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Incorporation

Setting up a company in Ireland

When setting up a company you may want to consider these factors:

  1. Business factors

    • Low corporate tax rate;
    • IDA requirements in ensuring the establishment or development of the operation and that the company is both commercially viable and will provide new employment;
    • Intellectual Property Law – In Ireland there is no legislation protecting know-how, trade secrets and confidentiality. Furthermore, IP ownership has to be specifically established by contract. Data protection laws in Ireland, however, are stricter than in the U.S.
  2. The Legal Framework may be an influence. The Country, indeed, follows a common law jurisdiction, with a legal system that is broadly similar to the US and the UK systems and might differ from other systems of civil law present in Europe.

Your Options

There are three main types of businesses available to foreign companies in Ireland. Each of these business forms has distinct advantages and disadvantages, as well as differing scope of activities, registration requirements and minimum capital requirements. In most cases the type of company to set up, will depend on the degree of commitment a company has to Ireland and the planned business activity.

Ireland represents an ideal access point for for doing business into the European Union. Businesses with operations in Ireland benefit from barrier-free access to the EU’s 28 member countries and its four freedoms – free movement of goods, capital, services, and people.

Limited Liability Company

The shares in a company are owned by its shareholders. If the company is a limited liability company, the shareholders’ liability, should the company fail, is limited to the amount, if any, remaining unpaid on the shares held by them. A company is a separate legal entity and, therefore, is separate and distinct from those who run it. Only the company can be sued for its obligations and can sue to enforce its rights.

There are several types of limited company:

  • A Private Company Limited by Shares (LTD company)
  • A Designated Activity Company (DAC) – (limited by shares)
  • A Designated Activity Company Limited by Guarantee (DAC) – (limited by guarantee)
  •  A Company Limited by Guarantee (CLG) (limited by guarantee not having a share capital)
  • A Public Limited Company (PLC)

These are the steps required to establish a Private Limited Liability Company in Ireland:

The founder swears before a Commissioner for Oaths (CfO.

A company founder (director, secretary, or solicitor) attests on the statutory incorporation form that the company has complied with all the relevant provisions of the Irish Companies Acts. Furthermore, the founder must swear before a CfO or a practicing solicitor. Moreover, the founder must declare that the company will carry on an activity in the state when the company has been incorporated.

Documentation required with the Companies Registration Office (CRO).

A founder may register a company at the Companies Registration Office (CRO) in one of the following three ways:

  • The CORE registration system, in which the papers for incorporation are lodged in print and electronic form. Under this scheme, the memorandum and articles of association must be submitted in CRO preapproved format. After the documents are filed, the CORE incorporates the company within 5 working days.
  • A “Fe Phrainn” system, in which (as detailed in the first method) the incorporation documents are submitted to the CRO in a preapproved format. Under this method, however, documents are submitted in print form only, and the CRO incorporates the company within 10 working days.
  • An further system in which the incorporation documents are sent to the CRO in print form, but the memorandum and articles of association are not in a preapproved format. In this instance, the

CRO incorporates the company in 2–4 weeks.

To access the first two systems, the company founder must apply to the CRO for an access number and have the memorandum and articles of association approved in advance. Generally, only professional agencies adopt the expedited systems.

  • Necessary documents for limited companies:
  • Memorandum and articles of association.
  • List of directors, secretary, and subscribers.
  • Statement of nominal (authorized) and issued share capital and consideration paid.
  • Notice of registered office.
  • Statement of the main business activities and the address where they will be carried out, contained in a statutory notice sent to the CRO.

All forms can be downloaded from the CRO web page. For all the mentioned methods, a CRO Form A1 must be submitted with details of the company name, the first election of directors and secretary, and the subscribers to the memorandum and articles of association; the authorized and issued share capital; and the registered office and the details of the location in the state where the central administration and the main company activities are proposed to be undertaken. The memorandum and articles of association, signed by the subscriber shareholders, will also be submitted to the CRO.

From April 2006 professional incorporators do not have to reregister the preapproved memorandum and articles of association. When using the CORE system only those pages that are company specific of the pre-approved memorandum and articles of association need to be submitted with an application to incorporate a company.

As of September 2009 it is possible to reserve the proposed company name in advance of submitting the incorporation papers. The advantage of this is that it avoids the rejection of the proposed name by the Companies Registration Office either because it has already been taken or because it is inappropriate for some other reason. There is a fee charged of € 25 but this fee is then taken off the incorporation fee meaning that there is in effect no cost. A registration fee of € 100 is charged for each model memorandum and articles of association registered with the Office. However, the use of the model company incorporation documents, using the CRO disk system, will result in a reduced incorporation fee of € 50. The company registration fee for procedures other than the new ones is € 100.

Obtain a company seal

In addition to getting a company seal, the company has to keep the statutory registers for the directors and shareholders.

Register for corporation tax, social insurance (PAYE/PRSI), and VAT with the Revenue Commissioners

To register for corporation for VAT taxes and for social insurance (PAYE/PRSI) with the Revenue Commissioners, the company must file Form TR2. The Tax Identification Number is needed only when the company must pay year-end taxes. Upon entering form data into the Commissioners database, the company is immediately registered for PAYE/PRSI. However, VAT registration requires an additional 5 to 10 working days.

Processing time: Approx. 2-3 weeks.

Partnership

According to the CRO, a partnership is where a minimum of two persons conduct business with a view to making a profit. It must consist of at least two persons and there is normally a maximum of 20.

