Ireland is a wonderful location for a business for one primary reason – a famously low corporate tax rate, which has attracted some of the biggest names in the world to the Emerald Isle.
There are plenty of other reasons for Irish eyes to smile when we consider the trading opportunities prevalent in the country, though, including a dedicated and talented local labour force and straightforward business practices.
Does Ireland welcome overseas businesses?
Ireland is a forward-thinking nation regarding business, welcoming investors and entrepreneurs from all over the world that can bring new ideas to the table. If you put together a business plan that impresses the Irish authorities, you are more than likely to be accepted into the country with open arms.
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What industries are most popular in Ireland?
Ireland has long been famous for its production of alcohol and agriculture, but these days the country is Europe’s answer to Silicon Valley.
Apple, Google, Facebook, eBay, and more tech giants all have a prominent base in Ireland, thanks in no small part to the generous corporate taxation rate.
In addition to ICT, pharmaceuticals, accountancy and auditing, business advisory services, and sustainable energy are all major industries in modern Ireland.
Is it easy to set up a business in Ireland?
The Irish authorities make it fairly straightforward to set up a new business in the country. Here are the steps you’ll need to take.
How to set up a business in Ireland
- Create a business plan
Especially if you intend to apply for funding
- Name your company
And choose your business structure
- Construct company by-laws
And register them with a company formation agent
- Locate a trading address in Ireland
You need to have a local Irish trading address
- Register your business
With the Companies Registration Office
- Acquire a company seal
From a legal representative
- Register with the Revenue Commissioners
To ensure tax and social security compliance
Opening a local business bank account is an optional final step but recommended – it will make your life much easier in the long term.
Can I run a business in Ireland while living overseas?
You can set up a company from overseas, but any business that trades in Ireland must have at least one director from an EEA or EU country. This means you may need to employ an Irish resident to represent you if you plan to live abroad.
Cultural considerations when running a business in Ireland
If you’re going to do business in Ireland, ensure you understand some of the business norms that you’ll encounter. These include:
- Irish business partners do not like to work with strangers. Rather than cold-calling or approaching a potential associate, arrange for a third party to introduce you.
- Once you have broken the ice with an Irish associate, informality will be established. You can use first names, and there is no need for a ceremonial exchange of business cards before a meeting, though punctuality is still valued.
- Not all negotiations take place in the boardroom in Ireland. Expect associates to invite you to the pub, a restaurant, or even their family home for dinner to talk business.
- Avoid bragging – that will not impress Irish associates. While education is valued in Ireland, potential partners will be more interested in what you can offer from a business standpoint in the here and now.
- Trust is vital in Ireland. If you agree to something verbally, do not backtrack later and say it does not count as it was in writing.
What business structures are supported in Ireland?
The most popular business structures for a new venture in Ireland are as follows.
| Type of Irish business entity | What is it? |
|---|---|
| Sole Trader | You will be welcome to remain wholly independent and decline to register as a business, but personal income tax will likely be higher than business taxes. |
| Partnership | Two or more sole traders can collaborate and share profits according to a contracted agreement, each paying income tax on their share of profits. |
| Private Company Limited by Shares (Ltd) | The most popular business structure in Ireland, this is a limited liability company that separates your business interests from your personal affairs. |
| Limited Liability Partnership | This structure sees two or more partners treated like a limited company, so they enjoy the separation of financial or legal issues from personal affairs, but continue to be taxed as sole traders. |
| Public Limited Company (PLC) | If your business is big enough, you can sell shares and float them on the stock market. A PLC requires a lot of administration and open reporting, so it is an inadvisable model for an SME |
Alternatively, you can open a branch of your overseas business in Ireland. You will be charged the standard business tax rate for doing so.
Taxation in Ireland
If you want to do business in Ireland, you must understand the taxation rules and regulations that will impact your bottom line.
What is the corporate tax rate in Ireland?
Ireland offers a very generous corporate tax rate of 12.5%, granting it a reputation as a tax haven for major international companies. As the lowest possible tax rate for a sole trader or partnership is 20%, it’s definitely worth opening a Private Company Limited by Shares if you plan to do business in Ireland.
What are the employee income tax brackets in Ireland?
All employees in Ireland must pay income tax, but the rate payable is comparatively complicated – it is not purely based on annual income but also on your marital status. Income tax contributions break down as follows.
| Annual salary | Income tax payable |
|---|---|
| Single or widowed person with no dependents, earning €36,799 or less | 20% |
| Single or widowed person with no dependents, earning €36,800 or more | 40% |
| Married couples with a single income of €45,799 or less | 20% |
| Married couples with a single income of €45,800 or more | 40% |
| Married couples with a dual income of €73,599 or less | 20% per income |
| Married couples with a dual income of €73,600 or more | 40% per income |
Income tax must be withheld from an employee’s salary at payroll, alongside a 4% contribution to Pay Related Social Insurance, and between 0.5 and 11.5% in contributions to the Universal Social Charge.
How are taxes paid in Ireland?
The tax year in Ireland runs from the 1st of January to the 31st of December. Filing of reports and payment of any taxes due must be completed and submitted to the Revenue Commissioners by the 31st of March of the following year, so payments for the 2022 tax year are due on 31/03/23.
Payroll and hiring Employees in Ireland
Hiring the right talent can make or break a company. Ensure your Irish business interests are staffed by the best possible talent.
Does Ireland welcome overseas talent?
Ireland is currently experiencing a shortage of skilled workers, especially in the tech sector, as graduates and young employees seek opportunities elsewhere in Europe that offer lower income taxes. Ireland is actively looking for talent to fill the nation’s skills gap.
