Brexit Outcome – A Challenge to Businesses Across Europe

The unexpected outcome of the Brexit referendum in the UK prompted a swift reappraisal of corporate relationships across Europe including Ireland.  Companies across the UK faced a very difficult and fundamental problem. As of the date of leaving the EU, they would no longer have access to the single market.

The single market has brought growth and diversity to the British business environment since 1973. Any UK firm that trades with Ireland the rest of Europe will find their business model fundamentally changed.

The degree to which the new post-EU UK will have access to the single market remains floating and unresolved. It is likely however that domestic UK firms will be rendered isolated and excluded and the City of London’s position as key global hub for financial services will be permanently affected. . So for those businesses, the critical challenge is how to preserve access once the UK leaves the EU. Relocation to other European countries to maintain access has, and will, occur in the coming years and will serve as a practical solution for many.

Why Ireland?

Europe wide locations are under consideration by UK and multinational businesses for relocation – Ireland consistently presents an impressive array of qualities:

  1. Fundamentally, our position displays our openness to trade and investment, a strong commitment to trade liberalisation, our global connectedness and our open society.
  • More specifically, Ireland demonstrates on-going, consistent growth with indigenous exports recently increasing by 60% to reach €20.6 billion; we have strong export growth in all geographic territories; our visitor revenues exceeded government targets by 20%; and our foreign direct investment (FDI) targets were exceeded by 30%. Ireland’s competitiveness has increased dramatically, from 17th most competitive in 2013 to 6th in the world.
  1. With respect to taxation, Ireland has consistent, transparent and long term tax policies:
  • 12.5% corporate tax rate currently, which is the lowest in Europe. Non-trading revenue is taxed at 25%.
  • Start-ups are exempt from corporation tax for three years where profits are less than €320k.
  • 72 tax treaties including with the US, UK, Australia, China, Canada, Japan and
  • A 25% tax credit is available on qualifying R&D spend – including staff salaries and other direct R&D costs.
  1. The population in Ireland is the youngest in Europe and possesses a desirable skill set:
  • Our people are highly educated, open, collaborative and creative. Over 20% of Irish students are engaged in higher education in the scientific and engineering sphere. Furthermore, approximately 25% of the student population are studying in the fields of social sciences, gaining skills and expertise in areas that include business and law.
  • 49% of the entire population is aged under 35, which gives access to a dynamic and ambitious workforce. This is more than that offered in the EU or the UK.
  1. Although increasingly multilingual, Ireland is the largest English-speaking country in the Single Market post Going forward we remain 100% committed to the EU and importantly retain access to the 27 member states with a population that totals 450 million people. Ireland benefits directly from a further 53 EU free trade agreements across the globe.
  • In Ireland we strongly believe the key to our achievements in sustaining jobs and incomes is our ability to succeed in international markets. In short: we will export more; we will attract more investment, visitors and international students; we will deliver success for our existing and newly imported businesses, for our country and for our citizens.
  • Our ambition for the future is to build on our successes, we aim to increase exports to €26 billion by 2020 and secure 900 new FDIs by 2019 in addition to significantly increased economic investment by our We also aim to have 200,000 more people in work by 2020.
  • Ireland will build and deepen relationships at all levels, engage with the global Irish business community, expand research collaborations, strengthen linkages in education and develop economic partnerships reinforcing Ireland’s connectedness across the world.
  • We plan to continue to strengthen our business environment for trade, provide a streamlined visa service, develop global transport connectivity and build our network of double taxation agreements and Foreign Earnings Deductions aligned with trade priorities.

Many Have Already Chosen Ireland

Ireland is an attractive location to many domestic UK or international firms but financial services companies in particular may be looking for a positive and practical solution to the Brexit problem:

  • 15 out of the world’s leading financial services firms already operate in Ireland;
  • Ireland is already the leading international hub for aviation finance with eight of the top 10 global aviation lessors based in Ireland, equating to over 60% of the world’s leased commercial aircraft owned or managed from Ireland. Aircraft lessors based in Ireland manage more than €159 billion in assets, which equates to more than 26% of the global fleet.
  • Our financial services industry is underpinned by cutting edge technology, innovation, a highly skilled workforce, an independent regulator and robust regulatory regime. The IFS2020 strategy aims to achieve almost 30% growth in employment by 2020.
  • According to the British Banking Authority, one-third of the UK’s financial services workforce (87,499 jobs) will migrate to the 27 EU member states over the next few years. Given the attractiveness of Ireland for foreign direct investment, it is likely that a growing number of firms will choose to relocate here in the coming months.

A Pro-Business Environment

Regardless of the particular industry seeking to invest in Ireland, relocating firms can expect to benefit from a pro-business environment:

  • The legal environment in Ireland uses the same common law system in use in Australia, Canada, New Zealand, offshore locations and in the US, which means minimal adjustment and maximum flexibility with respect to the regulatory environment.
  • Locating office space to house employees may also prove easier as Dublin has more office space available than many competing European cities, with 2m feet due to come to market.
  • Firms wishing to set up a hub in Ireland are not confined to the capital city and can opt for well connected regional locations such as Letterkenny, Cork, Galway, Limerick and Waterford, which are all easily accessible by road, rail and air.

UK Businesses Can Also Preserve Access to the Single Market

Ireland represents a smart and economically sensible move for medium or large sized UK businesses to preserve their access to the single market and the euro. Ireland offers UK companies:

  • shared English language;
  • similar business practices, customs and cultural links;
  • enhancement of historically strong economic links already established;
  • established logistics of transportation between the two neighbouring countries.

How Do I Invest in Ireland?

