_2012_v1.docx · web viewireland's location, its membership of the eu, its attractive tax...

reputed | experienced | professional

INVESTING AND DOING BUSINESS IN IRELAND - A LEGAL GUIDE

EUGENE F. COLLINSSolicitors

Temple Chambers3 Burlington Road

Dublin 4

T: 202 6400 | F: 667 5200 | www.efc.ie

© Eugene F. Collins, 2012

http://www.efc.ie/


Contents

FOREWORD.............................................................................................................................. iCHAPTER 1.............................................................................................................................1THE IRISH LEGAL SYSTEM.......................................................................................................1Sources of Law and Court System..........................................................................................1The Courts .....................................................................................................................1The District Court...................................................................................................................1The Circuit Court....................................................................................................................1The High Court .....................................................................................................................2The Supreme Court................................................................................................................2Tribunals .....................................................................................................................2Legal Representation.............................................................................................................3Chapter 2................................................................................................................................4CHOOSING THE RIGHT BUSINESS ENTITY...............................................................................4Registered Companies...........................................................................................................4Constitutional Documents......................................................................................................4Legal Requirements...............................................................................................................5Unlimited Company................................................................................................................5Ongoing Requirements...........................................................................................................6Stamp Duty .....................................................................................................................7Partnerships and Limited Partnerships...................................................................................7Partnerships .....................................................................................................................7Limited Partnerships...............................................................................................................7Limited Partnership Act 1907.................................................................................................7Investment Limited Partnership Act 1994..............................................................................7Sole Trader .....................................................................................................................7Branch of a Foreign Corporation.............................................................................................8Societas Europaea..................................................................................................................8Future Developments.............................................................................................................8The Incorporation Process......................................................................................................8The Procedure for Incorporating an Irish Company................................................................8Documentation Required........................................................................................................8Corporate Name ....................................................................................................................9Shares and Membership/Capital Requirements......................................................................9Directors, Secretary and Registered Office............................................................................9Other Statutory Filings.........................................................................................................10


Information to be included on Public Documents & Company Websites..............................10Chapter 3..............................................................................................................................12DEVELOPMENT AGENCIES....................................................................................................12IDA Ireland ...................................................................................................................12Shannon Development.........................................................................................................13Enterprise Ireland.................................................................................................................13Údarás na Gaeltachta...........................................................................................................14Further Assistance................................................................................................................14Chapter 4..............................................................................................................................15TAXATION ...................................................................................................................15Corporation Tax ...................................................................................................................15Research & Development Tax Credit...................................................................................16Capital Gains Tax (CGT).......................................................................................................16Holding Company Benefits...................................................................................................17CGT Exemption for a Holding Company...............................................................................17Dividend Treatment..............................................................................................................17Income Tax ...................................................................................................................18PRSI and USC ...................................................................................................................19Withholding Taxes................................................................................................................19Stamp Duty ...................................................................................................................19Capital Acquisitions Tax.......................................................................................................20Value Added Tax (VAT).........................................................................................................20Other Miscellaneous Taxes...................................................................................................21Chapter 5..............................................................................................................................22PROPERTY ...................................................................................................................22Ownership of Land................................................................................................................22Real Property ...................................................................................................................22Leasehold Property...............................................................................................................22Planning Controls.................................................................................................................23Environment ...................................................................................................................23Chapter 6..............................................................................................................................24INTELLECTUAL PROPERTY.....................................................................................................24Copyright ...................................................................................................................24Designs ...................................................................................................................24Patents ...................................................................................................................24Trade Marks ...................................................................................................................24Statutory Protection.............................................................................................................25


Passing Off ...................................................................................................................25Electronic Commerce...........................................................................................................25Domain Registry in Ireland...................................................................................................25Data Protection ...................................................................................................................25Commercial Court.................................................................................................................26Tax Advantages ...................................................................................................................26Chapter 7..............................................................................................................................27EMPLOYMENT LAW AND WORK PERMITS..............................................................................27Residence and Work Permits................................................................................................27Industrial Relations...............................................................................................................28Minimum Notice and Terms of Employment Act 1973-2005................................................28Protection of Workers (Fixed-Term Work) Act 2003.............................................................28Protection of Employees (Part-Time Work) Act 2001............................................................28Employees (Information and Consultation) Act 2006...........................................................28Statutory Leave 29The Maternity Protection Acts 1994 and 2004.....................................................................29The Carer’s Leave Act 2001.................................................................................................29The Parental Leave Acts 1998 and 2006..............................................................................29The Adoptive Leave Acts 1995 and 2005.............................................................................29Equality Legislation..............................................................................................................29Organisation of Working Time Act 1997...............................................................................29Business Transfers...............................................................................................................30Redundancy ...................................................................................................................30Unfair Dismissals Legislation................................................................................................30The National Minimum Wage Act 2000................................................................................30Forums for Employee Claims................................................................................................30ABOUT EUGENE F. COLLINS..................................................................................................31


FOREWORDEugene F. Collins is delighted to provide the latest edition of “Doing Business and Investing in Ireland – A Legal Guide”. With this Guide we aim to provide you with key initial information to assist you in following the path of the many successful businesses which have invested in Ireland.

Ireland's location, its membership of the EU, its attractive tax regime and the fact that the Irish Government actively promotes foreign direct investment (FDI) are some of the reasons why many foreign companies choose to locate in Ireland. Any reference in this publication to “Ireland” should be taken as meaning the Republic of Ireland. If you are considering FDI in Ireland, this Guide should be read in conjunction with the material available from Ireland’s autonomous state agency vested with the task of promoting inward investment into Ireland, IDA Ireland at www.idaireland.com

Doing business and investing in a foreign environment requires local knowledge and expertise in order to operate successfully.

This guide contains a summary of the key laws, regulations and practices relevant to doing business in Ireland.

This publication has been compiled by a team of solicitors within Eugene F. Collins drawing on their extensive knowledge and experience in advising and assisting investors to Ireland and their day to day dealings with businesses already doing business in Ireland. Whilst it cannot replace the necessity to obtain legal or tax advice for each particular scenario, this publication is intended to provide a general overview and guidance. The law is as stated at 14 February 2012.

Details about Eugene F. Collins and its services and its FDI team are provided at the back of this Guide. Should any of the topics covered in this Guide be of interest please contact me or any member of our FDI team.

Seán TwomeyManaging [email protected]

mailto:[email protected]

http://www.idaireland.com/


CHAPTER 1THE IRISH LEGAL SYSTEM

The Republic of Ireland is a parliamentary democracy with a President and a two-house parliament consisting of Dáil Éireann (the House of Representatives) and Seanad Éireann (the Senate) (together known as the “Houses of the Oireachtas”), whose powers and functions derive from the Constitution of Ireland (Bunreacht na hÉireann) (the “Constitution”) which was enacted by the people of Ireland on 1 July 1937. Each House of the Oireachtas has power under its Standing Orders to form Committees for specific purposes.

Ireland’s membership of the European Union (EU) since 1973 has involved surrendering a degree of sovereignty and the subordination of certain national law to European law. As a member of the EU, Ireland is subject to the Treaty of Rome (as amended) and various other Treaties. The currency of the Republic of Ireland is the Euro.