Who needs a visa or work permit to work in Ireland?
Unless you hold a passport issued by Ireland, Switzerland, or another EU or EEA nation, you will need a visa or work permit to trade in Ireland. If you have Irish ancestry, you may be able to apply for an Irish passport, but be aware that there is a long waiting list for approval and processing as countless English, Scottish, and Welsh employees attempt to circumnavigate the restrictions posed by Brexit!
If you wish to set up a business in Ireland, and have access to €50,000 to invest in the venture, consider enrolling in the Start-Up Entrepreneur Programme (STEP) for Ireland. If your application is accepted – there are caveats based on the feasibility of your business plan – you and your family will be granted residency in Ireland for two years.
What employee benefits are compulsory in Ireland?
All employees of an Irish business are entitled to the following mandatory benefits.
- Minimum of 20 days annual leave per year
- Minimum of 3 days of sick pay per year
- Contributions of up to 11.05% to Pay Related Social Insurance
- 156 days of paid maternity leave, with the option to take an additional 80 days unpaid
- 10 days of paternity leave, paid at a rate of €250 a week by the Department of Employment and Social Protection
Employers are not required to operate a private pension policy in Ireland, though many choose to do so if this is financially possible.
Employment law considerations in Ireland
The minimum wage in Ireland is €10.50 per hour for any employee over the age 20. The Employment Act 2018 bans zero-hour contracts in Ireland, so your business will not be able to trade in the so-called “gig economy.”
This act also bans any act of discrimination in the workplace. This must be kept in mind, as wrongful dismissal cases are common in Ireland. If you wish to part company with an underperforming employee, ensure you have a watertight case and cannot be accused of discrimination based on age, sex, religion, sexual orientation, or any other protected characteristic.
Longer probation periods are quite common because it can be challenging to terminate employment in Ireland. Under Irish law, an employee can be placed on probation for up to one year.
Cultural considerations when hiring employees in Ireland
If you wish to run a business in Ireland that relies upon the local labour force, ensure you understand some of the nuances you will encounter. These include:
- Irish employees flourish best in an informal workplace. Do not be a stickler for timekeeping or dress codes – your employees will work hard, regardless of what they wear or if they need more flexibility in hours.
- Employees in Ireland have the “right to disconnect” inscribed by law, meaning they are not obligated to respond to emails, phone calls, or text messages sent outside of working hours.
- Work/life balance is a big deal in Ireland, so be prepared to show flexibility with your employees – do not assume they will be happy to devote their lives to work and stay late every night.
- While the Irish are famed for their sense of humour, authority is still respected in the workplace. Your employees may tease and laugh with each other, but understand that you may not always be invited to be part of the joke.
FAQs about setting up a business in Ireland
Still have questions or are seeking a swift answer to a basic query? Here are some of the most frequently asked questions about establishing a business in Ireland.
There is a refreshing lack of red tape and needless bureaucracy when setting up a business in Ireland. You should be ready to trade within a week or two.
Ireland’s most popular business structure is the Private Company Limited by Shares, a limited liability company that separates your business affairs from your financial and legal status. You could operate as a sole trader or partnership, but this will involve paying personal income tax, which may be higher than business taxes.
There is no legal requirement to offer a private pension to employees in Ireland, though many bigger companies choose to do so to attract talent.
Section 486C tax relief enables an SME that turns profits lower than €400,000 annually for the first five years of trading. Partial relief is available for businesses that post gains between €400,000 and €600,000.
Pay Related Social Insurance is a contribution to the Irish national social security fund. Employers and employees are obligated to make monthly contributions to PRSI, the sum of which varies according to salary.
Employers pay 11.05% of a full-time employee’s salary into PRSI each month, while employees contribute 4% that is withheld from wages at the payroll issue. Employees must also contribute between 0.5% and 11.5% to the Universal Social Charge.
A probationary period in Ireland could be anywhere from 3 to 11 months. No employee can be placed on probation for longer than a year. Irish employees who have passed probation are extremely well protected from dismissal, so employers sometimes extend probationary periods as long as possible.
If you do not offer additional perks, such as a private pension, an employee can be hired at the cost of just 1.1 times an annual salary in Ireland.
No minimum share capital is required to open a Private Company Limited by Shares in Ireland. However, if you wish to enrol on the Start-Up Entrepreneur Programme (STEP) to gain residence, you’ll need to prove access to €50,000 (around £43,500) in funding.
This is not mandated by law, but your business practices will likely be simplified by having a local bank account.
Most Irish employees expect to work a traditional 40 hour week, typically between Monday and Friday.
Private pensions and insurance schemes, especially private healthcare and dental plans, are popular supplementary benefits among the larger employers in Ireland to attract top talent.
Absolutely not. Ireland does not recognise “at will” termination, and filings for wrongful dismissal are the most common court cases in the country. Hire carefully and only terminate with a compelling reason.
Irish law dictates that employees are entitled to a minimum of 4 weeks of holiday per year, which is 20 days if your employees work a 5-day week.
Yes. If your existing business already enjoys brand recognition that you would like to expand, you can open a branch and pay the standard corporate tax rate on all profits made in Ireland.
You can run your payroll from within your Irish business through a dedicated department, pay employees from overseas if you are not based in the country, or team up with a third-party company to manage payroll and taxes. If you are not living in Ireland, the latter is advisable.
Most employees in Ireland will earn the right to work by qualifying for a General Employment Permit or Critical Skills Employment Permit. Anybody looking to live in Ireland to open a business should enrol in the Start-Up Entrepreneur Programme (STEP). This comes with a residence permit valid for two years, so no work permit will be required.