the above suggestions and ask us to provided third party directors and/or set up a trust to hold the shares in the company, the reporting to the Irish tax authorities must be undertaken. We would suggest that you retain our services to act as "fiscal agent" for your company which would cover our fees in attending to the necessary reporting on behalf of you company. Additionally, as can be seen from the above, Irish companies must prepare audited accounts giving details of all transactions undertaken during the accounting year. These accounts must be filed promptly if penalties are not to be visited on the company. As the "Fiscal Agent" for your company we will also assist in completing and filing the necessary returns, assisting with the preparation of the accounts introducing the company to a suitable auditor as well as liaising with the company auditors and the tax department to ensure that the obligations of the company are met in full and in a timely fashion. If we are providing directors, we will insist on providing fiscal agent and our fees are reflected above. If you require this service please tick the appropriate box within section 8 of the application form.

An Irish company has the following characteristics:-

 

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Last reviewed: Saturday, July 01, 2006

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.