What are the main types of company in Ireland?
In Ireland, there are 4 different types of company:
- Ltd or Private Limited Company
- Plc or Public Limited Company
- LLP or Limited Liability Partnership
- Unlimited Company
The Ltd is comparable to the Italian S.r.l. and is the most commonly used corporate form in Ireland, especially among small and medium-sized enterprises. The shareholders of a Private Limited Company may be either individuals or other companies, and the shareholdings are represented by shares. To set up an Ltd in Ireland, it is sufficient to appoint a director, who need not be resident in Ireland.
Larger businesses, on the other hand, tend to prefer setting up a Plc (Public Limited Company), which requires a minimum initial capital of €50,000. Comparable to the Italian S.p.A., the Plc requires only one director, who also need not be resident in Ireland. As for shareholders, here too they may be either individuals or other companies.
The LLP or Limited Liability Partnership is a limited liability partnership, whose participations are represented by shares and whose incorporation requires at least two partners. An LLP is set up by way of a private agreement, which is not published with the companies register.
Another distinctive feature of this corporate form is its pass-through taxation; specifically, income generated by the company is taxed directly in the hands of the partners and not on the company. The income of an LLP, if formed by two partners who are not tax resident in Ireland, will therefore be taxed in the partners' country of residence and not in Ireland.
The Unlimited Company, finally, is a type of company similar to the Italian general partnership, and is characterised by the fact that the partners are directly and unlimitedly liable for the company's obligations with their personal assets. Like the LLP, the Unlimited Company is subject to pass-through taxation.
How long does it take to set up a company in Ireland?
The timeframe is much faster than in Italy and other countries: on average, incorporating a company takes between 24 and 48 hours.
Is a minimum share capital required to set up a company in Ireland?
For Ltds or LLPs, a minimum capital of €1 is sufficient, while for Plcs the minimum capital is €50,000.
Is it necessary to travel to Ireland to set up the company?
No, it is not necessary. All the procedures for setting up a business in Ireland (VAT registration, opening a bank account, company incorporation) can be handled remotely by our firm. Another important point is that the presence of a notary is not required, either in Ireland or in Italy.
Does setting up a business in Ireland require local residence?
No, both the shareholders and the director may also reside in another country.
Is it possible to protect shareholders' identity?
Yes, this is possible by setting up a trust or by appointing a nominee shareholder. A trust involves the client permanently transferring their shares to a trustee, who will manage them in the interest of one or more beneficiaries. When the beneficiary coincides with the settlor of the trust, this is referred to as a self-declared trust.
When nominee registration is used instead, the client remains the legal owner of the shares, while the fiduciary will become the registered holder of the shares on the client's behalf. The mandate given to the fiduciary company can be revoked at any time.
Is it possible to appoint a nominee director?
Yes, where the director of a company wishes to protect their identity. The firm is able to provide directors resident in Ireland. The client may revoke the nominee director's mandate at any time and may also retain access to and management of the bank account.
Is it required to appoint a sole auditor or a board of statutory auditors?
No, Irish law does not provide for this. However, an audit is mandatory once certain thresholds are reached.
Documents and information required to open a company in Ireland
Shareholders and directors must provide:
- a copy of an identity document, or a certificate of good standing where the shareholder is another company;
- a certificate of residence or other proof of each person's residential address (bank statement, internet bill, phone bill, etc.).
For the preparation of the engagement letter, the following information will be required:
- personal details of the shareholders and directors (first name, surname, date, place of birth, residential address);
- initial capital;
- number of shares to be issued and their allocation among shareholders;
- company name;
- description of the type of activity to be carried out.
Is it possible to open a bank account outside Ireland?
Certainly, there are no restrictions in this regard. Depending on the client's needs, it is possible to open an account outside Ireland as well.
What is the annual return of an Irish company?
The annual return is an updated list of shareholders that directors must file every year with the Irish register. However, in the event of a share transfer, at the request of one of the shareholders, an updated annual return can be filed before the statutory filing deadline. The annual return must not be confused with the annual financial statements.
What are the consequences of failing to file the annual return and financial statements?
If the annual return is not filed, the company may be struck off the companies register. The strike-off can be reversed, but only after filing the outstanding documentation, through a so-called restoration procedure.
Is it possible to contribute real estate located in Italy to a company incorporated in Ireland?
Yes, this is possible through an increase in the company's capital. One advantage of this procedure is that, unlike in Italy, no sworn expert appraisal is required: the value of the property is instead determined by the director. The transfer of ownership must be registered by notarial deed in Italy.
Contributing real estate to an Irish company enjoys a significant tax advantage with regard to registration tax, which is paid as a fixed amount rather than in proportion to the value of the property, as happens in Italy.
Can a branch be opened in Italy?