Sources of Law and Court System

The sources of law in Ireland are as follows:

The Constitution, which is a written Constitution, provides for certain fundamental rights of citizens;

Domestic Legislation;

Case Law;

European Law and obligations imposed by membership of the European Community; and

International Conventions.

Ireland is a common law country (which is judge made law with decisions handed down on the basis of evidence presented in court proceedings). However as with other Member States of the EU, where there is a clash between

domestic Law and European Law, the latter takes precedence.

The Courts

The Constitution outlines the structure of the court system as comprising courts of limited jurisdiction, the Circuit Court and the District Court organised on a regional basis, the courts of first instance which include a High Court with full jurisdiction in all criminal and civil matters and a court of final appeal, the Supreme Court.

Judges are completely independent in the performance of their functions and on their appointment take an oath set out in Article 34.5.1 of the Constitution.

The District Court

The District Court consists of a President and sixty-three judges. The country is divided into twenty-four districts with one or more judges permanently assigned to each district and the Dublin Metropolitan District. Generally the venue at which a case is heard depends on where an offence was committed or where the defendant resides or carries on business or was arrested.

The business of the District Court can be divided into four categories: criminal, civil, family law and licensing. This is the lowest level of court in the system dealing with minor cases and no jury is used in this court.

The Circuit Court

The country is divided into eight circuits with one judge assigned to each circuit except in Dublin where ten judges may be assigned, and Cork, where there is provision for three judges. There are twenty-six Circuit Court offices throughout Ireland with a County Registrar in charge of the work of each office. The Circuit Court is a court of limited and local jurisdiction.

The work can be divided into four main areas: civil, criminal, family law and jury service. The Circuit Court, as in the case of the District Court,

1


is a court of limited jurisdiction. On the civil side, the Circuit Court deals with medium-sized monetary claims as well as landlord and tenant actions.

Decisions of the District Court can be appealed to the Circuit Court with some exceptions. Appeals proceed by way of a full rehearing and the decision of the Circuit Court is final (unless the severity of a sentence is the sole matter in issue). The Circuit Court also acts as an appeal court for appeals from the decisions of the Labour Court, Unfair Dismissals Tribunal and the Employment Appeals Tribunal.

The High Court

This is the first court of general jurisdiction and under Article 34.3.1 of the Constitution "is invested with full original jurisdiction in and power to determine all matter and questions whether of law or fact, civil or criminal". Its jurisdiction also extends to the question of the validity of any law having regard to the Constitution.

The High Court acts as an appeal court from the Circuit Court in civil matters. It has power to review the decisions of certain tribunals. It may also give rulings on questions of law submitted by the District Court.

The High Court exercising its criminal jurisdiction is known as the Central Criminal Court.

A separate Commercial Court division of the High Court was established in 2004 to deal with high value and/or intellectual property disputes. Once admitted to the Commercial Court, a case is dealt with very quickly with strict timeframes imposed upon the parties.

The Supreme Court

This is the ultimate court of appeal in the Irish judicial system and, though the Supreme Court does not have administrative control over the lower courts, it has power to reverse decisions made in cases in the lower courts where the lower court’s decision has amounted to an error

of law. It may also reverse its own earlier decisions.

Apart from criminal matters the division of the responsibility of the courts is largely on monetary values, though a system of appeal to higher courts from the decision of the lower courts applies within certain guidelines.

In certain circumstances the High Court may, and the Supreme Court must, refer certain matters or issues to the European Court in accordance with the Treaty of Rome.

Tribunals

A Tribunal of Inquiry is vested with the powers, privileges and rights of the High Court. Tribunals are established by resolution of the Houses of the Oireachtas to enquire into matters of urgent public importance.

It is not a function of Tribunals to administer justice, their work is solely inquisitorial. Tribunals are obliged to report their findings to the Houses of the Oireachtas. They have the power to enforce the attendance and examination of witnesses and the production of documents relevant to the work in hand.

Tribunals can consist of one or more people. A lay person or non-lawyer may be the sole member of a Tribunal. Tribunals can sit with or without assessors (experts in the subject concerning the Tribunal). Assessors are not Tribunal members. Sittings are usually public but can, at the Tribunal’s discretion, be held privately.

Legal Representation

Legal representation in the Irish courts is divided into two professions, namely representation by barristers (senior counsel and junior counsel) and solicitors. Both solicitors and barristers are entitled to appear on behalf of clients in all courts but it is usually the barrister who appears in court.

2


3


CHAPTER 2CHOOSING THE RIGHT BUSINESS ENTITY

Commercial enterprises in the Republic of Ireland are usually set up in one of the following forms

a public or private limited company;

a partnership;

a limited partnership;

a sole proprietorship;

a place of business/branch of a foreign corporation; or

a Societas Europaea (“SE”) or European Company.

Registered Companies

In Ireland a registered company may be:

Limited by shares;

Limited by guarantee; or

Unlimited.

Such a company may be either public or private. The laws relating to companies are contained in the Companies Acts 1963-2009.

Guarantee and unlimited companies are used infrequently for normal business operations with a private limited company being the most frequently used vehicle for business organisation in Ireland.

A Private Company is one that limits the number of its member to 99, restricts the rights to transfer its shares and prohibits itself from making any invitation to the public to subscribe for its shares or debentures.

Any other company is deemed to be a public company (although the Companies (Amendment) Act, 1983 provides for certain statutory minima before a company may be registered as a public limited company).

The name of a public limited company must include the letters “plc”. In all other respects, public limited companies are similar in nature and form to private limited companies.

In practice, public limited companies are seldom used by investors as the minimum requirements in relation to the number of members and issued share capital can prove unnecessarily burdensome and the flexibility to be able to issue shares to the public is generally not of interest to such investors.

Constitutional Documents

Both public and private companies are incorporated with a constitution consisting of:

A Memorandum of Association which contains the facts about the company, including its name, its main objects, a statement that the liability of the members is limited (if that is the case) and the amount of the authorised share capital (which can be in any denomination); and

Articles of Association, which are bylaws regulating the relationship between the company and its shareholders.

Incorporation papers for all forms of companies are filed with the Registrar of Companies at the Companies Registration Office.

Legal Requirements

A private limited company is required to show the word “Limited” (which may be abbreviated to “Ltd”) in its name unless it has applied for an exemption (which is only given in limited circumstances) to use the word “limited” in its name.

4


Every private limited company must have an authorised and issued share capital and must issue at least one share which may be issued in any particular currency or amount depending on the requirements in each case. There must be at least one shareholder in every private limited company.

The single member company is an ideal vehicle for investors into Ireland as it greatly reduces administration requirements and eliminates the need for nominee shareholders.

Each company must have at least two directors and a company secretary (who can also be one of the directors). While there is no formal qualification required to become a director, certain persons such as undischarged bankrupts are ineligible to act. Also a body corporate cannot act as a director.

There is also a requirement under Irish company law that an Irish company must have an EEA resident director or else enter into an insurance bond for a specified amount which is lodged in the Companies Registration Office. Every new company applying for registration is required to demonstrate that the company will carry on an activity within Ireland.

There is a limit on the number of directorships that a director can hold (up to 25 companies). However, certain company types are not reckoned in calculating the number of companies of which a person is a director (for example subsidiaries of a holding company). Directors need not be members of the company unless the Articles of Association so require.

