Doing Business & Investing In...
Conor Hynes Tel: +353 1 417 2205 Email:
chynes@deloitte.ie
Cost base: Over the past number of years, there has been a significant realignment of the Irish cost base.
private rents, office rents, services, construction and labor have all become more competitive with costs generally down to 2003 levels.
The
reductions have been even more pronounced in the property market and as a result, companies have been able to secure cost effective bases from which to operate. Due to the substantial reduction in property values, we have also seen significant investment in Irish property from global players in recent months.
Ireland’s tax regime As
recently reinforced by the Minister of
Finance, Michael Noonan, the Irish Government is steadfastly committed to retaining
the
12.5% corporation tax rate. “Our 12.5% rate of corporation tax is here to stay. It is central to our industrial policy and is an integral part of our international brand. The Government’s message is therefore unequivocal and I can assure the House that there will be no deviation from that position.” While the headline corporation tax rate is 12.5%, the effective tax rate can be lower than this depending on the nature of the company’s activities in the context of eligibility for R&D tax credits, along with opportunities for IP and financing structuring.
R&D tax credits: If a company has overcome technological challenges to develop new products, processes, materials or certain services for its own use or its customers’ use, then it may qualify for generous Irish R&D tax credits, which broadly equate to a 300% tax deduction. A further benefit of the R&D credits is that in certain instances they can be used to reward key employees.
Intellectual property regime: Ireland’s onshore IP regime allows for capital allowances to be claimed on IP acquired by an Irish company
Business costs including energy,
for the purposes of its trade, to achieve a low effective tax rate. In addition to the onshore IP regime, there are other structures which have been used by companies to minimise the group’s ETR in relation to their Irish operations. Many companies have successfully amalgamated their supply chain management and IP management in Ireland. This enables them to minimise their global effective tax rate while maximising cross- functional efficiencies.
Special Assignment Relief Programme: This
relief was introduced for new employees arriving to Ireland and allows them to earn an amount of compensation which will not be subject to tax (broadly 30% between €75,000 and €500,000) which would otherwise be liable to tax in Ireland. This is an additional benefit for multinational employees who relocate to Ireland.
Wide tax treaty network: Ireland has signed 70 treaties to date with all major trading partners (including favorable treaties with China, Hong Kong, Japan, Singapore and South Korea) and the Government is currently negotiating with a number of other countries to continue to add new countries Ireland’s treaty network.
Ireland as a holding company: Ireland’s
holding company regime is very attractive and encompasses a participation exemption for capital gains arising on the sale of shares, a foreign tax credit regime (which was further enhanced in 2013) generally leading to no Irish tax on dividends, no CFC regime, no thin capitalisation regime and the ability to pay dividends free of withholding tax in listed or tax treaty/EU controlled groups. Many companies have taken advantage of the attractive regime, evidenced by the number of inversions into Ireland in recent years.
As already mentioned, there has been increased global scrutiny in the area of taxes in recent years
61
Louise Kelly
Tel: +353 1 417 2407 Email:
lokelly@deloitte.ie
by tax authorities and the media. This is focusing attention on ensuring a group’s operating model rewards its value adding entities and substantial operations. Therefore as a location where many multinationals already have significant operations, we believe Ireland is well placed to attract further investment as companies seek to build up robust operations.
About the Authors Conor Hynes is a tax partner with Deloitte in Dublin. Conor has more than 18 years of experience advising clients in financial services and international tax. He has provided advice to many clients on inbound and outbound investment, optimising the use of Ireland’s corporate tax rate, and tax planning with the aim of maximising tax efficiency and minimising tax cost. Conor has spoken at a number of international tax conferences on inbound investment into Ireland and Irish corporate tax planning.
Louise Kelly is a tax director specialising in
corporate and international tax.
Louise led Deloitte’s Irish desk in New York during 2011 and 2012. She advises multinationals on
investment into
Ireland and group reorganisations to minimise the overall group tax liability, with a particular focus on companies in the life sciences and technology industries.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90