Category Archives: Uncategorized

Why Asia’s investors see Ireland as a key partner in Europe

When disorder and a police crackdown of demonstrators spiralled out of control in Hong Kong earlier this year, property tycoon Ivan Ko dreamt up a solution that would help the beleaguered territory – he’d build a city for Hong Kong Chinese emigrants in Ireland.

Ko, founder of the Victoria Harbour Group (VHG) – which is an international charter city investment company –planned to look for a site between Dublin and Belfast to build the new city.

The huge urban centre would involve schools, government buildings and medical centres all within easy reach of Dublin airport. Ko told reporters that Ireland was his first choice with its strong manufacturing base and biomedical and tech firms that had set up recently,

Ko later assured Beijing the plan was not exclusive to the Hong Kong Chinese – clearly worried about Beijing’s reaction once he returned to Chinese territory. Nevertheless, Ko, like so many other Chinese and East Asian businesspeople, views Ireland as an ideal base for future European and global operations.

Chinese attraction

Despite the ongoing spat between the US and China (and with President-elect Biden in office this could change significantly), Ireland continues to attract waves of Chinese investment.

Foreign direct investment (FDI) by China increased to €128 million in the first half of 2019, a 75% rise compared with the first half of 2018, according to a report published by Baker McKenzie. Given that Chinese worldwide investment dropped by 60% in the first half of the year, the attraction of Ireland looks even more impressive and the countries one of the few in the EU to record a trade surplus with China.

Bilateral trade in goods and services between Ireland and China totalled€17billion last year, according to Ireland’s Department of Foreign Affairs. This figure has more than doubled in the past five years. Furthermore, Brexit is proving a success in luring Chinese and Asian businesses that need an EU base with an English-speaking country. This is particularly true with financial institutions.

But it’s not just Chinese firms that have been attracted to the Emerald Isle. Ireland has geared itself up through its state agencies and private sector bodies to create ideal business and trading conditions that are now building crucial links across Asia. Indeed, FDI from Asian countries has become a cornerstone in Ireland’s economic growth plans. For Asian firms, Ireland’s emphasis on an open and highly competitive business environment is proving a huge attraction and companies as far apart as Japan, South Korea and Singapore, as well as China, are increasingly turning up to find out what’s happening on the ground. Meanwhile, Ireland is increasing the number of its trade delegations to Asia’s capitals to show potential investors opportunities in Ireland.

While there are multiple factors that attract FDI to Ireland, the country’s Corporation Tax Rate of 12.5% is considered as one of the most significant. Ireland’s corporation tax is one of the lowest “onshore” Statutory Corporate Tax rates in the world.

Ireland also ranks first in the EU and sixth in the world for ease of paying taxes. This takes into consideration the number of hours companies spend a year dealing with tax administration along with the average number of tax payments made by companies each year.

In Ireland companies spend an average of 80 hours per annum complying with tax administration, which is a very positive result compared to Germany at 218 hours, Italy at 269 hours and the average number of hours coming in at 176 hours.

Ireland also has other favourable tax breaks, including just 6.25% for revenue from intellectual property. Further tax measures include a 25% tax credit against research and development costs and it has double taxation agreements with more than 60 countries, including every one of its major trading partners.

Together with such a favourable business culture is a mobile, talented, educated workforce that is highly sought after by multinational corporations.

Ireland has been particularly successful in attracting financial services companies and an astonishing 80%of the global top 25 financial services companies now have their operations in the Republic. In March 2017, Ireland was formally approved as one of the 13 new members to join the Asian Infrastructure Investment Bank (AIIB), an institution set up by the Chinese government to fund a range of infrastructure projects in Asia. Ireland’s membership will further strengthen the relationship between the countries in Asia. Moreover, it has a long, successful record of expertise and depth in the financial services sector, which have attracted financial companies from across Asia. Indeed, many of these businesses are some of the biggest financial services corporations in Asia including China Construction Bank, Mitsubishi UFJ, Bank of China, SMBC, and Ping An.