Every company registered in the Republic of Ireland must have a registered office in Ireland. The day-to-day management of the company is normally carried out by the board of directors, whose general responsibilities are set out in the Companies Acts 1963-2009 and may be further regulated by the company's Articles of Association.

In addition, there exists under Irish law the concept of a "shadow" director. This is a person in accordance with whose instructions the directors of a company are accustomed to act. A "shadow" director, while not entitled to attend board meetings or exercise any of the rights or powers attached to the post of director, in certain circumstances has the same responsibilities and liabilities as a director.

Unlimited Company

In this type of company there is no limit on the members’ liability in the event that the company’s assets are insufficient to discharge its creditors. Unless the risks associated with unlimited liability can be eliminated investors do not often use these companies. One of the ways the risk can be removed is by having a limited liability company as the parent of the unlimited company.

The two main advantages however to using this type of company are:

an unlimited company may, subject to its Articles of Association, purchase its shares from its members and may reduce its share capital without recourse to the courts; and

subject to certain conditions being met an unlimited company is not required to file a copy of its annual accounts with the Registrar of Companies. However unlimited companies which are not required to file accounts are required to prepare and file a copy of a special auditor’s report which must be certified by a director and the secretary of the company and attached to the company’s annual return.

Ongoing Requirements

Under Irish law every company is required to hold an annual general meeting each year not more than 15 months after the previous annual general meeting. However the first meeting

5


need only be held within 18 months of incorporation of the company.

No annual fee is payable to the Registrar of Companies to enable a company to remain incorporated but annual returns containing details of a company’s share capital, members and officers, and the amount of indebtedness secured by charges on the assets of the company along with audited accounts (unless the company can avail of exemption) must be made to the Companies Registration Office. A fee is payable to the Registrar of Companies to file the annual return but, provided the return is filed in a timely manner, the fee is nominal. Save in the case of the first annual return (see below), failure to file an annual return for any one year may lead to strike-off of the company from the Registrar of Companies and penalties for the officers of the company in default.

The annual return of a company is required to be made up to a date that is not later than its Annual Return Date. In general terms, the annual return date is set at six months after the date of incorporation of the company. The first annual return of a company must be filed six months after incorporation but accounts are not required for this first annual return. A company may bring its annual return date forward to an earlier date or it may extend the annual return to a later date (subject to being able to do so only once in a five-year period).

There is also a strike-off procedure in respect of companies that have failed to deliver a statement to the Revenue Commissioners that is required under tax legislation. This procedure involves the sending of a statutory strike-off notice and is similar to that employed where a company is in default of its annual return filing obligations. A company will be removed from the strike-off list only if the Revenue confirms within the time limits laid down in the tax legislation that the required statement has been delivered.

In recent years the Companies Registration Office has become increasingly active in striking companies off the register.

Both public and private limited companies are required to file in the Companies Registration Office, annual accounts containing certain financial information with the Annual Return. These documents will ultimately be documents of public record. The extent of the filing requirements depends on whether the company is "small" "medium" or "large" as those terms are defined in the 1986 Companies Act (as amended).

The formation of a limited company provides the members of that company with immunity from liability for the company's debts (except in the case of fraud, when civil and criminal liability can occur) and the members are liable only to the extent of any sum due and unpaid in respect of any shares issued to them.

Legislation since the early 1990’s increasingly seeks to combat abuses of limited liability and generally to bring under tighter control the activities of controllers of companies. For example, with some exceptions, a company making a loan to its own directors is prohibited and shareholders must approve substantial property transactions involving directors.

The Office of the Director of Corporate Enforcement was established in 2001 and is responsible for encouraging compliance with the Companies Acts and bringing to account those who disregard their obligations under company law.

Stamp Duty

On the transfer of any shares in a company (with a market value of over €1,000), stamp duty of 1 per cent of the consideration is payable to the Revenue Commissioners. Certain reliefs and exemptions apply. Up until late 2005, capital duty was payable on the issue of, or increase in a company’s share capital, but this has now been abolished.

6


Partnerships and Limited Partnerships

Partnerships

Persons who do not wish, for taxation or other reasons, to form a limited company and who are not concerned about unlimited liability or are unable to form a company because of professional regulations, may decide to form a partnership. The members of a partnership regulate their internal affairs by mutual agreement. Usually a written partnership agreement will be drawn up. In addition the Partnership Act 1890 implies certain terms into the agreement where there is no provision to the contrary in the agreement.

When the business name of a partnership does not consist of the true names of all the partners it must be registered in the Register of Business Names which is maintained in the Companies Registration Office.

Limited Partnerships

In addition to the Partnership Act 1890 there are two other partnership statutes in operation namely the Limited Partnership Act 1907 and the Investment Limited Partnerships Act 1994 which may apply to limited partnerships.

Limited Partnership Act 1907

A limited partnership must consist of one or more persons called general partners, who are liable for all debts and obligations of the firm (i.e. unlimited liability) and one or more persons to be called limited partners, who shall at the time of entering into such partnership contribute to the partnership a sum or sums as capital or property valued at a stated amount, and who shall not be liable for the debts or obligations of the firm beyond the amount so contributed.

The main purpose behind the creation of such partnerships was to provide a partnership where one or more partners limit their liability to creditors of the firm to their capital contribution and in return the limited partner is not allowed to take part in the management of the firm or to

bind his co-partner. In this way the limited partner can be involved as an investor and without risk of being liable to an unlimited extent to creditors.

Investment Limited Partnership Act 1994

This type of partnership was introduced by the Investment Limited Partnership Act, 1994 (the “1994 Act”) to facilitate investment vehicles for investors interested in collective investment (fund) opportunities in the Republic of Ireland.

An investment limited partnership is a partnership between one or more general partners and one or more limited partners, the principal business of which is the investment of its funds in property. A general partner in an investment limited partnership has unlimited liability for the debts and obligations of the firm, while a limited partner is not liable for the debts and obligations of the firm beyond the amount of his capital contribution.

Sole Trader

This merely involves the operation of a business under the name of an individual who will have unlimited liability. A sole trader may operate under a business name (as may a company or partnership) and such business name should be registered in the Register of Business Names by filing the appropriate forms with the Registrar of Business Names at the Companies Registration Office. Such registration does not of itself give protection for the name of that business but it may help in any action against a third party attempting to pass itself off as operating under the title of that sole trader.

Branch of a Foreign Corporation

Foreign corporations may carry on business in Ireland without the necessity of forming a separate corporation, company or partnership in Ireland, but there is a requirement under the Companies Act 1963 that foreign corporations which maintain a place of business in Ireland must register with the Registrar of Companies as an external company on the External Companies

7


Register and must nominate both an address in Ireland for the service of notices and a person in Ireland authorised to accept service of notices.

The European Communities (Branch Disclosure) Regulations 1993 apply to the equivalent of an Irish limited liability company incorporated elsewhere that establishes a “branch” in Ireland and requires registration of certain details. There are some differences between the requirements imposed on companies incorporated in the European Union and companies from other countries.

A branch may have to file annually the financial statements of the external company of which it is a branch together with an annual return.

An Irish branch of a foreign company is subject only to corporation tax on the profits on Irish branch income, for which it will often get a tax credit in its home country. Often a branch is used at the commencement of an Irish operation when it is loss making so that the losses can be used in the home country. Where the branch will be profitable, consideration is often given to moving the trade into an Irish subsidiary of the foreign company.

