Ireland is rapidly establishing itself as one of Europe’s most prominent business hubs. The country is particularly popular among tech giants. Google, eBay, Facebook and Apple all have premises in Dublin’s so-called Silicon Docks.
Ireland also offers competitive tax rates and a comparatively easy-going approach to business regulations. Ranking highly on ease of doing business scale, and particularly friendly to new and start-up businesses, Ireland should be considered by any business seeking expansion into a European powerhouse.
World Bank Ease of Doing Business Ranking (1-190)
Tax rates 2020
Setting up a payroll in Ireland is usually a smooth and painless experience. The Irish authorities are business-friendly and actively seek to welcome new enterprise into the country.
Your first step is choosing a company name, if you are not opening a branch of an existing business. In many respects, this will be the biggest challenge that you face. The Irish Companies Registration Office are very strict on company names. Rules and regulations include:
Once you have an appropriate name and have registered it with the Companies Registration Office, your business will need to register for tax repayments. All of this is achieved by filling in forms. Your business will likely be active within 10 days – often just a week.
When it comes to hiring employees, expect to pay between 1.08 and 1.15 times an employee’s salary to accommodate tax and benefits. While this need to be factored into any employment offer, that’s a lower rate than many other territories.
Finally, ensure that any employees in Ireland and legally permitted to work in the country. If the employee has an EU or EAA passport, they will be free to work without restriction. Anybody else will be subject to work permit or visa, which must be approved by the Irish government.
There is no legal requirement to offer a company pension to employees in Ireland. If your business does not offer a pension though, you must advise employees about a Personal Retirement Savings Account, or PRSA. Your role will be purely advisory. You do not need to pay into the scheme to match contributions, though you are welcome to do so.
As an employer, you will need to pay15.05% of every employee’s salary into Pay Related Social Insurance, or PRSI. This is the welfare program of Ireland. Employees will also contribute. How much an employee pays depends upon the role and salary of the employee. There are 11 different classes of PRSI in Ireland, many of which also contain smaller sub-classes.
Employees will also need to pay income tax. There are just two scales of income tax in Ireland. Employees that meet the following criteria will pay 20% of their annual income in tax.
Everybody else pays income tax at a rate of 40%. All employee tax contributions must be withheld at the point of salary release and submitted to Revenue Ireland.
It can be difficult to part company with an underperforming employee in Ireland, so think carefully about your hires. Employees have a wide array of rights, and unless guilty of gross misconduct (such as theft, acts of violence or intoxication at work) must undergo a lengthy process of warnings and performance improvement programs before dismissal becomes an option. Most new employees are placed on a 6-month probation.
Ireland offers a favourable corporate tax rate at just 12.5%, making it the ideal location to set up a new business. A subsidiary company is best. A Limited Company is the most popular subsidiary business model in Ireland.
You will not need to open a local bank account to do business in Ireland, though it would be an advantage to do so. You’ll have to wait until your business is active before you can open this account.
You’ll also need at least one director and a company secretary. These positions cannot be held by one and the same individual. The company secretary is a senior executive that handles elements of corporate responsibility, ensuring the business acts in a legally compliant way at all times.
Alternatively, you could open a branch of your existing business in Ireland. As with a subsidiary company, this need to be conducted through the CRO.
Opening a branch in Ireland takes a little longer, and any debts or legal difficulties will become the responsibility of the parent company. However, any profits generated by the Irish branch will only be subject to the 12.5% tax rate. If you’re a new or start-up business, you may even qualify for tax relief during your first 3 years of trading.
There are a handful of local nuances to consider if planning to start a company in Ireland. A business needs at least one director, which must be a resident of the EU and EAA. If this not the case, a resident’s bond will be necessary. This is essentially an insurance policy for the Irish authorities, ensuring that if the director leaves their post they cannot leave unpaid debts behind.
You’ll endear yourself to potential business partners in Ireland if you embrace the culture of the country. This means starting meetings with small talk, being willing to debate current affairs (you will be expected to have an opinion, and to back it up when questioned) and showing a little charisma.
The corporate hierarchy is less important in Irish business than personal chemistry. Be prepared to accept some gentle teasing, and do not try to impress or pull rank based on job title or academic credentials. In Ireland, knowing the right people will get you much further than attending the right University.
Finally, while Irish culture is based on a strong work ethic, family affairs will always be deemed more important. This means that Irish employees may sometimes appear to have a laissez-faire attitude, and many corporate leaders may be slow to make decisions. Expressing frustration with this will get you nowhere, so be patient.