Elsewhere, Japan and Ireland celebrated 60 years of diplomatic relations between the two countries in 2017.This coincided with EU and Japan finalising an Economic Partnership Agreement that represents the largest trade agreement ever negotiated by the EU and came hot on the heels of the EU-South Korea Free Trade Agreement, which was formally ratified in 2015. This was the first signed between the EU and an Asian country. With the EU having commenced discussions with both China and India on investment/trade agreements, trade between Asia and Europe is set to continue to grow and Ireland is ideally placed to become a hub for investment and centre of operations for ambitious Asian firms big and small.

Examples of this increase in activity include the recent purchase of Ireland’s largest building, the Tesco distribution centre in Donabate, Co Dublin, by a South Korean investor for about €160 million late last year. The acquisition of the 73,200sqm warehouse by KTB Investments & Securities and KTB Asset Management represents the largest single-asset logistics transaction to have taken place in the Irish market.

Meanwhile, Singaporean private investors, real estate developers, asset managers and private equity firms have been looking closely at the Irish property market. This follows last year’s acquisition by Singapore’s Oxley Holdings Ltd of the North Wall Quay site in Dublin’s docklands. The€111 million commercial development was dubbed Project Wave by the National Asset Management Agency.

A team of developers from Oxley Holdings Ltd who were present at the launch of the project made it clear to everyone attending there was a big appetite in Singapore for medium- to longer-term returns on property in Ireland. And regardless of the effects of the Covid-19 pandemic, this will not have changed.

There’s no doubt that in a post-Brexit world, Ireland will have increased relevance for Asian companies seeking easy access to the EU market with its 500 million consumers. Ireland will be attractive as a European gateway for its ease of doing business, political stability, being the only native English-speaking country in the EU, talent pool and its corporate tax regime. With visits by senior heads of state and business leaders from China, India, Japan and South Korea, Ireland is becoming recognised as a business friendly country with none of the negative historic legacies often attached to other European countries.

Recent Chinese investments in Ireland

2019

  • November: WuXi Vaccines announces additional $240 million (€216 million) investment with plans to build a vaccine production facility in Dundalk, leading to the creation of 200 new jobs.
  • November 18: Shanghai Newbaze Industrial Group opens a new dairy formula plant in Carrickmacross, Co Monaghan, a euro20 million investment leading to the creation of 60 jobs.
  • November 14: Bank of China confirms takeover of Goodbody Stockbrokers in a deal valued at an initial euro150 million.
  • October 25; Huawei announces 100 new jobs in Ireland.
  • August 27: Huawei unveils plans to invest euro70 million in R&D in Ireland over the next three years.
  • April 2: Emeri Nutrition opens a $60 million (euro54 million) infant formula facility in Co Meath.

2018

  • December: China Reinsurance’ acquires the Irish unit of Chaucer Insurance in a $40 million (€36 million) deal.
  • May: FLI Group secures €10 million investment from China MinshengJiaye Investment Corporation.
  • March: State-run Ireland Strategic Investment Fund (ISIF) joins forces with CIC Capital Corporation for a €150 million technology investment fund.

2016

  • December: Gaelectric sells 14 Irish wind farms worth an estimated €400 million to China General Nuclear Power’s European energy arm.
  • January: HNA acquires Dublin-based aircraft lessor Avolon in $2.5 billion (€2.25 billion) deal.

2013

  • August: Chinese hotelier family the Kangs acquire Fota Island resort from Nama for €20 million.

Starting a company in Ireland

Setting up a Limited Company in Ireland has several legal prerequisites. This article outlines what you need to do in order to avoid making common errors.

This is a busy and certainly interesting point in your life, and you want to do it right. This article will help you start a company in Ireland.

The process to start a business in Ireland isn’t a painful one if you do things correctly and on time. You do want to tackle it right from the start. This is going to be your company and it’s vital you take it seriously.

Let’s look at all the things you should know.

The definition of a Limited Company

You will find a Limited Company also being referred to as a ‘Private Company’ which is ‘Limited by Shares”. This structure is the one found in Ireland most often.