Societas Europaea

A Societas Europaea (“SE”) or European Company is a form of public limited company which can operate on an EU-wide basis.

There is a minimum capital requirement of €120,000.

In January 2007 domestic implementing legislation which allowed for the incorporation of an SE in Ireland was introduced.

Future Developments

The Irish Companies Acts 1963–2009 will be replaced by a new Consolidated Companies Act to reform, restructure and update company law

in Ireland and which should leave Ireland with a more simplified and streamlined company law.

The Incorporation Process

Any company now incorporated in Ireland must state the ‘activity’ it will carry on and the exact place from which it will carry on this activity. This means that the Irish company must have a physical address in Ireland. It is important to note that “activity” is defined as “any activity that a company may be lawfully formed to carry on and includes the holding, acquisition or disposal of property of whatsoever kind.” This definition is necessarily very broad to allow for resident companies to be formed for asset holding purposes.

The Procedure for Incorporating an Irish Company

Documentation Required

A Memorandum and Articles of Association of the company must be drawn up. By use of a standard type Memorandum and Articles, approved in advance by the Companies Registration Office, the Registrar of Companies will incorporate a company within 5 to 10 days of lodging the documentation (usually just the Memorandum and Articles of Association together with a statutory form recording general details about the company, such as directors/secretary’s details, registered office and share capital details).

It is also possible to “customise” a company’s documents before incorporation but, because such documents are not standard pre-approved documents, incorporation takes longer, approximately 5-6 weeks. The potential disadvantage to using the standard set of Memorandum and Articles of Association is that only 3 “variables” are allowed, being the name, the main objects clause and the authorised capital of the company. The time saving is, however, considerable. In any event, the standard Memorandum and Articles can be

8


altered after incorporation to suit specific needs if that should be necessary.

Corporate Name

A company’s name can be reserved in the CRO for a period of 28 days before incorporation. The name is only secured when the Certificate of Incorporation issues. Even then, albeit in limited circumstances, one can be obliged to change a name by the relevant government department. It is not possible to reserve a change of name after incorporation and it is advisable to furnish a number of names for possible use, marked in order of preference.

Shares and Membership/Capital Requirements

The company must determine its authorised capital, which can be in any legal denomination or currency. The issued share capital may be in any particular amount depending on the requirements in each case - there is no minimum requirement in relation to private companies. The authorised capital can be any amount and no extra cost is incurred irrespective of the level of the authorised capital.

Directors, Secretary and Registered Office

As mentioned above, every company must have at least two directors (one of whom must be EEA resident unless an insurance bond is taken out or a certificate obtained) and must also have a secretary who may be one of the directors. Each of the proposed directors and the secretary is required to sign a form consenting to being appointed director and/or secretary. This form must be completed prior to the lodging of any documents with the Companies Registration Office.

The company must by law have a registered office in Ireland.

All information in relation to directors and the company secretary of a company is available for inspection by the public on the payment of a fee in the Companies Registration Office.

The information to be provided to the Companies Registration Office in respect of the directors is as follows:

Full names - initials will not suffice, and any former surname and/or forename;

Residential address;

Nationality;

Business description (occupation);

Date of birth; and

Details of any other directorships whether in Ireland or elsewhere held over the last ten years.

The information required in relation to the secretary is:

Full name, again no initials, and any former surname and/or forename; and

Residential address.

The proposed directors and the company secretary of a new company must sign their consent to act as officers of the company. In addition, one of the directors, the company secretary or a solicitor engaged in the formation of a new company must swear compliance with the requirements as outlined before a practising solicitor, Commissioner for Oaths or a Notary Public. The completed documentation and the Memorandum and Articles of Association will then be lodged with the Registrar of Companies.

Company law does not differentiate between executive and non-executive directors but the former is expected to have a greater knowledge of the company’s day-today affairs. In the case of fraud, reckless trading and other specified breaches of the Companies Acts 1963–2009, a director can be held personally liable for the debts of the company.

9


Other Statutory Filings

Apart from the annual filing requirement, any changes to the Memorandum and Articles of Association, authorised and issued share capital, directors or secretary of the company or the registered office of the company, must be submitted to the Registrar of Companies within time limits as set out in the Companies Acts 1963-2009. In most cases the changes must be notified to the Companies Registration Office within 14 days.

Banks usually require loans to be secured either by way of a debenture on the fixed and floating assets of a company or by way of mortgage from an individual or company over some specific asset. Often banks may also require personal guarantees from the principals involved in a business venture. It is necessary to register the creation of a debenture, mortgage or other charge over any asset of the company in the Companies Registration Office within a period of 21 days from the creation of the charge.

All newly incorporated Irish companies must file basic company information in the prescribed form with the Revenue Commissioners within 30 days of commencing business.

Information to be included on Public Documents & Company Websites

Under the Companies Acts 1963-2009 limited liability companies are already required to include the following details in their business letters and order forms:

1. the name of the company and its legal form;

2. the place of registration of the company, the number with which it is registered and the address of its registered office;

3. the present and any former forename (or initial of same) and surname of every director and shadow director of the company and his/her nationality if not Irish;

4. in the case of a company exempt from the obligation to use the word “limited” or “teoranta” as part of its name, the fact that it is a limited company;

5. in the case of a company that is being wound-up, that fact that it is so;

6. if, on any letters or order forms there is a reference to the share capital of the company, the reference shall be to the paid-up share capital.

The European Communities (Companies) (Amendment) Regulations 2007, introduced requirements regarding the information to be displayed on company websites and electronic communications. The aim is to provide consumers and creditors with certain basic information in relation to the companies with which they are dealing. With the exception of number 3 above, every limited liability company must also identify this information on their homepage, and to include it in all email and fax communications.

There are penalties for failure to comply with the regulations and a further fine may be imposed for each day that the offence is continued following conviction.

The requirements do not apply to unlimited liability companies or branches of foreign-registered bodies corporate.

10


CHAPTER 3DEVELOPMENT AGENCIES

Many factors contribute to Ireland being such an attractive location to do business, including its location, a low corporate tax rate, an English-speaking highly skilled graduate workforce and the fact that the Irish Government actively promotes foreign direct investment.

In the 2011 IMD World Competitiveness Yearbook, Ireland ranked fourth in the world in terms of availability of skilled labour and openness to new ideas. Irish labour productivity is reported to surpass that of the US, UK, Germany, France and Japan.

There are a number of incentives available to inward investors in Ireland which consist of tax incentives and financial assistance.

Financial inducement provided by the State, which is usually in the form of grants, is administered by a number of different government agencies each with its own area of particular interest.

The skills levels and the numbers of people likely to be employed in a project are crucial factor. Other key determinants of the availability and level of grant assistance are:

the activities to be carried out in Ireland;

how such activity fits in with industrial policy;

the permanency of the proposed activity;

the geographical location of the project within Ireland with the highest level of grants usually being granted to businesses based outside of the Dublin region.

IDA Ireland

IDA Ireland (the “IDA”) is an autonomous state agency vested with the task of promoting inward investment into Ireland and should be one of the first points of contact for anyone considering inward investment into Ireland. It supports almost 1,000 companies in Ireland.

