Setting up business in Ireland: A guide for British SMEs
In the wake of Brexit, many UK business owners are asking themselves “Should I consider moving my business to Ireland and, if so, how would I go about it?”
Whether you’re a startup or an established financial company, there are many potential benefits that come with continuing to be governed under EU law.
This guide – the second in our series on Brexit – seeks to enhance your understanding of the current commercial climate and provide actionable advice on relocating your business.
How many UK businesses plan to move to Ireland?
Approximately one fifth (21%) of UK startups are now considering opening a branch in a different EU country, while 1% intend to relocate their headquarters.
With around 650,000 new startups incorporated during 2016 alone, this percentage represents hundreds of thousands of individual businesses.
In terms of established companies, those in the financial sector appear most likely to move to Ireland. Original estimates predicted the UK would see 100,000 staff from this industry move abroad.
The Irish Government claims to have already cemented agreements with over a dozen UK-based financial institutions looking to move abroad (The Guardian). Barclays is rumoured to be among the biggest (Reuters).
Why relocate your business to Ireland?
The key factor in this changing landscape is, of course, the UK’s decision to leave the EU.
In the fallout from this decision, UK businesses have identified a host of factors that make relocating to Ireland an attractive prospect:
New research has highlighted the primary push factors for UK startups:
- Employee eligibility: 32% cite concerns over long-term opportunities for non-UK employees
- Venture capital: 21% predict venture capital funding will be harder to attract
- Business costs: 21% believe business costs will rise
- Recruitment capacity: 12% think it will be harder to attract talented EU employees
- Trade restrictions: 7% worry that selling to the EU will get harder
Businesses in the financial sector face additional challenges.
Regulators have demanded all financial services businesses be “day one ready” before April 2019.
The Bank of England also demanded submission of a comprehensive Brexit plan (to include all potential outcomes) from those in the financial services by 14 July.
Aside from helping businesses overcome the hurdles described, Ireland boasts a host of pull factors that make it an attractive proposition for UK startups:
Ireland has many cultural similarities with the UK, especially in terms of:
- Regulatory framework
- Language (Ireland will be the only English-speaking EU member post-Brexit)
The Corporation Tax rate in Ireland is 12.5%, compared to 19% in the UK. Ireland has also signed over 70 treaties designed to help businesses avoid double taxation.
Businesses based in Ireland will remain part of the common market, enabling tariff-free trade.
They will also continue to be covered by passporting rights. This function allows trade within the European Economic Area (EEA) without the need for authorisation from each individual country.
The country is in the global top 10 for the availability of skilled labour, with 41% of the population (aged 25-64) having completed a bachelor’s degree (approximately 80% of these in the financial sector).
The workforce is the youngest in Europe, while Ireland also claims the top-spot for availability of senior management talent. In addition, Irish businesses have access to an EU workforce of around 250 million people.
Moving your business to Ireland – What you need to know
Let’s look at the key factors to consider and types of business support that may be available to you.
What will I need to do before moving my business to Ireland?
First, you’ll need to choose whether to establish a subsidiary company in Ireland, or dissolve your UK business and incorporate a new business under the same name.
- New headquarters: Establishing a new company means you’ll be fully governed under Irish and EU law. This should make the company easier to run and you’ll gain access to additional governmental support. However, it may make it harder to trade with the UK post-Brexit.
- Subsidiary company: This is a separate legal entity that can be controlled by the parent company and enables access to EU trading rights, grants and subsidies. A subsidiary mitigates risk. However, the parent company will still be financially liable for debts, while having limited control over cash flow.
With the latter, you’ll still need to set up actual working premises in Ireland and appoint a company secretary. This can be an Irish resident or corporate body.
Once you’ve made a decision, you’ll need to register the new company or subsidiary with Companies Registration Office (CRO).
Business support available for new business in Ireland?
If you decide to re-register your business and set up new headquarters, you could be eligible to receive business support from Enterprise Ireland.
The €10m fund has been ring fenced to attract startups and entrepreneurs from overseas. This initiative will provide advice and/or mentoring, networking opportunities, and potentially even capital.
You can receive advice on everything from strategic business locations, to searching for a new home. The latter also includes short-term accommodation services.
Your startup may also be eligible for tax credits and/or relief for business investors. The Research and Development (R&D) Tax Credit Scheme enables you to credit certain outgoings against your R&D spend. Irish citizens who invest in your company may be eligible for tax relief under the Employment Investment and Incentive Scheme (EII).
To qualify for Enterprise Ireland Support, you must be:
- Introducing a new/innovative product to international markets
- Involved in internationally-traded services (e.g. manufacturing or technology)
- Able to create 10 jobs and reach €1 million in sales within four years of establishment
- Headquartered in Ireland (usually with one or more company founders)
- Led by experienced managers with Irish trading/citizenship entitlements (or, a start-up entrepreneur visa)
If you are planning to open a subsidiary branch, you may be eligible for assistance from the Industrial Development Agency (IDA).
Expert accountancy partner
Relocating your business to Ireland will be a major shift, but the potential benefits are clear.
During such a critical time, your business needs a level of financial support that will give you confidence in every decision you make. Partnering with the best financial partner can really help smooth the way.
At Greavy & Co (visit: greavyandco.ie), our accountants have extensive experience of partnering with growth-orientated startups to provide the expertise and administrative capacity needed to achieve success.
Get the expert financial guidance you need to ensure your business makes the most of Brexit. Contact us today;
Greavy & Co Accountants Dublin,
8 Clanwilliam Square,
Grand Canal Quay,
(01) 604 0011