The Limited Company (LTD) is limited in terms of their shares capital and liability. Smaller Limited Companies are exempt from auditing. This means you will not have to submit any financial statements for audit.

What is required for company formation in Ireland?

There are some essentials you need to ensure you have everything in place to set up your Limited Company.

Here are the things you need to set up:

  • Company director
  • Company secretary
  • Shareholders
  • Share (ownership) framework
  • Business address and registered office
  • Company name and documents for company registration
  • Company seal
  • Business bank account
  • Tax registration

Now, let’s expand each step of the process, in order:

1. Name your company director 

You must appoint at a minimum of one company director. This individual manages the Limited Company on account of all the shareholders. For smaller companies, their Directors may also be their shareholders.

An Irish company must have at least one Director who is an official EEA country resident. If every Director is external of the EEA you must buy a non-EEA residents bond before any other action.

Say you have one Irish-resident Director and another EEA-resident Director. Here, you would not need to purchase this bond.

If your two Directors, for example, were based in the USA, you would be required to purchase the bond before being allowed to set up your Irish Limited Company.

A point to remember here is that your shareholders’ residency does not have an influence.

2. Appoint your Company Secretary

If your Limited Company has a sole Director you must appoint a separate Company Secretary. 

If your company has two or more Directors, one of them can be appointed as Company Secretary.

Your company may outsource this role to a third party corporate body.

The major responsibility of the Company Secretary will be to submit the Annual Returns. Working closely with a company accountant, this person oversees the timely filing of financial statements. Fines of a maximum of €1,200 could be incurred for filing this after the deadline. Following financial statements would then be mandatorily audited for two years. To ensure you’re not penalised like this, you can employ a third party to file these Annual Returns on time.

3. Appoint a minimum of one shareholder

Your shareholders effectively own your company. In a startup the Director or the Company Secretary are usually shareholders.

4. Decide the number of shares you’re going to release

A share is a portion of your company that you give out. The shares you give away determines the percentage of ownership you or your shareholders has of your company.

You then issue those shares upon the set up of your company. For an Irish Limited Company there are 2 types: 

“Authorised shares” are an ambitious number of shares you may issue either now or later.  This type of share has zero monetary value nor do they impact your company’s value.

“Issued shares” are the amount of shares allocated and bought by shareholders. Say, for example, you issued one hundred shares to a single shareholder. That shareholder would own 100% of your company. Be mindful of how many shares you issue as this directly determines the owner of the company.

It is standard to authorise 100,000 shares and issue 100 at the value of €1. If you’re unsure of the appropriate structure to use for your shares, you can seek expert advice.

5. Set up both a Registered Office and Business Address

These two addresses are a requirement to register your Irish Company with the CRO

Your registered office address acts as the legal company address. It has to be a real, physical Irish address and regularly monitored. Typically, the company accountant will be based here as notices are sent to this location.

Your business address is your trading location. If you’re an online entity or you work remotely it is advisable to look at setting up a Business Correspondence Address, which correspondence can be forwarded to.

6. Name your company

In 2019, 67 new companies were registered in Ireland every day.

When setting up a company, a name is likely one of the first things you want to do. 

Practically, the company name has to be unique. You must be able to distinguish your company from companies already CRO-registered. The Registrar conducts a name check; if your suggested name isn’t good enough, your submission will be returned to you. This is not an unusual reason for submissions to be returned. You can employ a third party company to ensure you make a strong choice.

If you’re not feeling creative, there are tips you can find online to land on a company name. The company name has to meet certain guidelines. You’re able to check if that company name is already in use via the CRO Search Facility and/or Trademark Register.

You may also want to utilise the efficiency of a company registration expert.

7. Collate and sign your incorporation documentation

Following your company registration, you will be at the point where you have gathered all of the above you need to incorporate your Limited Company. You have two options for how to do this:

You can do this online through CORE (Companies Online Registration Environment).

You may also employ a company who specialise in this kind of formation. Often, using a third party to do this for you removes the stress and guarantees the documents are filed correctly.