Its current focus is to secure investment from new and existing clients in areas such as high end manufacturing, global services (including financial services) and research, development and innovation.

Within these areas, key sectors for investment include Life Sciences (Pharmaceutical and Medical Technologies), Information Communications Technology (ICT), Engineering, Professional Services, Digital Media, Consumer Brands and International Services.

The IDA is also actively pursuing up-and-coming spheres such as clean technology, convergence and services innovation, which are suited to the Irish experience and skill-set. The IDA believes that Irish geography and climate provide an ideal environment for clean technology.

The IDA has its head office in Dublin and has overseas offices in many locations throughout the world.

IDA IrelandWilton Park HouseWilton PlaceDublin 2Ireland Tel: +353 (0) 1 603 4000 www.idaireland.com

In addition to providing grants, some of the other services that the IDA provides are:

providing information on key business sectors and locations (generally or within specific regions) within Ireland;

assisting in setting up a business in Ireland;

11

http://www.idaireland.com/


introducing potential investors to local industry, government, service providers and research institutions;

offering advice on property solutions; and

offering non-financial support to help overseas companies assess Ireland’s suitability as a location for a new investment or expansion project.

Shannon Development

Shannon Development was founded in 1959 and is a government owned, regional development agency, which is dedicated to the promotion of the Shannon Region in Ireland. Its brief is to create demand for Shannon National Airport and drive regional economic development in the wider Shannon area, known as the Shannon Region. This covers an area of some 10,000 square kilometers spanning counties Clare, Limerick, North Tipperary, South Offaly and North Kerry, which collectively has a population of over 450,000 people.

The range of grants available from Shannon Development is broadly similar to that offered by the IDA.Shannon DevelopmentHead OfficeShannon Town Centre ShannonCo. Clare: Tel: +353 (0)61 361555

www.shannondevelopment.ie

Enterprise Ireland

Enterprise Ireland is the state agency that promotes FDI into Ireland in the food and natural resources sectors. Enterprise Ireland also provides assistance for international companies who are searching for world-class Irish suppliers.

However it is in its role as assisting indigenous Irish companies that it is best known. Its clients are mainly:

High potential start-up companies;

Irish manufacturing and internationally traded services companies that are small or medium sized;

large companies that employ over 250 people; and

overseas food and natural resources companies operating in Ireland.

Enterprise Ireland also administers National and EU supports for building technological innovation capability and co-operation between industry and higher educational institutions. It also provides a range of services to help international business access and evaluate appropriate and competitive sources of supply in Ireland.

Enterprise Ireland’s key focus for Irish companies is funding supports, export assistance, supports to develop competitiveness, incentives to stimulate in-company R&D, assistance with R&D collaboration and connections and introductions to customers oversees.

Enterprise Ireland services are accessed through an Enterprise Ireland development adviser who has sectoral experience familiarity with all stages of business development from fledgling companies, to SMEs and through to Irish international businesses.

Enterprise IrelandEast Point Business ParkDublin 3Tel: +353 (0) 1 72 72 000

www.enterpriseireland.comÚdarás na Gaeltachta

Údarás na Gaeltachta (“Údarás”) was established in 1980 and is the regional authority responsible for the economic, social and cultural development of the “Gaeltacht”. The term “Gaeltacht” is used to denote those areas in Ireland where the Irish language is the communal language of the local population. The

12

http://www.enterpriseireland.com/

http://www.enterprise-ireland.com/AboutUs/Helping+International+Companies.htm


aim of Údarás is to ensure Irish remains the main language of the region and is passed on to future generations.

Údarás encourages investment in the Gaeltacht through a range of generous incentives for new enterprises and through support and assistance for existing businesses and supports businesses in developing new markets, technologies, products and strategic alliances through research and development. Gaeltacht companies span a range of commercial sectors, including tourism, fish processing and aquaculture, renewable energy, food, life sciences, ICT, niche manufacturing, audio visual and digital media, arts and crafts.

The range of assistance that Údarás offers is broadly similar to that offered by the IDA but the grant rate for this area is typically one of the highest offered in Ireland.

Údarás na GaeltachtaCo GalwayTel: + 353 (0)91-503100www.udaras.ie

Further Assistance

Ireland encourages FDI and indigenous investment that will develop its knowledge based economy.

Companies operating in Ireland are also eligible to apply for grants from the EU. One of the main grant schemes relevant for business is the “Framework Programme for Research and Development” (FP). FP7 commenced in 2007 and will run until 2013. Subject to eligibility criteria significant levels of grant-aid of up to 50% of project costs are available: www.fp7ireland.com

In addition to the financial assistance through tax credits for R&D, Ireland is funding third-level research with the individual universities, the Higher Education Authority (HEA) and Science Foundation Ireland (SFI) to develop academic research into innovative products and services.

Renewable energy projects also receive financial funding from the REFIT scheme operated by the Department of Communications, Energy and Natural Resources: www.dcenr.gov.ie. Tax relief for corporate investment in renewables energy projects has been extended until 2014.

Certain indigenous companies obtain funding from private investors under the new Employment and Investment Incentives (EII) Scheme, introduced in the Finance Act 2011 which replaces the Business Expansion Scheme.

13

http://www.dcenr.gov.ie/

http://www.fp7ireland.com/

http://www.udaras.ie/


CHAPTER 4TAXATION

Ireland’s tax system collects tax by both direct and indirect means. Liability to direct taxation in Ireland is generally based on residence whilst an indirect taxation liability is usually referable to the value of the chargeable item. Specialised tax advice should always be obtained when considering investment in Ireland.

Corporate taxpayers and the self-employed must calculate their tax liability on a self-assessment basis and then submit returns and payment to the Revenue Commissioners. The Revenue Commissioners administer the tax code and have general legislative provisions to counter tax avoidance. The tax year follows the calendar year.

Direct tax, stamp duty, VAT and capital acquisitions tax legislation has been consolidated by the Taxes Consolidation Act 1997 (TCA), the Stamp Duties Consolidation Act 1999 (SDCA), the Value-Added Tax Consolidation Act, 2010 (VATCA) and the Capital Acquisitions Tax and Consolidation Act 2003 (CATCA) respectively. This legislation has been constantly updated and amended by subsequent legislation, most notably the Finance Act which follows the budget passed by the Irish Parliament each year.

Ireland has entered into many double taxation treaties with other countries which generally provide either for credit in the country of residence for the tax paid in the country of source or for exemption in the country of source. Where there is no tax treaty, foreign tax is generally allowed as a deduction from foreign income rather being permitted as a tax credit, but certain unilateral credit relief is given in respect of foreign dividends, interest and foreign branch profits. An up to date list of all the countries with which Ireland has entered into a double taxation treaty can be found at www.revenue.ie

The main types of tax are set out below.

Corporation Tax

Ireland’s tax rate ranks as one of the lowest rates in the world, comparing favourably with countries such as the United Kingdom (26%) and Germany (30%).

The standard rate of corporation tax for active or trading income earned by an Irish resident company is 12½% unless the trading activity is carried on wholly outside Ireland where a 25% rate applies. A higher corporation tax of 25% also applies on (passive) non-trading income, chargeable capital gains and dealing in undeveloped non-residential land. Special arrangements exist for certain residential land transactions.

Corporation tax is payable in respect of taxable profits of a company for an accounting period.

