choose ireland · capital gains tax (cgt) 33% entrepreneur’s relief: 10% on gains up to €1...

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Choose IrelandThe EU Gateway#chooseireland

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Welcome to Ireland

Ireland is a great place for business and a great place to live. Whether you are a dynamic start-up seeking guaranteed access to a European market of 500 million people or an established business looking to meet high performance objectives, Ireland delivers.

However, don’t just take our word for it – the list of successful companies that have chosen Ireland proves that smart decision makers value our pro-business policies, exceptional people and reputation as a highly attractive place to work and live. We’re also famous for our warm welcome and ‘can do’ attitude, so please get in touch and we’ll make sure you get the most out of your decision to choose Ireland.

Seamus HandManaging Partner, KPMG in Ireland

Ireland is the location of choice for successful businesses. A winning combination of talented people, attractive business taxes, commitment to the EU and an exceptional track record sets Ireland apart.

We’re home to entrepreneurs, innovators and business leaders in every sector. They choose Ireland for many different reasons but they each have one thing in common – a desire to succeed in a business friendly European gateway that’s great for business and great for living. We look forward to working with you and telling you about how - if you choose Ireland - our KPMG teams can help your business succeed.

Anna ScallyPartner, International Tax, Head of Technology and Media & Fintech LeadKPMG in Ireland

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Ireland delivers

Ireland - one of the best countries in the world for doing business

Forbes

Ireland is the data capital of Europe

Google

Ireland ranks 1st for emerging US FDI companies looking to break into EU markets

American Chamber of Commerce US-Ireland Business Report 2018

One of the top 10 most innovative countries in the world

2018 Global Innovation Index

No.1 destination in the world for inward investment by quality and value of investment project

IBM Global Location Trends Report 2018

Choose IrelandThe EU Gateway

Guaranteed access to an EU market of 500 million people

A proven pro-business environment

A transparent, consistent and certain tax environment

A highly competitive Corporation Tax rate of 12.5%

An English speaking, committed member of the EU and Eurozone

A stable political environment and legal system

A thriving R&D environment and a strong national research ecosystem

A track record of delivering for international investors

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The choice of winners

Ireland is the location of choice for:

• 8 of the top 10 global software companies

• 15 of the top 15 US technology companies

• 10 of the top 10 global pharmaceutical corporations

• 9 of the top 10 global medical technology companies

• 20 of the 25 leading financial services firms globally

• 9 of the 10 global aviation lessors

• Ireland is the 2nd largest exporter of software in the world

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A highly attractive corporate tax regime

Tax CertaintyIreland has consistent, transparent, long term tax policies.

12.5% Corporation Tax RateThe lowest rate in Western Europe – applicable on trading income of Irish resident companies and Irish branches of foreign companies.

Excellent Tax Treaty Network74 tax treaties including US, UK, Australia, China, Canada, Japan and Russia. Facilitates reduction in foreign taxes and withholding taxes on cross border payments.

R&D Tax Credit25% tax credit available on qualifying R&D spend - includes staff salaries and related costs and other direct R&D costs. The credit is additional to the 12.5% deduction available for R&D spend. The credit reduces corporation tax or is refundable over 3 years where the company is loss making.

The benefit can be taken ‘above the line’ i.e. before tax. Further credits may be available on buildings used for R&D.

Knowledge Development BoxAn effective rate of 6.25% may apply if undertaking R&D in Ireland and developing patents or similar assets or copyrighted software.

IP AllowancesTax depreciation allowances are available on the acquisition of a wide range of intangible assets including patents, software and registered designs.

Start-up ReliefThere is a 3 year exemption for new businesses where profits are less than €320,000, with marginal relief where profits are below €480,000.

25% Tax RateApplies to passive and non-trading income.

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Tax - Corporation tax rate of 12.5% and a tax treaty network with 74 countries

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Supporting a winning environment for innovation

R&DTax Credit

Allowances for acquiring

IP

Knowledge Development

Box

12.5%Tax Rate

R&D Grant Aid

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Living & working in Ireland

• Ireland is a fully committed member of the European Union

• According to the Economist Intelligence Unit’s ‘where-to-be-born’ index, Ireland scores ahead of the US, Germany, France and the United Kingdom

• Expats are also attracted by a beautiful unspoilt environment, vibrant social and cultural scene and ease of access to other countries

• Ireland is one of very few countries with the ability to pre-clear US customs and immigration at the point of departure to the US

Visa & Permits• For non EEA nationals, and depending on personal

circumstances, entry visas and employment permits may be required

Start-Up Entrepreneur Programme:- This enables non-EEA nationals with an innovative

business idea to secure residency in Ireland for the purposes of developing their business

- Initial funding of €75,000 is required and €75,000 per additional principal involved in the business

Employment Permits:- Non-EEA nationals (with a number of exceptions),

must have employment permits in order to take up employment in Ireland. There are a number of different permits depending on personal circumstances and these include:- Critical skills permit- Inter-company transfer- General employment permit- Contract service provider

Investor Programme:- This is available to non-EEA nationals and their

families who commit to an approved investment in Ireland. The programme is designed to facilitate participants in establishing a permanent relationship with Ireland.

