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.
This structure is ideal for use as a European Trading structure where
the receipts of invoices from an offshore company would not
be
acceptable. This limits the difficulties normally
experienced while
directly dealing with offshore companies. Taking the below diagram as
an example the UK Company whilst buying goods/services would be
obliged to withhold tax when paying for goods to a tax haven entity.
At the same time, the German Company may prove to be reluctant to sell
goods/services to an offshore company.
Key
Advantages:
o
Low
tax vehicle - Tax is only payable on 5-10% of turnover.
o
Ideal
where receipt from offshore company would not be acceptable.
o
Excellent
for situations where an onshore profile is required.
o
Can
be used effectively in EU VAT triangulation situations.
Key
Facts about an Irish Agency Company:
Accounts:
Annual accounts must be filed which may
need to be audited. In its statutory and tax accounts the Irish Company
will
only acknowledge the commission it received through this arrangement,
it does
not need to recognize the turnover and profit of the offshore company.
The
amount of commission received by the Irish Company may vary
between 5% to 10% depending on the volume and type of business
activity.
Taxation:
The Irish Company pays Irish Corporation Tax on its commission although
all
allowable expenses incurred in carrying out its business will be
deducted
first. The ultimate success of this type of structure relies on the
fact there
is no Irish
source income. Since the company is being controlled and managed from
outside Ireland,
the Irish Revenue Authorities can only assess the Irish Company for tax
on the
fees it earns by way of commission for effecting the business of the
offshore
company. The payments made to the offshore company by customers are
therefore
not subject to Irish
taxes.
VAT
Registration:
If the company's turnover exceeds €75,000 in a 12 month period the
company must
register for VAT (Value Added Tax). We can handle all VAT registration
formalities, and also complete and file all VAT returns to the Irish
Revenue
Authorities. Since the Irish Company has a VAT number there would not
be any
VAT charged in the transaction described above.
Whilst
the turnover of the Irish company may not warrant VAT registration for
most intra EU trading purposes a valid Irish VAT number can be
obtained. As corporate administrators our responsibility is
to
ensure the Irish Company accounts and prepares the
requisite VAT
Returns, together with the filing of
accounts and tax computation for the Irish Revenue Service.
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More Information
Call: +353-51-879120
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