Save for small companies and start-ups, preliminary tax is due in the month prior to the end of a company’s accounting period for companies with a tax liability less than €200,000 in the previous accounting period. A company must submit the balance of tax (if any) and its return of profits, chargeable gains and other particulars 9 months after the end of its accounting period of the company. If it is late, it may incur restrictions of allowances and reliefs in addition to surcharge, penalty and interest.

Companies with a tax liability of over €200,000 in the previous accounting period must pay preliminary tax in two instalments. The first instalment is payable in the sixth month of the accounting period (i.e. June for a company with calendar year accounts) and the amount payable will be 50% of the corporation tax liability for the preceding accounting period or 45% of the corporation tax liability for the current accounting period. The second instalment will be payable (as before) in the eleventh month of the accounting period (i.e. November for a company with calendar year accounts) and the amount payable will bring the total preliminary tax paid

14

http://www.revenue.ie/


to 90% of the corporation tax liability for the current accounting period.

A new or start-up company with a first year liability of €200,000 or less is not required to pay preliminary tax in respect of its first accounting period. Similarly a small company, being one that has a corporation tax liability threshold of less than €200,000, has the option of paying preliminary tax at the lower of 90% of the final liability of the current period or 100% of the liability of the previous period.

New companies that commence trading in 2012-2014 may also obtain relief where its total corporation tax liability for a 12-month accounting period does not exceed €40,000. A qualifying new company with a corporation tax liability up to this amount will have its corporation tax liability reduced to nil. The maximum relief over 3 years is €120,000 (€100,000 for companies engaged in the transport sector). There is a sliding scale of marginal relief where the corporation tax liability for a 12-month accounting period exceeds €40,000 but is less than €60,000. From January 2011, the value of the relief is linked to the amount of employers’ PRSI paid by a company in an accounting period, subject to a maximum of €5,000 per employee and an overall limit of €40,000.

Incentivised reduced corporation tax for locating companies in specified areas or carrying out specified manufacturing activities are being phased out but other credits, reliefs, deductions and exemptions are available in certain circumstances. For example, 20% of the incremental expenditure on research and development since 2003 can be offset against a company’s corporation tax liability in the tax year in which it is incurred.

Research & Development Tax Credit

Ireland has had a 25% tax credit for incremental research and development (“R&D”) spend calculated in comparison to the base year of 2003. This incentive encourages companies to

undertake new and/or additional R&D activity in Ireland. The R&D tax credit is available to Irish companies and branches within the charge to Irish corporation tax, on the incremental cost of in-house, qualifying R&D undertaken within the EEA.

This R&D tax credit is in addition to a tax deduction at 12.5% for R&D expenditure in Ireland, giving an effective tax saving of 37.5%.

If the R&D tax credit is not fully utilised in a particular year, it can be:

(subject to conditions) claimed as a cash refund from Revenue (spread over three accounting periods);

carried back against the preceding period’s corporation tax liability; or

carried forward indefinitely against corporation tax.

The expenditure must be undertaken in a scientific or a technological field. Useful guidance on what constitutes qualifying R&D activities has been provided by the Revenue Commissioners. Qualifying spend includes both revenue and capital expenditure including buildings, machinery, related overheads and salaries.

Details on intellectual property tax advantages are contained in Chapter 6.

Capital Gains Tax (CGT)

Both companies and individuals are liable to tax on a gain made on the disposal of chargeable assets at the current rate of 30% but rezoned development land is treated differently. An individual is liable to capital gains tax whereas a company is liable to corporation tax on the gain.

Irish resident companies are liable to tax on capital gains arising from the disposal of chargeable assets wherever located.

15


A non-resident company trading in Ireland through a branch or agency is liable to corporation tax on any chargeable gain arising on the disposal of assets situated in Ireland that are held for the purposes of the trade attributable to that branch or agency.

A non-resident company not carrying on a trade in Ireland through a branch or agency is subject to capital gains tax on the disposal of certain specified assets relating to real estate, minerals or exploration rights or on unquoted shares deriving their value therefrom (Specified Assets).

The domicile and residency rules determine whether an individual is subject to capital gains tax on the disposal of assets. An individual who is resident or ordinarily resident in Ireland and domiciled in Ireland for a year of assessment is liable to CGT on the disposal of assets wherever situated. An individual who is neither resident nor ordinarily resident in Ireland is liable only on chargeable gains made on the disposal of Specified Assets. An individual who is resident or ordinarily resident in Ireland, but not domiciled in Ireland, is liable to CGT on the disposal of assets outside Ireland and the United Kingdom, only to the extent that the proceeds are remitted into Ireland.

Generally companies calculate a chargeable gain and complete it as part of their corporation tax returns. Individuals must make a return by the following 31st October. Individuals must pay any CGT liability in respect of a disposal made between 1st January and 30th November in a given tax year by 31st December of that year. Any CGT liability arising on a disposal made after 30th September and before 31st December is payable by 31st January of the following tax year.

There are reliefs, deductions and exemptions available in certain circumstances; a notable example being that the first €1,270 of an individual’s chargeable gain is exempt. In an effort to stimulate the property market, no CGT is payable on the disposal of property held for seven years which is acquired between 7th

December 2011 and 31st December 2013.

Holding Company Benefits

Ireland is a favourable holding company location. Its main advantages is a capital gains tax exemption for the disposals of shares in subsidiary companies and an improved tax credit system for dividends and interest received from foreign subsidiaries. These provisions, combined with a number of existing tax features make Ireland a very attractive jurisdiction for holding and trading companies.

CGT Exemption for a Holding Company

The Irish holding company regime allows for a capital gains tax exemption on disposal of qualifying shareholdings (≥ 5%) in companies resident in an EU member state/double tax agreement partner country. The exemption extends to disposals of certain assets related to shares, including options over shares, options to acquire securities convertible into shares or securities convertible into shares or options.

Dividend Treatment

There is a reduced 12.5% tax rate for qualifying foreign dividends received by an Irish resident company from companies resident in an EU member state/double tax agreement partner country. Where the dividend is paid out of a mix of trading profits and non-trading profits, only that part attributable to the trading income only will be taxed at 12.5%. The balance will be taxed at 25%.

Where 5% or more of the ordinary share capital of a foreign company is held by the Irish company, a tax credit will be given for both the foreign withholding taxes paid on such dividends and for underlying corporate taxes paid by the paying company in its home jurisdiction. This credit extends to state and local taxes.

Irish tax resident holding companies use excess tax credits on one source of foreign dividend as an offset on the corporate tax payable on another source of foreign dividend received are

16


entitled from different companies in different jurisdictions. Credits that cannot be so pooled may be carried forward to future years. Pooling is also available to branches of foreign branches of Irish resident companies. Where (i) the Irish company receives foreign branch income, and (ii) the foreign tax suffered exceeds the Irish tax on the foreign branch income, then the excess may be set-off against Irish tax on other foreign branch income of the Irish company in the year concerned.

Certain interest received from associated companies in double tax treaty jurisdictions may also avail of pooling.

When an Irish company makes distributions, dividend withholding tax can be avoided in certain circumstances including where the recipient is resident in an EU member state/double tax agreement partner country.

Double taxation agreements and/or favourable domestic legislation minimise the withholding tax payable by recipients of royalties and interest.