Certain financial partnerships may however have up to 50 members. It is not a separate legal entity – that is to say, a partnership has no legal personality, separate and distinct from the various partners which comprise the partnership. A partnership that adopts a name that does not consist of true names of the partners without any addition must register the name as a business name.

The Limited Partnership Act 1907 facilitates the creation of a partnership in which some members have limited liability for the debts of the firm. Their liability is limited to the extent of their contribution.

A limited partnership must consist of at least one general partner and one limited partner. The general partner(s) is/are liable for all the debts and obligations of the firm. The limited partners contribute a stated amount of capital and are not liable for the debts of the partnership beyond the amount contributed.

A limited partnership must be registered with the CRO and in accordance with the 1907 Act; otherwise the partnership is a general partnership.

To form a limited partnership, submit the following forms, together with the registration fee, to the CRO:

  • Form LP1 (Application for registration of a limited partnership)
    This form must be signed by both the general and limited partners.
  • Form LP3 (Statement of the capital contributed by the limited partners)
    Statement of the capital contributed by the limited partner(s). The form must also be signed by any one of the general partners.

Processing Time: Approx. 3 weeks.

For all the forms

Fees:

  • LP1 – €2.50
  • LP3 – N/A

Sole Trader

It is easier to set up as a sole trader but if your business fails you are liable for any debts that the business can incur. The main legal obligation is that the entrepreneur must register as a self-employed person with the Revenue Commissioners. In particular, it is necessary to advise the local Revenue office when a source of income (other than PAYE income) commences. It is possible to do this by completing Form TR1 – Tax Registration form for Sole Traders, Trusts and Partnerships. This form is for an Individual, Sole Traders, Partnerships, Trusts and Unincorporated Bodies requiring to register for Income Tax, Employers Paye/PRSI/USC, VAT and Relevant Contracts Tax.

When registering for self-assessment with Revenue you will automatically become registered for PRSI purposes with the Department of Social Protection.

The most effective way to deal with tax affairs is through Revenue On-Line Service (ROS) available at www.revenue.ie. By accessing ROS it is possible to familiarize with its many features and register to become a ROS customer thereby enabling you to file returns and make payments electronically. (See also section on Mandatory Requirement to file Tax Returns electronically).

Also if you wish to use a business name other than your own name you must register your business name with the Companies Registration Office.

Registration of a business name is obligatory if any individual or partnership (whether composed of individuals or bodies corporate or any combination of both) or any body corporate carries on business under a name other than their own true names. Its purpose is to make public the identities of those individual(s), partnerships or corporate bodies being the legal entity behind the business name.

Specifically, registration of a business name is required if:

  • an individual uses a business name which differs in any way from his/her true surname. It makes no difference whether the individuals first name or initials are added. So registration is required if, for example, Mr. John Murphy traded as Murphy Builders but not if he traded as Murphy or John Murphy);
  • a firm uses a business name which differs in any way from the true names of all partners who are individuals and the corporate names of all partners which are bodies corporate;
  • a company uses a business name which differs in any way from its full corporate name;
  • a person having a place of business in the State carries on the business of publishing a newspaper.

Forms to be completed

To register a business name, submit one of the following forms, along with the registration fee (€40 for paper filing/€20 for electronic filing), to the CRO within one month of adopting the business name:

  • Form RBN1: for an individual
  • Form RBN1A: for a partnership
  • Form RBN1B: for a body corporate

Processing Time: Approx. 4 weeks.

For all the forms

Fees: Forms RBN1; RBN1A; RBN1B: €40 paper /€20 electronic.

 

Societas Europaea (SE)

A Societas Europaea or SE is a European public limited liability company formed under EU Regulation (Council Regulation 2157/2001) and the European Communities (European Public Limited Liability Company) Regulations 2007. S.I.21/2007.
An SE can be formed by merger or as a holding or subsidiary SE or by conversion of a plc to SE. An SE must have members from different Member States unless an SE itself is setting up a subsidiary SE.

A Societas Europea as per the council regulation can be formed in 4 ways:

  • First of all there can be a merger and at least two of the companies must originate in different EU countries;
  • secondly a joint subsidiary can be formed and at least two of the companies must originate in different EU countries or they must have had a subsidiary or branch in another EU country for at least 2 years;
  • thirdly a holding company can be created and at least two of the companies must originate in different EU countries or they must have had a subsidiary or branch in another EU country for at least 2 years;
  • lastly, a public limited company formed under the national law can be converted and the company must have had a subsidiary in another EU country for at least 2 years.

Only the public limited companies belonging to the Member states can form a merger. The creation of a SE holding firm is allowed to private and public limited companies, which have their registered offices situated in any of the member states and branches or subsidiaries in any of the member states. A joint subsidiary can be formed under similar circumstances to legal entities, which are governed, by private or public law.

The minimum capital requirement is EUR 120,000.

The registration and completion of liquidation of an SE is published for information in the Official Journal of the European Union.

Fees:

  • Holding – € 100
  • Merger – € 100
  • Subsidiary – € 100
  • Conversion – € 100

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Ireland, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Ireland they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Ireland
  • the company needs help with tax, employment, immigration and payroll compliance in Ireland

The complexity of employment regulations in Ireland makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Ireland allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Ireland.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Ireland. Read more about outsourced employment through Shield GEO.

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