When considering investing in Ireland, there are a variety of practical issues that our specialist commercial solicitors and investment experts can help you with;

What Permissions Do I Need?

In order to do business in Ireland, you must be granted ‘business permission’ by the Irish Government. We will advise you on the relevant criteria.

What Assistance Can I Get in Terms of Visas and Residency?

Ireland offers a variety of programmes that are designed specifically for individuals looking to set up in Ireland. There are a variety of different schemes available. We are here to offer advice and guidance on the various schemes.

Can I Bring Some Members of the Team Into Ireland?

The structures in Ireland have been specifically designed to encourage foreign investment, and this extends to employment permits and the rules that govern them.

a) Intra-Company Transfer Permit

b) Critical Skills Employment Permit

c) General Employment Permits

 

What Incentives Are Available to Encourage Staffing of the Business from the Domestic Workforce?

The Irish Government operates a number of Employer Incentive Schemes to encourage employers, including foreign investor businesses, to employ their staff from the local population. We can advice on you all incentives available to you.

What Kind of Businesses are Acceptable?

Private limited companies incorporated in Ireland tend to be the most common commercial entities foreign investors utilise. Certain criteria need to be satisfied:

  • The company must have the intention of carrying on some kind of activity in Ireland including the holding, acquisition or disposal of any kind of property.
  • There must be details given as to the place in Ireland where the company will carry out its business, and where the organisations and administration of the company will be conducted from.
  • Regarding the proposed name of the company, there must be a search conducted with the Companies Registration Office. This will guarantee that the name proposed for the company is not already being used, or does not have too much of a similarity with a company that is already operating in Ireland.
  • At least one of the directors of the company must be resident within the European Union (EU). If not possible, then the company will be entitled to hold a bond to the value of €25,400. An insurance company will provide two original bonds, and the company must file both of these with the Companies Registration Office.

What Kind of Businesses are Acceptable?

You may decide that you do not want to incorporate a private limited company in Ireland to facilitate your investment. The alternative is to make use of a company incorporated outside of Ireland, and operate in Ireland via a branch office. A branch office, in Irish law, is a branch of a foreign company that operates in Ireland and:

  • has the appearance of permanency;
  • has a separate management structure;
  • has the ability to negotiate contracts with third parties;
  • has a reasonable degree of financial independence.

As a result of changes in EU law, domestic companies and branch offices of foreign companies must now satisfy largely similar registration requirements.

What Are The Rules Governing The Ownership of Real Estate in Ireland?

Foreign investor businesses have the option of owning real estate in Ireland, if it proves to be a more attractive proposition than securing a commercial lease. Real estate can be owned either through the purchase of the freehold interest, or of a long leasehold interest. All businesses in Ireland are subject to certain restrictions on the purchase, development and occupation of real estate.

An alternative to purchasing real estate in Ireland would be to secure a commercial lease. The duration of commercial leases tend to range between five and twenty years. Our expert team will advice you on negotiating and concluding commercial leases.

Commercial leases commonly include break clauses, facilitating an exit from the agreement if you no longer deem it viable to operate your business from the premises. Other points to note regarding commercial leases include:

  • it will normally be a requirement of a lease that you, as a commercial tenant of the property, will maintain the property, and make any repairs that become necessary;
  • the lease will limit what you are able to use the property for;
  • if your business is placed in a development with multiple occupiers, you may be obliged to pay service charges and insurance costs in addition to the monthly rent; and
  • there will likely be a provision allowing for a rent review – these can allow both for an upward or downward movement.

How Will My Investment Be Protected?

For many years Ireland has been focused on developing a business culture that protects businesses, and encourages investment and innovation. The intellectual property (IP) regime in Ireland has been specifically formulated to provide robust protection for businesses:

Copyright

Copyright laws provide protection against infringement of a variety of works including original databases, literary, dramatic or artistic works, film and television programming.

There is no registration requirement for your business to enjoy copyright protection: the moment a particular work is created, copyright will exist. The duration of the copyright will however depend on the type of work in question.

Design and Trademarks

Both designs and trademarks are protected where the necessary statutory criteria are satisfied. In addition to this protection, trademarks also benefit under common law. Registration may be achieved under the Irish, European or international registration frameworks.

Patents

Irish patent legislation is in keeping with comparator states. Where the requisite criteria are satisfied, patents can last for 20 years. It is possible to apply for shorter patent protection, allowing for some savings to be made by the business.

Data Protection

Ireland has a strong reputation for data protection. There is also a dedicated Data Protection Commission charged with overseeing the enforcement of data protection laws, designed to protect the data that is used by businesses.

Why Instruct Sherwin O’Riordan?

At Sherwin O’Riordan, we have a dedicated foreign investment team of solicitors that have specialist expertise in assisting businesses to relocate to Ireland. We regularly provide advice on how to establish a foothold in the country, which can be achieved through the registration of domestic companies or the operation of branch offices. We are also experienced in providing advice on seeking beneficial tax relief for investors.

Ireland ranks among the most competitive states in the world for businesses, alongside America, Japan and the UK. If you have questions about doing business in Ireland and want to speak to a lawyer that will provide you with bespoke, comprehensive legal advice, contact us today.

Contact Sherwin O’Riordan

If you are considering relocating your business or setting up a branch in Ireland in order to preserve access to the single market, contact Sherwin O’Riordan for an immediate response. Expert advice will be provided from one of our foreign investment team of solicitors. A detailed assessment of the nature of your business will form part of our comprehensive approach to setting up your business to take advantage of the many positive features on offer in Ireland. Our wide range of expertise encompasses regulatory requirements, company registrations, taxation advice, employment concerns and intellectual property law. Contact us today for advice on all your business needs.

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