In addition to preferential treatment of dividend income received, no controlled foreign corporation rules or thin capitalisation rules, the interest deduction to acquire shares in trading companies is available.

Transfer pricing rules have been introduced but only apply to large connected enterprises that are availing of the low corporation trading tax rate of 12.5% and where the taxable profits are understated.

Ireland has a wide range of double taxation agreements with other countries and through EU member states but even in the absence of a double taxation agreements, unilateral provisions within domestic Irish tax legislation allow credit relief against Irish tax for foreign tax paid in respect of certain types of income.

Income Tax

Irish residents are usually liable to income tax on worldwide income and gains. Non-residents are usually only liable to income tax on Irish-sourced income. Ordinary residence and domicile are also major factors in determining the extent of an individual’s liability.

Employee PRSI and the USC (universal service charge) are charged in addition to any income tax.

All monetary benefits of employment are potentially subject to income tax, PRSI and the USC. Credits, reliefs, deductions and exemptions are available in certain circumstances. Income tax, employee PRSI and the USC is deducted at source and remitted monthly for employees under the Pay As You Earn system (PAYE).

Where an employee must relocate his residence for work purposes, an employer may pay for or reimburse an employee free of tax for certain relocation costs. Also, a special assignment relief programme introduced in 2012 shall provide an incentive to encourage a skilled workforce to come to Ireland

In order to support Ireland’s export drive a foreign earnings deduction applies from 2012 where an employee spends a minimum of 60 days developing export markets in Brazil, Russia, India, China and South Africa.

For the self-employed, payment of preliminary tax is due on 31st October in the year of assessment with the balance due on 31st October following the year of assessment.

PRSI and USC

Employers are required to make an additional employer related pay related social insurance (PRSI) contribution on behalf of each employee, usually at a rate of 10.75%. There is a reduced employer’s PRSI rate of 8.5% in certain circumstances. A PRSI exemption has been

17


introduced to encourage employers to recruit individuals who have previously been unemployed.

Employees earning less than €352 per week are exempt from making an employee PRSI contribution. An employee’s PRSI contribution is 4%, in addition to the health contribution of 2% which has no cap, both of which are withheld at source by the employer. Self-employed individuals must pay a PRSI rate of 4% in all income. There is also a 3% surcharge for self-employed income exceeding €100,000.

The Universal Social Charge is a tax payable on gross income, including notional pay, after any relief for certain capital allowances, but before pension contributions.

The USC rates in 2011 are:

2% on the first €10,036; 4% on the next €5,980; and 7% on the balance.

PRSI and the USC are in addition to any income tax payable by an employee.

Withholding Taxes

Ireland has no withholding taxes as such separate from the normal corporation tax and income tax structures, but the term “withholding tax” is often used to note the deduction of corporation tax or income tax at source from various payments.

Salaries and wages paid to Irish resident employees are subject to deduction of income tax and USC by their employer under the pay as you earn (PAYE) system.

Irish resident companies must withhold tax at the standard rate of 20% on interest paid to foreign corporation shareholders and on dividends paid to shareholders, subject to certain exemptions. However exemption is usually available where the recipient is a resident of the EU or a country with which Ireland has a double tax treaty.

On the disposal of Specified Assets or assets of a business carried on in Ireland in excess of €500,000, a purchaser must withhold 15% of the purchase price and pay it to the Revenue Commissioners unless the Revenue Commissioners have issued a certificate to the contrary prior to the sale proceeding.

Payments for professional services made by a wide range of government departments and state funded bodies are subject to a professional services withholding tax which can then be credited against the payee’s ultimate tax liability. In the absence of a certificate from the Revenue Commissioners, a payment made by a main contractor to an authorised subcontractor in a “relevant contract” (generally being in a primary industry) is liable to relevant contracts withholding tax which is deducted at 35%.

Stamp Duty

Stamp duty is chargeable on certain instruments and certain transactions and is affixed onto the instruments. The duty is calculated as a percentage of the consideration of the transaction (ad valorem duty) in most instances. However, sometimes a fixed duty applies regardless of the value of the transaction. Anti-avoidance measures deem the consideration paid to be the market value of the asset transferring for the purposes of determining the stamp duty.

Stamp duty is payable by the transferee of the asset and is due 30 days after the execution of the relevant document. The residence of the parties to the instrument or transaction does not determine whether stamp duty is payable; rather the instrument or transaction becomes stampable if:

1. the instrument of transfer is executed in Ireland; or alternatively

2. no matter where the instrument is executed, if it relates to Irish property or to matters or things done or to be done in Ireland.

18


Transfers of property, stocks and shares and are subject to ad valorem duty. Stamp duty on property is determined by whether it is non-residential or residential property and the property’s value.

The transfer of non-residential property is stampable at 2% on the entire consideration. The transfer on residential property is stampable at 1% on the first €1,000,000 consideration paid and 2% on the excess. Many previously available reliefs were abolished in December 2010.

A lease is chargeable to stamp duty on both the premium/fine and the rent payable under the lease. The duty chargeable on the premium is at the rate applicable to residential or non-residential property as appropriate. Duty on rent varies according to the term of the lease. However duty on rent for a commercial lease of less than 35 years is 1% of the average annual rent. In certain circumstances, value added tax may also be payable to the Revenue Commissioners on the creation of the lease or on the transfer of property.

The stamp duty chargeable on a stock or share transfer is 1% of the entire consideration but there is an exemption for de minimus values and for dealings by stock exchange firms and intermediaries of shares quoted on public exchanges. A transfer of intangible assets such as goodwill under a business transfer agreement is stampable at 2% in the same way as the transfer of non-residential property.

Transfers of certain types of intellectual property (such as trademarks, patents, copyright) are exempt from stamp duty.

There are reliefs, deductions and exemptions available in certain circumstances including for associated company transactions.

Capital Acquisitions Tax

Capital Acquisitions Tax (CAT) is a tax on the market value of a gift or inheritance. The general rule is if the donor and donee are resident or ordinarily resident in the State and

the asset is situated in the State, it is subject to CAT.

The relationship between the donor and donee determines the tax-free threshold which is allowed. The asset received by a donee is aggregated with other property received by that donee from people in the same group threshold. The excess is chargeable to CAT at 30%.

There are reliefs, deductions and exemptions from CAT available in certain circumstances; one of significance being that if CAT is chargeable on an asset and the same event gives rise to a CGT charge, then the CGT charge paid can be credited against such CAT charge.

Value Added Tax (VAT)

Value-added tax is levied on goods and services supplied in Ireland in the course of a business and on goods imported into the State from outside the EU. VAT is also chargeable on intra-EU acquisition of goods by VAT registered persons. VAT is chargeable on the total consideration which the taxable person supplying the goods is entitled to receive. The principal rate is 23% but there are also rates of 13½%, 10%, 9%, 5.2%, 4.8%, 0% and exempt. An entity with a turnover of more than €37,500 in the case of services and €75,000 in the case of goods must register for VAT.

The rules governing VAT on property transactions was simplified on 1st July, 2008, ensuring more equitable terms for taxpayers.

Other Miscellaneous Taxes

Local taxes (rates) are levied annually by local authorities on the occupiers of commercial premises. Rates are based on the notional annual rental values of the property. These vary widely, depending on when the property was valued and its location.