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The EU Gateway

Ireland was included in National Geographic’s Best Places to Visit in 2018

Choose Ireland

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Our skilled workforce

The Irish workforce is highly skilled and adaptable. Over 30% of students are currently enrolled in science and engineering courses, and another 25% are currently enrolled in social sciences, including business and law.

Attainment in higher education is high among 25-34 year olds in Ireland at 54%, which is 9% above the OECD average.

Furthermore, Ireland is part of the EU open labour market thus ensuring that your Irish based business can benefit from a wide pool of European talent.

Ireland also ranks 1st in the IMD Competitiveness Yearbook 2018 for flexibility and adaptability of our people when faced with new challenges.

Ireland is also increasingly multilingual, with a wide range of skilled people able to converse fluently in languages, in addition to English.

Each year Ireland attracts a significant influx of foreign workers eager to work in a dynamic and enjoyable environment with a pro-European and diverse outlook.

Ireland - has the youngest population in Europe with 33.1% under 25 years of age

IDA Ireland

Ireland ranks in the Top 10 globally for quality of the education system

IMD World Competitiveness Yearbook 2018


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Personal taxes

Employee income tax and social security is accounted for through the payroll withholding tax system. This is known as the PAYE system.

The Irish tax year is aligned with the calendar year. The rates of personal tax and social security for an employee in Ireland for 2019 are set out below:

Tax/Levies 2019 Rate

Income Tax 20% up to €35,300* 40% thereafter

Social Security Employee: 4% on total earnings Employer: 10.85% on total earnings

Universal Social Charge (USC)**

€0 – €12,012: 0.5% €12,013 - €19,874: 2% €19,875 - €70,044: 4.50% €70,045 upwards: 8%***

Capital Gains Tax (CGT)

33% Entrepreneur’s Relief: 10% on gains up to €1 million (after an annual exemption of €1,270)

Gift/ Inheritance Tax

33% (subject to certain exempt thresholds)

* The 20% tax band is increased depending on marital status.

** Individuals with income lower than €13,000 are exempt from USC.

*** 11% > €100,000 for self employed.

Various tax credits and reliefs are also available depending on personal

circumstances.

Companies are required to operate a payroll withholding tax system (PAYE) in respect of cash payments and benefits in kind, e.g. medical insurance and company cars provided to employees. Certain equity based compensation is also processed through the PAYE system.

A typical compensation package might include: salary, bonus, stock-based-compensation (Stock options, RSU’s, ESOP), if appropriate and other benefits.

Reliefs and IncentivesThere are a number of reliefs and incentives which can reduce the personal income tax burden. These include:

Entrepreneurs ReliefFirst €1m of capital gains can avail of a reduced 10% rate of CGT. This requires the entrepreneur to own at least 15% of the equity of the company and have been involved on a full time basis for 3 years.

Employment and Investment Incentive (EII)Individuals can secure personal income tax relief on investments of up to €150,000 per annum in qualifying companies. Tax relief equal to 40% of the investment is available, 30% upfront and the remaining 10% after year 3.

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The EU Gateway

Choose Ireland

Special Assignee Relief Programme (SARP)Tax relief may be available to assignees transferred to Ireland. SARP operates by reducing taxable employment income over a threshold of €75,000 by 30%.

Where employees are required to perform duties outside of Ireland, the relief will still apply.

The SARP relief is available for a maximum of 5 consecutive tax years.

Employees who qualify for the regime can also recover the cost of one return trip for their family to their home country from their employer tax-free and can also have school fees (of up to €5,000 for each child) paid by the employer tax-free.

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Personal taxes continued

Foreign Earnings DeductionA Foreign Earnings Deduction may be available for employees who are required to travel to work in emerging markets, i.e. Brazil, Russia, India, China and South Africa, along with a growing number of other African, Middle Eastern and Asian countries.

The relief provides a tax refund for the relevant employee where they spend 30 full days working in the relevant countries in a continuous 12 month period and meet certain other conditions.

The maximum annual deduction for a relevant employee from taxable income is €35,000.

Key Employee Engagement Program (‘KEEP’)Ireland introduced a new share option scheme in 2017 to support start-ups and SME’s in attracting and retaining key talent in certain sectors.

Each individual who qualifies for the scheme can be granted options with a value of up to €300,000 over their lifetime. The market value of share options granted under the scheme in any one year can be equal to the employee’s emoluments in that year (certain other limitations may apply).

