Why open a subsidiary in Ireland?
is a very attractive destination for foreign investors wanting to open companies
in this country. The facilities offered by the Irish government
refer to the numerous types of companies that can be registered here, the taxation system and low corporate rates, as well as on the right to full foreign ownership of businesses registered in Ireland
Investors interested in opening a company in Ireland
should know that amongst the types of companies
available under the Irish legislation
, there are also the Irish subsidiaries
. The subsidiary
is the most popular business structure
for small or medium-sized companies
foreign investors choose to open here and our specialists in company formation in Ireland
can offer assistance for opening this legal structure.
You can observe the main characteristics of an Irish subsidiary in our scheme below:
What is a subsidiary and what are the requirements when opening one in Ireland?
The Irish subsidiary
is an independent legal entity
from the parent company
, which can have full foreign ownership
. The parent company’s liability
limited to the share capital
invested in the subsidiary
, which is what makes this type of company
so appealing to foreign businessmen. Subsidiaries in Ireland
benefit from the same tax treatment as it is the case of Irish based companies
, which means that they can obtain the same tax deductions and similar benefits that are applicable to any domestic business.
Foreign businessmen who are interested in the procedure of company formation in Ireland
under this legal structure should know that the business will be liable to the corporate tax
(applicable at the rate of 12,5%). At the same time, the company
is required to file the annual reports on its financial activity.
As a general rule, most of the subsidiaries in Ireland
are registered with the Companies Registration Office
as limited liability companies
, and our team of Irish company formation consultants
can offer more details in this sense. They can definitely help foreign businessmen who are interested in setting up a limited company in Ireland
in order to establish a subsidiary
. The mandatory requirements for the procedure of company registration in Ireland
under the form of a subsidiary
are the following:
• a minimum number of two directors, out of which one should have an Irish citizenship;
• subscribe the minimum share capital – in the case of a private limited company, there are no minimum capital requirements that have to be satisfied;
• the subsidiary must hold a registered office in Ireland, just like any other type of business registered in this country;
• appoint a company’s secretary and have a maximum number of 99 shareholders;
• present the resolution of the parent company which stipulates the decision of registering a subsidiary in Ireland.
When carrying a business activity in Ireland
or elsewhere, the investors should analyze the benefits and the pitfalls of any type of business form. The subsidiary
offers the advantage of being independent from the parent company
; in the case of a local company
set up as a branch office, this advantage will not be applied and, as a consequence, the parent company
will be fully responsible for the Irish branch office
As a general rule, conducting the company’s business operations
through a subsidiary
is seen as providing a higher level of trust for company’s business partners
and thus, the subsidiary
is a more reliable vehicle for starting a company
. Although the branch office benefits from a simpler registration procedure
and simpler accounting requirements, the subsidiary
is the preferred business structure, as it protects the parent company
from the obligation of taking over its liabilities.
What are the steps to be followed when establishing an Irish subsidiary?
The first step when opening an Irish subsidiary
is to draft the memorandum and articles of association of the company
, which represent the main statutory documents of a
newly founded business. If the shareholder incorporating the subsidiary
is a foreign entity, a resolution for the incorporation
must also be prepared.
Once all the documents are ready, they must be submitted with the Companies Registration Office (CRO) in Ireland
. After the Commercial Register
releases the Certificate of Incorporation
of the new subsidiary
, the registration for taxation
purposes with the local tax office
must be completed. Companies in Ireland
operating as subsidiaries
will need to register with the Tax Office
in which the legal entity set up its operations.
will have to register for
value added tax (VAT)
corporate tax. At the same time, the subsidiaries
which employ foreign or local workforce
will need to register for social security purposes. Such entities are also required to file
VAT returns. It is also necessary to notarize the documents submitted at CRO
, a procedure that can be completed at a public notary in Ireland
Our experts in Irish company formation matters created this video below which shows the main steps to follow when opening a subsidiary in Ireland:
The advantages of opening an Irish subsidiary - presented by our Irish company formation team
From a legal point of view, the subsidiary
is considered a different legal entity than the parent company
, having a high level of independence
. Furthermore, in the situation in which the Irish subsidiary
faces any financial difficulties, the subsidiary
will be held accountable
and not the parent company
, as it is the case when operating through an Irish branch office
The parent company can be held accountable for the debts of the Irish subsidiary only to the extent to which it has participated at the subsidiary’s capital. Furthermore, the Irish subsidiary can benefit from the Parent-Subsidiary Directive, applicable in this country starting with 1st of January 2004. The Directive stipulates a set of tax exemptions and deductions, which are available in specific conditions.
