How to move a UK business to Ireland

We’ve watched with a keen interest the rise in UK companies eyeing the Republic of Ireland as an alluring destination for business operations. The prospect of capitalising on the unique bridge between the UK and the European Union represents a great business opportunity.

Here, we will delve into the legal and economic landscape, highlighting the steps, benefits, and practical scenarios involved in moving an existing business to Ireland.

Why Ireland?

The Republic of Ireland, a member of the European Union, has long been an appealing destination for UK companies looking to expand their operations. The benefits of moving to Ireland include access to the EU single market, favourable corporation tax rates, a strong economy, and a business-friendly environment.

Ireland’s membership in the European Union offers UK businesses a gateway to the EU single market, which comprises 27 member states and over 450 million consumers. Post-Brexit, many UK businesses have found this access to the single market and the EU free trade environment an irresistible lure.

Moreover, the Irish government actively encourages foreign direct investment (FDI). The country’s low corporation tax rates (just 12.5% for trading income) make it one of the most competitive in the world. In addition, the Irish economy is robust and diverse, with key sectors including pharmaceuticals, technology, financial services, and more, providing ample opportunities for UK companies across various industries.

In recent years more than 1,200 multinational companies have chosen Ireland as their platform for international expansion, employing almost 230,000 people in Ireland.

Legal Considerations

Moving a UK business to Ireland requires careful consideration of legal factors.

Firstly, you need to decide on the type of entity you wish to establish. Most commonly, UK businesses opt to form a private limited company, which is a separate legal entity from its owners.

Alternatively, you may choose to set up a branch office, which is not a separate legal entity and is legally dependent on the parent company.

The Companies Registration Office (CRO) oversees the process of company formation and registration in Ireland. Whether you are registering a new Irish company or a branch office, you’ll need to complete the necessary paperwork and meet specific requirements.

For instance, an Irish company registered here must have at least one director who is a resident of the European Economic Area (EEA). If this is not possible, the company can purchase a bond to the value of €25,000. Also, every Irish company must appoint a company secretary, who can either be an individual or a corporate body.

Check Your Contracts

  1. Geographical Limitations: Some contracts might contain clauses that restrict the services to a particular geographical location. If you relocate, these contracts may no longer be valid or applicable.
  2. Termination Clauses: If relocation necessitates the termination of some contracts, you need to understand the implications. There could be penalties for early termination, or notice periods that need to be adhered to.
  3. Change in Laws and Regulations: Different jurisdictions have different laws and regulations. When moving, especially internationally, the legal environment affecting your contracts will change. It is essential to understand how this impacts your contractual obligations and rights.
  4. Supply Chain Impact: Relocating your business could affect your supply chain. You need to assess how it impacts your contracts with suppliers and logistics partners.
  5. Cost Implications: The cost of services may vary based on location. Moving your business could impact the financial aspects of your contracts.
  6. Customer Agreements: If you have contracts with customers, your relocation might change the terms of delivery, service provision, or even pricing. You need to communicate and manage these changes effectively to maintain customer relationships.

Tax Implications

Ireland’s corporation tax rate is a significant draw for UK companies. However, it is essential to understand that tax liabilities can also arise in the UK, particularly if the UK company retains a presence there.

For instance, if the UK company is deemed a “controlled foreign company” (CFC) under UK law, the profits of the Irish subsidiary could be subject to tax in the UK. Therefore, it’s important to seek professional tax advice to understand the potential tax implications fully.

In addition, UK companies operating in Ireland must register for Value Added Tax (VAT) with the Revenue Commissioners if their annual turnover exceeds or is likely to exceed specific thresholds.

Understanding Tax Implications

Here are some key points to consider:

  1. Corporation Tax: Ireland has one of the lowest corporation tax rates in the EU at 12.5% for trading income and 25% for non-trading income. This can be a significant advantage for businesses looking to establish themselves in Ireland.
  2. Value Added Tax (VAT): The standard rate of VAT in Ireland is 23%. However, reduced rates and exemptions apply to certain goods and services. Businesses need to register for VAT if their turnover exceeds or is likely to exceed specific thresholds.
  3. Double Taxation Agreement: The UK and Ireland have a Double Taxation Agreement in place. This means that you won’t have to pay tax on the same income in both countries. It’s important to understand how this agreement works and how it affects your business.
  4. Pay As You Earn (PAYE): If you employ staff in Ireland, you’ll need to operate PAYE on their wages. This includes deducting income tax, universal charge and social insurance contributions from their pay.
  5. Professional Advice: Tax laws can be complex, and mistakes can be costly. It is advisable to seek professional advice to ensure you are fully compliant and taking advantage of any available tax benefits.

Employment and Immigration

Relocating a business may involve relocating people.

If you plan to move existing UK employees to Ireland, they may require a separate employment permit. The Irish government provides several types of employment permits, including the Critical Skills Employment Permit and the General Employment Permit.

The type of permit required depends on the nature of the job and the employee’s skills and qualifications.

On the other hand, if you plan to hire new staff in Ireland, you will need to comply with Irish employment law. This covers areas such as minimum wage, working hours, and holiday entitlements, which may differ from UK employment law.

Managing Business Operations Post-Move

Adapting to the local business culture is another important factor. While Ireland and the UK share many cultural similarities, there are also differences that could impact your business operations. For example, understanding local business etiquette, negotiation styles, and customer expectations can help you develop more effective strategies and foster stronger relationships in Ireland.

Financial management is another critical area. This involves not just managing your company’s finances, but also understanding and complying with Irish tax laws and regulations. It may be beneficial to engage a local accountant or tax advisor familiar with these laws to ensure compliance and optimise your tax position.

Don’t forget about ongoing legal compliance. Just as you needed to understand Irish law to move your business there, you will need to stay up-to-date with any changes to ensure your company remains compliant. This may involve anything from employment laws to data protection regulations.

Can I register my UK business in Ireland?

Yes, you can register your UK business in Ireland. You’ll need to follow the registration process with the Companies Registration Office (CRO) in Ireland. This includes choosing a company name, appointing directors and a secretary, and providing an Irish registered office address.

Can I move my UK limited company to a different country?

Yes, it is possible to move your UK Limited Company to another country. The process, known as ‘redomiciliation’, allows a company to transfer its registration to another jurisdiction while maintaining the same legal entity. However, not all countries allow redomiciliation. It’s advisable to consult with a legal expert to understand the specific requirements and implications.

Will Ireland pay you to start a business?

While Ireland won’t directly pay you to start a business, the country offers several incentives and grants aimed at encouraging entrepreneurship and business growth. These include the Enterprise Ireland Competitive Start Fund, Local Enterprise Office grants, and Research & Development tax credits. Eligibility criteria and application processes apply.

Is it better to set up a company in Ireland or the UK?

Both Ireland and the UK offer significant advantages for businesses, and the best choice depends on various factors, including your business sector, target market, and long-term goals. Ireland has a low corporation tax rate and strong ties with the EU, making it attractive for businesses seeking to operate within the European Single Market. The UK, on the other hand, provides a large domestic market and global influence. It is recommended to seek professional advice to make an informed decision based on your specific circumstances.

Article by: Milan Schuster