Under the incentive, qualifying options will be taxed at the CGT rate, currently 33%, rather than being subject to income tax.

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Remittance BasisNon-Irish domiciled individuals who are resident in Ireland are taxable in Ireland on Irish source income. Foreign income is only taxable to the extent it is remitted to Ireland.

Tax efficient income and benefitsThere are a number of other tax relieving provisions available to employees coming to work in Ireland,including the following:

• Relocation expenses such as shipping, storage costs and costs associated with the purchase of a new home (e.g. stamp duty, solicitors fees etc.) can be reimbursed tax free;

• Accommodation and subsistence costs for the first 12 months of an assignment that is expected to last less than 24 months can be paid or reimbursed tax free;

• Employer contributions to Revenue approved occupational pension schemes. This exemption can be extended to foreign employer pension schemes in certain circumstances;

• Employee contributions to Revenue approved occupational pension schemes are deductible for income tax purposes, subject to certain income and age related limits. There is no deduction for PRSI and the Universal Social Charge;

• It is possible to obtain Revenue approval in respect of certain share schemes, e.g. Approved Profit Sharing Schemes and SAYE Share Option Schemes which can result in tax savings for employees.

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Setting up your business

Company Set UpBefore you start doing business in Ireland, you need to decide if you are going to operate through a branch or company. Most fast growing businesses choose to operate through a company.

Irish companies are registered with the Companies Registration Office (CRO), and can be formed having public or private status, and with limited or unlimited liability. A company must have at least one shareholder, which may be an individual or a corporate entity, along with a minimum of two directors in most cases, or one director and secretary in certain cases. At least one of the directors must be resident in the EEA, except where there is a bond in place to the value of €25,000.

The incorporation of a company can be completed in a number of ways, with the most efficient being online, using a specific application process. Under this online scheme, where standard constitutional documents are used, the CRO guarantees to issue a Certificate of Incorporation within 5 working days.

State SupportIDA Ireland provides advice, assistance, grant aid and incentives to international companies coming to Ireland. A wide range of supports are available from capital, employment and R&D grants, to support recruiting talent and finding office space. For international companies coming to Ireland, IDA Ireland will be the principal body responsible for providing assistance.

Further information is available on www.idaireland.com

For entrepreneurs looking to come to Ireland to start their business, assistance is provided by Enterprise Ireland (www.entreprise-ireland.com). Supports are available through the Competitive Start Fund (CSF) and High Potential Start-up (HPSU) funding, mentor programmes and workshops. In addition, Enterprise Ireland has a €10m fund to attract entrepreneurs to relocate to Ireland and establish ambitious start-ups focused on international markets.

FinancingAside from equity and bank financing, Ireland has a vibrant angel and Venture Capital (VC) environment. Levels of angel and VC funding have increased significantly in recent years, particularly in financing and developing high potential innovative companies. The Halo Business Angel Network (HBAN – www.hban.org) and the Irish Venture Capital Association (IVCA – www.ivca.ie) are important representative bodies of such angel and VC funding in Ireland.

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The EU Gateway

50% of the Top 10 “World’s most innovative companies” choose Ireland

Forbes

Choose Ireland

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How KPMG can help

We understand the pressures faced by businesses of every type and size when locating to a new jurisdiction. We are the adviser of choice for a wide range of start-ups and established business who choose Ireland as their EU Gateway. Our approach is based on simplicity and total commitment and includes support and advice on:

• Company set-up and tax registration• Fundraising

• Corporate and operating structures

• Maximising group tax benefits and minimising group tax costs

• Shareholder and employee tax matters

• Intellectual Property planning

• Expat tax matters

• R&D tax credits

• Both routine and more complex compliance matters (legal and tax)

• VAT and customs duty

• Outsource accounting

• Accounting advice and assistance

• Statutory & US GAAP Audit

What’s more, we can draw on the experience of our colleagues globally.

For further information, please contact one of our team or visit www.kpmg.ie

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Anna Scally Partner, International Tax Head of Technology and Media & Fintech Lead

KPMG in Ireland

Tel: +353 1 410 1240 Email: [email protected]

Your KPMG Ireland Contacts

Orlaith de Valera Director, International Tax

KPMG in Ireland


Amy O’Toole Associate Director, International Tax

KPMG in Ireland


Niall Flood Director, Corporate Finance

KPMG in Ireland


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Drew DonnellyAssociate Director, Corporate Finance

KPMG in Ireland

Tel: +353 1 700 4815

Email: [email protected]

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© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.

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Produced by: KPMG’s Creative Services. Publication Date: May 2019. (5014)

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choose ireland · capital gains tax (cgt) 33% entrepreneur’s relief: 10% on gains up to €1...

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