Setting up an entity in Ireland is a fast process. You should be good to go within around 10 days. It could be closer to 4 to 6 weeks before you’re ready to start making hires for your payroll though.
You’ll be welcome to open a branch of an existing corporation in Ireland. If setting up a new business, the most popular choices are:
Private Company Limited by Shares (LTD) – the Irish equivalent of a limited liability company
Unlimited Company – as above, but members do not have limited liability
Designated Activity Company (DAC) – for companies that perform one set practice rather than enjoying the unlimited powers of a limited company
Private Limited Company by Shares is the most popular business model in Ireland by some distance.
Offering a pension scheme to employees of an Irish business is not mandated by law. Doing so will endear you to potential new hires, though. This is a popular supplementary benefit.
Yes, under a protocol known as Section 486C. Start-up businesses that owe less than €40,000 in corporate tax can apply for this relief for their first three years of trading. Businesses that accrue a corporate tax bill between €40,000 and €60,000 can apply for partial relief in this same timeframe.
PRSI stands for Pay Related Social Insurance. This is the social security program that Irish employers and employees need to pay into monthly. Basically, it is Ireland’s welfare tax.
Employers contribute 15.05% of an employee’s monthly wage to social security in Ireland – the aforementioned PRSI. Ireland has eleven different PRSI classes, with employee contributions depending upon their vocation and working status.
Irish employees are typically placed on a quite lengthy probationary period. It is common for an employee to be assigned 6-month probation upon joining a company. This period could extend to 11 months, though the employee will need to be notified in writing if this the case.
It will cost between 1.08 and 1.15 times an employee’s annual salary to make a new hire in Ireland. This is among the lowest rates in Europe.
There is no minimum share capital for setting up a limited company in Ireland. You can get started with as little as €1, but some experts recommend ensuring you have at least €100.
It is not a business requirement to have a local business account in Ireland, but it will make your life much easier if you do. Be aware that you cannot set up a business account until your business is registered and incorporated.
The average working week in Ireland is 40 hours and cannot exceed 48 hours by law. Employees frequently take a one-hour lunch break each day, where the desk is usually left and phone calls and emails go unanswered. Employees are also entitled to unpaid 15-minute breaks after every consecutive 4 and 6 hours of work.
Popular supplementary benefits for Irish employees include:
• Private pension plans
• Life insurance and death in service payments to family members
• Income protection
• Health and dental insurance
• Food subsidiary
• Additional holiday days
• Gym memberships
No, employees cannot be terminated at will in Ireland. Unfair dismissal is the most common lawsuit filed in Ireland, so employers must have good reason to terminate an employee. This will typically revolve around gross misconduct.
Examples of this include verbal or physical aggression toward colleagues or customers, theft of attending work under the influence of drugs or alcohol. You will need to evidence of this transgression. Poor performance or timekeeping or not grounds for dismissal without numerous verbal and written warnings.
Once an employee is notified of their dismissal, they can request a written explanation. This must be provided within 14 days. If the employee considers this justification unjust or inaccurate, they can still file a case for unfair dismissal.
You will need to provide a final payslip and any outstanding salary upon severance. Severance pay varied depending on the employee’s length of service.
Irish employees are entitled to 4 weeks of paid annual leave each year, in addition to 9 public holidays.
Yes, you will be welcome to open a branch of an existing business in Ireland. This takes around 10 days and you will pay the standard corporate tax rate of 12.5% on any profits generated by the branch.
There are 4 different approaches to setting up a payroll for a business in Ireland.
Internal Payroll – the company handles everything to do with payroll themselves, usually through an HR department
Remote Payroll – as above, but for a company that is opening a branch in Ireland. The parent company is responsible for everything related to the payroll of employees in Ireland
Local Payroll Administration – an external company will manage the hiring of employees and check their legal status. The business, meanwhile, manages tax affairs
Fully Outsourced Payroll – bringing in an external company to manage every element of the payroll process, including the withholding of taxes and liaising with Revenue Ireland
If a prospective employee does not hold an EU or EEA passport, they will be unable to work in Ireland without a visa or work permit. The most common examples of these documents include:
Critical Skills Employment Permit – for employees with superior skills and education in sectors that Ireland has a requirement
General Employment Permit – a less restricted version of the above, for roles that do not qualify as highly skilled
Intra-Company Transfer Employment Permit – for employees of a parent company that wish to transfer to an Irish branch of a patent company
Internship Employment Permit – for unpaid interns in reputable educational institutions to gain work experience for 12 months