Ireland is one of the best countries to start a business when looking to expand into the European Union (EU) market. The country boasts one of the most business-friendly tax rates across the region. Additionally, Ireland has one of the lowest crime rates in all of Europe. Indeed, many global companies have decided to make Ireland their home base for their European operations.
Business in Ireland
Ireland boasts one of the lowest corporate tax rates within the EU at only 12.5%. Furthermore, the country has signed 74 double taxation treaties, with 73 of them already in effect. Ireland also features infrastructure and laws that promote the growth of international trade.
Doing business in Ireland poses other advantages for international investors besides tax purposes. Some of the most prominent advantages include:
- Ease of trade – As a member of the EU, the country provides duty-free access to other EU member states.
- Ease of travel – It provides fast and convenient access to other EU member states.
- Workforce – The country has a very skilled and young workforce, providing your company a large pool of talent.
- Legal system – It has a strong set of laws that ensures the protection of intellectual property.
- English speaking population – Among members of the EU, Ireland boasts one of the largest English-speaking populations.
- Multinational – The country is friendly and welcoming, having a growing multinational population.
All of these factors combined make Ireland a very attractive location to setup a company.
Legal System of Ireland
Ireland is a parliamentary democratic republic. The president serves as the head of state and is elected by popular vote. On the other hand, the Taoiseach (which is the equivalent of a prime minister) is elected by the Dáil Éireann and serves as the head of government.
The legislative branch of government is divided between the Seanad Éireann and Dáil Éireann. These are the senate and the house of representatives, respectively.
Business Entities in Ireland
Before you start your own company in Ireland, you need to know the different business entities available so you can register the most appropriate type of entity (or click here for an alternative to company incorporation).
- Sole Proprietor or Sole Trader
- Limited Partnership Company or LP
- Public Limited Company or PLC
- Private Company Limited by Shares or LTD
- Designated Activity Company or DAC
- Company Limited by Guarantee or CLG
Taxation in Ireland
Foreign business owners in Ireland will only have to pay income tax equivalent to what they have earned in Ireland. There are currently three different bracket types that determine the amount of tax due, which are determined on an annual basis.
- Single or widowed individuals with no dependents
- Income up to €35,300: 20% income tax
- Balance of income beyond €35,300: 40%
- Married couples with a single source of income
- Income up to €44,300: 20%
- Balance beyond €44,300: 40%
- Married couples with two sources of income (at least €26,300 each)
- Income up to €70,600: 20%
- Balance beyond €70,600: 40%
Ireland has a standard VAT rate of 23%. However, certain essentials such as children’s books and clothes, oral medicine, and disability aids like wheelchairs are VAT-free.
As mentioned previously, Ireland imposes a corporate tax rate of 12.5%, which makes it the second lowest corporate tax rate across Europe.
Working hours in Ireland
As stated in Ireland’s Organization of Working Time Act 1997, the maximum average working hours for adults in a workweek is 48 hours. Employees are entitled to an unpaid 15-minute break after four hours of work. However, this rule does not apply to those employed as a Gardai (Irish police force) or in the defense forces, workers at sea, and family employees.
For employees under 18 years old, the conditions such as work hours and break times differ. The maximum working hours per week is 40 hours. In addition, there is a time limit on when they can work. For those under 16, they can’t work before 8 AM and after 8 PM. Meanwhile, for ages 16-17, they should only work between 6 AM to 10 PM.
Vacation leave in Ireland
According to Irish law, employees are entitled to a minimum of four weeks of paid vacation. Leave is calculated based on the “leave year,” which is from the 1st of April to the 31st of March of the following year.
Vacation leave has three different calculations:
- After 1,365 hours of work in a leave year, the employee is entitled to four weeks of fully paid work leave.
- If an employee works at least 117 hours in a week, they are entitled to 33.3% of that working week as leave.
- 8% of hours worked in a leave year, with a maximum of four weeks.
Public Holidays in Ireland
The following days are recognized as public holidays in Ireland:
- New Year’s Day
- Saint Patrick’s Day
- Easter Monday
- Labor Day (1st Monday of May)
- 1st Monday of June
- 1st Monday of August
- Last Monday of October
- Christmas Day
- Saint Stephen’s Day
Ireland has no laws on sick leave. It is the employer’s prerogative to pay their employee during sick leave. Workers can instead apply for the Illness Benefit from the Department of Social Protection (DSP) if they have enough Pay Related Social Insurance (PRSI) contributions.
However, the Irish government recently announced the Statutory Sick Pay Scheme. Under this new law, those who have been employed for at least six months by the same employer are entitled to up to three days of sick leave in 2022. It is planned to increase to five days in 2023, seven days in 2024, and 10 days in 2025.
All Ireland residents are provided emergency care at the cost of €100 per visit. Maternity and childcare for children up to six years of age are free of charge. A medical card is available to people receiving welfare, low-income individuals, and retirees. It provides free hospital visits, consultations, and free prescriptions.
INS Global in Ireland
For nearly 2 decades INS Global has been helping companies expand in different parts of the world. We help companies to hire and pay staff in Ireland, recruit top talent and much more. Get in touch with our experts today and learn more about how we can help you.