Benefits of doing business in Ireland
Ireland is a gateway to Europe
Ireland holds a strategic location for companies interested in doing business in the European market. The country serves as a “gateway to Europe” and a global business hub, providing access to 741 million potential consumers. Many companies use Ireland as their EMEA headquarters.
Ireland is unique in that it’s the only European country where all three of these are true: it is a member of the EU, has membership to the Eurozone and is English speaking. With the U.K. expected to leave the European Union, Ireland and Malta will be the only two EU-member nations with English as an official language.
Attractive tax environment
Ireland provides a business-friendly tax environment. Tax initiatives are designed to foster support for business activities, especially those in the area of research and development and innovative projects.
The corporate tax rate in Ireland is currently set at 12.5 percent. The government charges a low corporate tax rate of 6.25 percent for revenue that is tied to a business’s patent or intellectual property.
To support research and development, Ireland provides a tax credit of 25 percent to qualifying expenses that are incurred by a company for eligible R&D activities. This credit is in addition to the 12.5 percent deduction, which can result in a total corporate tax benefit of 37.5 percent.
Research and development
Ireland has attracted worldwide leaders in areas such as pharmaceuticals, biotechnology, medical devices and financial services. The country has accomplished this by providing a business-friendly environment (such as the tax incentives listed above) for R&D activities.
Ireland’s government created IDA Ireland, a noncommercial and semi-state body that helps attract billions in foreign direct investments from high-tech companies. IDA is a semi-state agency, meaning it is a state-owned enterprise that is technically commercially run. The organization partners with potential investors to establish operations in Ireland. Funding and grants are available to those considering foreign direct investment.
Skilled workforce
Ireland is home to one of the most skilled workforces worldwide. The country has high marks in a variety of skills-related indicators, according to the OECD Skills Strategy report for 2019. For example, Ireland has a track record of helping their youth develop workforce-related skills.
A large percentage of young adults complete postsecondary education, and advanced education is more common in the region than in other parts of the world. The country’s education system ranks in the top 10 globally.
Having the youngest population in Europe, Ireland is expected to grow from one million to 5.75 million by 2040.
Risks and considerations of doing business in Ireland
Brexit
Britain is still in the process of negotiating its withdrawal from the European Union. Economists speculate that Brexit could be more difficult on Ireland’s economy than on other neighboring economies.
The U.K. is currently Ireland’s largest trading partner in Europe and shares a border between Ireland and Northern Ireland. The degree to which Brexit will ultimately impact the country depends on the results of the U.K.’s deal negotiations with the EU—or if there is no-deal. A no-deal Brexit would mean barriers to trade would go into effect immediately. This increases uncertainty for Irish businesses and other companies doing business in the region.
Long-term competitiveness
Ireland has experienced steady growth in recent years. In fact, it has the fastest-growing EU economy.
However, Ireland’s rate of growth is dependent on factors outside the government’s control. Ireland’s trade is concentrated in a narrow range of markets, which could leave the country vulnerable to disruption.
Ireland is encouraging companies to expand their export strategies to reach broader groups of countries and diversify overall operations. The government is providing support to encourage business expansion strategies.
Costs of doing business
Ireland is the fifth most expensive economy in the EU, according to the National Competitiveness Council.
Elevated costs for labor and property can be a significant hurdle for some businesses.
The permitting process is more expensive than in many other jurisdictions. Construction permits costs rank higher than the OECD high-income average, and the cost of construction permit acquisition is roughly 4.1 percent of a property's value—versus the OECD average of 1.5 percent.
Contract enforcement also continues to be relatively expensive. The World Bank reports that the total cost of enforcement is roughly 26.9 percent of the value of a claim. Time is also an issue, with it taking, on average, 650 days to complete this process.
Doing business with greater success
Doing business in a new country, even one as business-friendly as Ireland, presents unique challenges. Without a firm grasp on the evolving nature of local laws, regulations and business practices, growing businesses can face the possibility of delayed entry, rising costs, tax penalties—or even civil or criminal litigation.
With our experience and global footprint, CT Corporation delivers the products and services you need to keep you compliant as you do business in Ireland.
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