Certainly. To do so, a resolution to open a branch must be prepared, which will be filed with a notary in Italy together with the company's articles of association and memorandum of association. The branch must have a duly registered representative recorded with the Italian companies register. The annual financial statements will follow Irish rules but must also be filed with the Italian companies register.
The firm is able to assist clients through all stages of opening a branch.
Can a company incorporated in Ireland operate exclusively in Italy?
Certainly, yes. In this case, the company will remain legally bound by Irish law, while it may become subject to Italian taxation from a tax perspective.
Social security contributions: must directors and shareholders of an Irish company pay them?
If not resident in Ireland, directors and shareholders are not required to pay any social security contributions in Italy.
How to sell shares of an Irish company?
To sell the shares, it is sufficient to sign a stock transfer form and file it with the Irish companies register, without the need for a notary.
Why is it advantageous to set up a company in Ireland?
- Much faster times for incorporation, dissolution and amendment compared to Italian law;
- there is no need to specify the corporate purpose in detail;
- the possibility of appointing nominee shareholders and directors;
- the possibility of contributing shares to a trust;
- the possibility of transferring a property from Italy without a sworn appraisal and with a fixed registration tax;
- access to the Irish market.
Is there a bilateral double taxation treaty?
Yes, there is a treaty between the Italian and Irish governments against double taxation, which entered into force on 30 December 1990 (Law No. 329 of 5 November 1990).
Is a company incorporated in Ireland always taxed under Irish law?
To determine where a company pays income tax, it is first necessary to establish where the company's tax residence is located. If a company with its registered office in Ireland, owned by Italian shareholders, has its effective management in Italy, it will be subject to Italian taxation and will have to pay IRES in Italy on income produced anywhere in the world.
If, on the other hand, the company is managed from Ireland, then it will be taxed under Irish law, while in Italy it will only have to pay tax on any income produced in Italy through a permanent establishment.
Where does a company incorporated in Ireland pay VAT?
If the company is tax resident in Italy, it will pay VAT like an Italian company. If, on the other hand, its tax residence is in Ireland, the company will pay VAT in Ireland.
Can the use of an Irish company be challenged by the Italian tax authorities?
If the company operates in full compliance with the law, there is no reason for the tax authorities to challenge the incorporation of a company in Ireland.
Is there an obligation to hire employees?
No, there is no such obligation. Hiring is at the company's discretion.
For further information about setting up a company in Ireland, please contact us at +39 02 36 63 86 10.
Opening a Branch in Ireland
Opening a branch of an Italian company in Ireland
Procedure for opening a branch of an Italian company in Ireland
An Italian company wishing to open a branch in Ireland must file, within thirty days of its establishment, Forms F12 or F13 with the Companies Registration Office, together with the following documentation of the parent company, duly translated into English and notarised:
- The company's certificate of good standing.
- A copy of the company's memorandum and articles of association.
- Details of the person in charge, including identity documents and proof of address.
Accounting requirements for a branch
Branches must file financial statements prepared in accordance with the law of the country of incorporation with the Irish companies register (together with the directors' and auditors' reports, where required) and Form F7.
Tax obligations
Branches of foreign companies in Ireland must register for VAT purposes, as well as with the Irish tax authority. Branches of foreign companies in Ireland constitute permanent establishments in Ireland, and are therefore subject to Irish income tax (Corporation Tax). The Irish tax rates are as follows:
- Standard rate on trading income: 12.5%
- Rate on non-trading income: 25%
- Rate on capital gains: 33%
Opening a Representative Office in Ireland
Opening a representative office of an Italian company in Ireland
A representative office of an Italian company in Ireland cannot carry out commercial activities or generate revenue in Ireland, but may only carry out study and market research activities in preparation for opening a branch in Ireland or an Irish company.
Procedure for opening a representative office in Ireland
An Italian company wishing to open a representative office in Ireland must file the following documents with the Irish Companies Registration Office within thirty days of its establishment:
- the company name and the location of the registered office;
- a list of directors;
- the address of the representative office;
- a copy of the memorandum and articles of association, certified by an Italian notary;
- the names and addresses of at least one representative of the representative office.
Accounting requirements
Representative offices must file annual financial statements, prepared in accordance with the law of the country of incorporation, with the competent Irish authorities.
Tax obligations
Since a representative office cannot carry out commercial activities, it does not, as a rule, constitute a permanent establishment, and is therefore not subject to any income tax in Irish territory.
Employment Law and Payroll Matters in Ireland
Employment relationships with employees must be governed by appropriate employment contracts, which set out the terms and conditions of the employment relationship, as well as the rights, obligations and responsibilities of the employee.
Payroll, in turn, entails various obligations for employers, including tax charges and social security contributions. Employers must register with the "Universal Social Charge" and apply tax withholdings through payroll.
Most employers and employees must make social security contributions to the National Social Insurance Fund. The amount of these contributions varies depending on the nature of the work. Paying social security contributions gives workers broad social protection where the relevant conditions are met.
