Corporate Solutions

Solutions offered by Irish Incorporations Ltd. are based on matching client requirements with different types of company structures and other measures designed to maximise wealth.

Solutions may involve the formation of:

Agency companies, suitable for international trading and commission arrangements.
Royalty companies, which can be used for royalty payments generated outside of Ireland.
Holding companies, which can be tax-efficient.
Companies which attract a 12.5% rate of corporation tax.

They may also cover the management and administration of agreed structures.

Agency / Sales Distribution Company

An Irish company is formed specifically to operate as a nominee or agent for a principal company - in effect the Irish company acts as a fiduciary or agent for the principal company. The two companies sign an agreement which specifies the terms of the agreement between them. All business and sales is then conducted in the name of the Irish company, but on behalf of the principal company. The customer enters into a contract with the Irish company, is invoiced by them and pays the invoices into the bank account of the Irish company. Income is then remitted to the principal company by the Irish company after deduction of an agreed commission. The Irish company is managed and controlled by the principal company and its officers, as is the bank account of the Irish company. It should be noted that the Irish company cannot trade within Ireland or with any Irish businesses.

The Irish company will pay tax on the profits which it makes on the fees retained in accordance with the agency or nominee agreement. This will be at the normal Irish Corporation Tax rate which starts at 12.5%. Accounts must be filed both with the Irish Revenue Commissioners (Irish tax authority) and with the Irish Companies Registration Office (Irish public record of companies). VAT registration for a Irish agency company is available where appropriate. Beneficial owners of these companies must be non-resident for tax purposes in Ireland.

A more detailed data sheet is available on request

Royalty Company

Since 1973, Irish tax legislation has provided for an exemption from tax for income derived from ‘qualifying patents’. A qualifying patent is defined as a patent in relation to which the research, planning, processing, experimenting, testing, devising, designing, developing or similar activity leading to the invention, the subject of the patent, was substantially carried out in Ireland. It is not necessary for the patent itself to be an Irish patent. However, the company or individual claiming the relief must be resident in Ireland for tax purposes.

Royalties received by companies from a qualifying patent are exempt from corporation tax. In addition, full relief is also available, in certain circumstances, to shareholders on dividends which are made by companies out of income from patents which have been disregarded for corporation tax purposes. Restrictions on the patent exemption have been introduced over the last few years with a view to preventing the use of exempted patent income for the remuneration of employees and executives through special classes of company shares, and to prevent excessive tax exempt royalties being paid between connected parties. It should be noted, however, that no restriction exists where a patent royalty is paid by an unconnected person. The recipient of the royalty is entitled to the full exemption from Irish taxation. Where research and development work in relation to patented intellectual property has been carried out in Ireland, the tax rate applicable to the resulting patent income will be reduced from the 12.5% rate to 0%. While no limitation has previously been placed on the patent income exemption, as and from 1 January 2008, a cap of €5 million for each 12-month period is being introduced in respect of this exemption. Where a number of connected individuals or companies qualify for this relief on patent income, the cap of €5 million for each 12-month period is applied between them. Any income above this threshold will be subject to either income tax or corporation tax.

The Irish Government remains committed to maintaining this valuable tax exemption and with careful tax planning, the patent royalty exemption can be of great benefit to companies and individuals in the licensing of IP from Ireland.

Holding Company

Following the introduction of a number of key taxation reliefs and exemptions in recent years, Ireland has become a very attractive place for multinational companies to locate a holding company. The main features that give Ireland a competitive advantage over other jurisdictions are as follows:

No withholding tax on dividends by the holding company to EU or tax treaty countries.
No Capital Gains Tax on the disposal of shareholdings in subsidiaries.
No transfer pricing, thin capitalisation or CFC rules.
Tax deductions for interest on borrowings to acquire shareholdings in subsidiaries.
Favourable treatment on the receipt of dividend income.
Extensive Tax Treaty network and access to EU Parent-Subsidiary Directive.

A favourable Holding Company regime allows an Irish company to act as a European/Regional holding or intermediate holding company. Until recently, investment in Ireland was likely to be routed through a holding company in another European location such as the Netherlands or Luxembourg . Recent legislation has put Ireland in a position to compete with these established European holding company locations. Thanks to these changes, an Irish company can now act as a European/Regional holding or Intermediate holding company. The changes relate to the treatment of capital gains and foreign dividends: Although foreign dividend income is liable to tax in Ireland it is possible to gain relief so that no further Irish tax will arise.

Companies may use a system of:

Foreign tax credit pooling.
The EU Parent – Subsidiary Directive.
Double taxation agreements.

One of the major advantages that Ireland has over other jurisdictions is the ability to combine the holding company with trading activities such as Shared Service Centre activities, Group Procurement, Treasury and Research & Development.