For example, the
Directive allows the
on the payment of the withholding tax on เกมยิงปลาใหม่dividends
to an EU company
. Under its regulations, the resident company in Ireland
will be required to
pay the corporate tax
received from foreign companies
, but an exemption in this sense is granted in certain situations.
The EU Parent - Subsidiary Directive stipulates that the payment of the withholding tax on dividends can be exempted in the case in which the dividend is paid by a company registered in any country of the European Union (EU) to its parent company operating in another member state of the Community. However, this tax exemption can only be applied provided that the parent company owns at least 10% of the subsidiary’s shares.
Investors who want to open a company in Ireland
as a foreign subsidiary
should also know that the profits of this type of business will not be taxed in this country as a general rule, but they may be taxed in specific conditions. This can apply in the situation in which the subsidiary’s profits
are repatriated in this country through the payment of dividends, for example.
In the situation of an Irish based company
that operates several subsidiaries
, investors are entitled to obtain a tax deduction on the funding costs associated with the investments in these subsidiaries
, but there are certain conditions that have to be met, which can be detailed by our team of consultants in company registration in Ireland
The EU Parent – Subsidiary Directive
applies to a wide range of business entities. For example, investors operating certain categories of
or mutual companies
can benefit from the provisions of the Directive. Also, the Directive is applicable to funds
and savings banks, but also to associations that perform commercial activities. It is important to know that companies
operating as European companies
) may also benefit from this
Are there any tax benefits for Irish holding companies?
Yes, holding companies in Ireland
can benefit from numerous tax advantages, which is also applicable in the case of holding companies
that own shares in businesses operating as subsidiaries
. For example, Irish holding companies
can obtain an exemption on the payment of the capital gains tax
on the disposal of shares of a subsidiary
, in the case in which several conditions are met and our specialists
can offer an extensive presentation on the matter.
One of the main requirements is to own share rights in a subsidiary
that is a tax resident of the EU or, if not, the subsidiary
must be a tax resident of a country with which Ireland
has signed a treaty for the avoidance of double taxation
Further on, the holding company is required to own at least 5% of the subsidiary’s share capital for a period of minimum 12 months. It is also necessary for the holding company to have the right to at least 5% of the subsidiary’s profits and to own minimum 5% of its assets.
The exemption on the payment of the capital gains tax will be applicable if another condition is satisfied, which stipulates that the subsidiary
has to develop a business activity that can be considered a trade. Our team of specialists in company registration in Ireland
may offer further information on this subject.
This relief on the capital gains tax can also be applied in the case of asset transfers developed through groups of companies (intra-group transfers). A group is defined by a parent company and its 75% group of subsidiaries, which can be registered in Ireland, at the level of the EU or the European Economic Area (EEA) or in a contracting state of an Irish double tax treaty.
What is a wholly owned subsidiary in Ireland?
Another way of starting a business activity in Ireland is by setting up a wholly owned subsidiary. As its name suggests, the wholly owned subsidiary is characterized by the fact that the parent company owns a large share of the subsidiary’s stocks, which can increase up to 99%.
According to the stipulations of the Irish Companies Act 2014, Section 8
, a company
can be considered a wholly owned subsidiary
of another enterprise in the case in which the latter is the only representative of the subsidiary
. Other stipulations are presented in the same section and our team of consultants in company registration in Ireland
can provide a complete definition of the term.
Investors can contact our representatives in company formation in Ireland
for information related to company registration
under a subsidiary
and for other details related to the taxes applied to companies
. Our consultants
can also provide advice on the advantages of registering a branch office in Ireland
, another option available for foreign companies
that want to expand in this country.