Setting Up a Trust in Ireland
A trust is an act consisting of transferring a person's assets to another person, who is given the task of managing them in the interest of one or more beneficiaries. The beneficiary may coincide with the settlor of the trust (a self-declared trust), and a third party may also be appointed to supervise the trust's operations.
Trust: when is it set up?
A trust is set up in Ireland to achieve various purposes, such as, for example:
- generational transfer;
- privacy protection;
- asset segregation;
- charitable purposes;
- asset protection;
In the case of setting up a trust for asset protection purposes, before the trust is established it is necessary to verify that the assets are not encumbered by third-party rights or claims.
Italy does not have specific trust legislation; however, thanks to the "Convention on the Law Applicable to Trusts and on their Recognition", signed at The Hague on 1 July 1985, trusts established under Irish law are recognised (Law No. 364 of 16 October 1989).
The main types of trust in Ireland
Real estate trust
A real estate trust involves transferring one or more real estate assets to a trustee, who will have the power to manage those assets in full accordance with the settlor's wishes. This type of trust is very useful for protecting real estate assets from aggressive action by creditors, or for better managing the division of real estate in the event of inheritance.
Corporate trust
A corporate trust, as the name suggests, involves the settlor transferring company shares to a trust. This is a very effective tool for asset protection, since the shares can only be attacked by members of the trust, not by the settlor's creditors. A corporate trust can also be used in cases of generational business succession.
Guarantee trust
This type of trust involves transferring money, real estate and other assets to a trust in order to create a fully separate pool of assets. The management of these assets will, under guarantee, follow the purposes and objectives set by the beneficiary, and will be unassailable by creditors. A guarantee trust is valid not only for individuals but also for companies.
Family trust and trusts for disabled persons
A family trust involves transferring money, real estate and other assets to the trust where it is necessary to address situations such as family relationships, cohabitation arrangements, marital breakdowns, successions, etc. Trusts for disabled persons, on the other hand, are used to exercise judicial guardianship.
For more information, contact +39 02 36 63 86 10.
Registering a Trademark in Ireland
A trademark is a symbol created to distinguish one or more of a company's products from those of competing businesses and, at the same time, to identify their origin. For a trademark to be considered valid, it must at least meet the requirements of truthfulness, originality, novelty and lawfulness.
The trademark owner is also the person who holds full, exclusive authority over it; however, to avoid problems related to registration of the trademark by third parties, it is best to protect it. How? By ensuring the registration application is filed before the trademark is put on the market.
Stages of trademark registration in Ireland
There are 3 steps required to register a company's trademark in Ireland:
- verifying that all the legal requirements are met;
- filing the registration application;
- publication of the application.
Registration typically takes 4 to 6 months to obtain, but importantly, trademark protection begins on the date the application is filed.
The application can be made by both individuals and companies.
Types of registrable trademarks
There are 3 types of registrable trademarks in Ireland:
- certification marks;
- product marks;
- service marks.
For certification marks, the owner must have no ongoing commercial interest in relation to the products to which the trademark refers.
For more information about registering a trademark in Ireland, contact +39 02 36 63 86 10.
Accounting and Tax Matters in Ireland
Financial statements: requirements and obligations
All Irish limited companies must keep accounting records and file financial statements with the Irish companies register (Companies Registration Office). Within six months of incorporation, the list of shareholders (Annual Return) must be filed, and must then be updated every twelve months.
The requirements for preparing financial statements depend on the type and size of the company. The financial statements must be filed within nine months and fifty-six days (in the case of electronic filing) of the end of the financial year.
Corporate income tax: Corporation Tax
Irish companies must file a tax return (the so-called Corporation Tax Return) with the tax authority, calculated on profits and capital gains wherever accrued. Corporation tax currently has the following different rates:
- 12.5% on profits from trading income;
- 25% on profits from other income (e.g., income from rentals or investments);
- 33% on capital gains.
Value Added Tax - VAT
Companies must apply for a VAT number if their annual turnover exceeds certain set thresholds, below which VAT registration is optional. Depending on the type of activity, the thresholds are €37,500 or €75,000.
The standard VAT rate is 23%. Reduced rates of 13.5%, 9%, 4.8% and 5.4% apply to specific goods and services.
Personal taxation
Individuals resident in Ireland are subject to Irish tax on income produced anywhere in the world (worldwide income principle). Tax residence is determined based on a test that takes into account the number of days spent in Irish territory during a one-year period. Individuals are considered tax resident in Ireland if they spend at least 183 days a year there, or 280 days over the previous two years, with a minimum of 30 days in each year.
There are two different rates, a standard rate of 20% and a higher rate of 40%. The applicable income band is determined based on various factors, including marital status and family composition. Finally, various reliefs and tax benefits are available.