8. Order a company seal for your company

Following the incorporation of your company and approval of your name you next need to buy a company seal. This must contain the company name, which should be engraved. You will need this to seal specific documentation, such as share transfers and paperwork relating to company and contract as well as property law.

You’re able to buy a company seal at the same time as registering your Limited Company so both are ready at the same time.

9. Open a business account with an Irish bank

When your company has been set up it’s best to then separate your business from your personal income. Opening an Irish bank account typically requires a meeting. You’ll need to bring your company documentation with you. This includes your company incorporation certificate, constitution and A1 form. These documents can be collated for you if you employ a third party.

10. Registering for taxes

A Limited Company must be in a position to pay Corporation Tax before invoicing any clients. Here we will cover what taxes a new company should be aware of registering for:

Corporation tax

Every company in Ireland pays Corporation Tax, regardless of size. You must prove your company is registered, trades actively and is centrally managed within Ireland to qualify for the 12.5% rate.

If you do not qualify for the 12.5% rate, you must still register to pay tax. You’ll then be required to pay 25% Corporation Tax.

Your accountant or you must file all of your payments and also returns via the ROS (Revenue Online Service). The accountant will require a login for the ROS account.

Value added tax

Over the course of 12 months, if your business makes a turnover of more than €75,000 from sales you must register for Value Added Tax (VAT). You should register for this as soon as you feel you will exceed the given threshold.

Registering for VAT can be done online. You can hire someone to do this on your behalf. Once completed, you will be given a VAT number which means you can then reclaim VAT from business expenses.

Relevant contracts tax (RCT)

As a principal contractor, you will be required to pay RCT. This applies when you hire a subcontractor for completing tasks and representing your company. This only applies to the meat processing, construction and forestry industries.

Employers PAYE

If you’re going to hire staff, you must register your company for employer status. You must also create a payroll. You’ll be responsible for the deduction of PAYE tax as well as PRSI and USC from your staff’s wages either before or on the day of their payments. 

This particular task can be very time-consuming. It’s wise to outsource this particular task to a professional body who can complete it for you.

11. Ensure you file your Annual Returns

After your company incorporation, you are required to file an Annual Return with the CRO. You must do this even in the case where you haven’t traded yet. Every company must comply with their Annual Return Date (ARD), which is allocated to them. You can check when this date is using the CRO’s Company Search feature.

Your B1 form, which is your Annual Return, should be submitted 6 months following your company incorporation. It’s key to remember you have a period of 28 days following this ARD to submit your Annual Return. The first of which will include information about your business.

This is something you can employ a third party Company Secretarial expert to do on your behalf to ensure the job is done correctly and on time.

Your next Annual Return will be due precisely 12 months following your first Annual Return. At this point, the accountant will be required to create a balance sheet as well as a profit and loss record and director’s report. An auditor’s report might be needed on an annual basis too. Financial statements and annual returns from here will always be filed on the same date each year.

12. Don’t miss your deadlines

If you miss your initial B1 form submission deadline, your company incur a fine of €100 then subsequent €3 every day until this is filed. Failing to submit your following B1 forms will result in the fine again, with the additional requirement of your accounts being audited for a period of two years.

Revenue Publishes List of Tax Defaulters every year

Your deadlines are very important. You would benefit from an expert managing this for you. Annual Return is a necessary process with consequences for missing your allocated submission dates. You can rest assured knowing a third party expert body will not fail to do this on your behalf.

In 2019, Google had to pay $549 million fine for tax evasion.

13. Submit your form 11 (Director’s income tax return) by October 31

Your company Director must complete a self-assessment income tax return annually. This is the same process as when a Sole Trader completes the same self-assessment. A director who owns less than 15% of the company’s shares, known as a non-proprietary director, must file a form 12.

Should you hire an agency to do your filing for you, this is something they can do on your behalf.

Now you’re ready to start your Limited Company in Ireland

Once you’ve gotten to this point, you’ve completed your company formation. Starting a company does not need to be painful. If you employ support and use the best resources available, your startup will be a success.. Good luck!