Nominal residential property taxes, pension fund levies and carbon taxes have been introduced and it is expected that their scope will be extended.

19


Charges are payable for the disposal of residential waste. Environmental levies such as plastic bags, incineration and landfills have all been introduced. Further environmental taxes are expected and water charges are to be introduced.

Vehicle Registration Tax (VRT) is charged on the first registration of a vehicle in Ireland It is determined solely with reference to the carbon dioxide emissions – lower emissions vehicles shall attract reduced ad valorem VRT rates. This shall be reviewed in 2012.

Excise duties are consumption taxes charged on a limited number of goods namely tobacco products, mineral oils and alcoholic beverages. Customs duties are charged on goods imported from outside the EU.

A profit resource rent tax on oil and gas production is operated on a graded basis, from 5% to 15% depending on profitability, in addition to the 25% corporation tax currently employed.

There are no taxes on net wealth, or corporate net wealth, in Ireland.

20


CHAPTER 5PROPERTY

Ownership of Land

In Ireland there are two registers where title/ownership may be registered, namely, in the Registry of Deeds and in the Land Registry. However registration in the Registry of Deeds is being phased out with all property being compulsorily registerable in the Land Registry since 1 June 2011. Generally title to property registered in the Land Registry is protected by a state guarantee.

Stamp duty is payable on the transfer of property or on the creation of a lease as set out in Chapter 4.

Real Property

Real property is that held in fee simple or freehold and therefore held outright forever, usually without the payment of rent and usually without any restrictive covenants.

Leasehold Property

In relation to commercial properties, the normal type of commercial lease has, for many years, been for a term between 20 and 35 years. However due to a current over-supply, shorter terms or break options very five or ten years are currently being negotiated between landlords and tenants. Rents are usually calculated on a square footage basis. There may be VAT chargeable against the tenant based on the rent paid and it is important that the tenant is registered for VAT and can recover this VAT liability where applicable. The occupier is also liable for rates (a local authority service tax charge).

Such leases incorporate strict covenants and conditions requiring the tenant to keep the premises in good repair, to insure, to regulate the use of the premises, to ensure compliance with planning regulations and other similar

matters. Such leases provide for the payment of a current market rent, such rent to be reviewed on a five year basis to the then market rent for the property. Upward only rent reviews on new leases have recently been prohibited by legislation. Planned legislation to ban all upward only rent reviews is been withdrawn.

On the expiration of the term of the lease, a tenant is entitled, on the service of an appropriate notice of intention to claim a new lease. The provisions as regards the renewal of a tenancy are contained in the Landlord and Tenant (Amendment) Act 1980 as amended by the Landlord and Tenant (Amendment) Act 1994. It sets out the limited circumstances in which a Landlord can refuse to grant a new lease; if the landlord wishes to exercise such an option, compensation would be payable to the tenant in respect of his removal from the premises.

Also the Civil Law (Miscellaneous Provisions) Act 2008 permits renunciation of a tenant’s rights for a new tenancy both before and during the course of tenancy. If a tenant executes such a renunciation, it will automatically waive any rights that it may have to compensation under Section 16 of the Landlord and Tenant (Amendment) Act 1980 on quitting the tenement. However the tenant’s right to compensation for improvements under the 1980 Act would not be affected by a renunciation.

If a right to claim a new tenancy is based on business equity, the duration of the new tenancy is fixed at 20 years or such a term as the tenant may nominate, but not less than five years. In the event of the right to a new tenancy being based on long possession or improvements equity, the term of the new tenancy may be up to 35 years or such lesser term as the tenant may nominate.

Planning Controls

Planning permission is required for any development on land. Application must be made to the relevant Planning Authority for permission to erect any buildings, to make alterations or

21


additions to existing buildings or to change the use of any land or buildings. Planning and land use controls are regulated by the local planning authority in the area where any development is carried out. The Planning Authority may grant permission with or without conditions, or refuse permission.

Certain large scale environmental, transport and energy infrastructure may be classified as strategic infrastructure for which a fast track planning process will apply and in such cases application for planning permission is made directly to the Planning Board (An Bórd Pléanala).

If the application is made to the Planning Authority the applicant and third party objectors can appeal the Planning Authority’s decision to the Planning Board. For a strategic infrastructure application there is no appeals mechanism. However the decisions of the Planning Authority or of the Planning Board may be subject to an application for judicial review to the High Court.

The Planning Authority has responsibility for regulating enforcement of planning.

Environment

For certain large scale developments and all strategic infrastructure projects, an Environmental Impact Statement must be submitted with the planning application.

Planning Authorities also regulate and permit the operations of less intensive environmental activities whilst the national environmental authority, the Environmental Protection Agency (EPA), regulates larger scale environmental and waste operations. The EPA has extensive monitoring, reporting, investigative and enforcement powers. Much of Ireland’s environmental and waste legislation originates from the EU. Where a company breaches such legislation, its directors may incur personal liability.

When a building is constructed, sold or rented a Building Energy Rating Certificate detailing its energy consumption must be provided to the prospective purchasers or tenants. The Certificate must be accompanied by an Advisory Report and it is valid for 10 years unless there is a material change in the building, for example an extension, a significant deterioration in the fabric of the building or a change of heating system or type of fuel used in it. Section 3 of the European Communities (Energy Performance of Buildings) Regulations 2006 sets out the categories of buildings which are exempted which include national monuments, protected structures, buildings used as a place of worship and certain agricultural and industrial buildings.

22


CHAPTER 6INTELLECTUAL PROPERTY

Combined with tax advantages and an experienced workforce Ireland’s secure regulatory environment makes it a central hub for the creation and exploitation of intellectual property.

Copyright

The Copyright and Related Rights Act 2000 (the “2000 Act”) sets out the law relating to copyright in Ireland. Under the 2000 Act copyright can subsist in original literary, dramatic, musical or artistic works; in sound recordings, films, broadcasts or cable programs; in the typographical arrangement of published editions; and in original databases. Copyright arises automatically and no registration of the work is required.

The term of protection of copyright varies depending on the work. The term of protection for original literary, dramatic, musical or artistic works and for original databases is the life of the author plus 70 years.

The 2000 Act implements the EC directive on databases (96/9/EC) which creates the sui generis database right which gives protection to databases (whether or not they are a copyright work) where there has been a substantial investment in obtaining, verifying or presenting the contents of the database. The duration of the database right is 15 years from the end of the calendar year in which the database was created.

Designs

The Industrial Designs Act 2001 provides for the registration and protection of industrial designs Registration of a design gives the proprietor the exclusive right to use the design and authorise others to use it. The design rights last for a maximum period of 25 years subject to renewal every 5 years.

It is also possible to register a Community design right which applies throughout the EU.

Ireland also offers protection in respect of unregistered community designs. No registration of these designs is required but they offer more limited protection. The term of protection is 3 years from the date on which the design is first made available to the public.

Patents

Under the Patents Act 1992 (“1992 Act”) (as amended by the Patents (Amendment) Act 2006) an invention is patentable if it is new, involves an inventive step and is capable of industrial application. An invention is considered as capable of industrial application if it can be made or used in any kind of industry including agriculture. The granting of patent confers a monopoly on the owner in respect of its invention. Subject to the payment of renewal fees, patents are granted for a term of 20 years, in the case of long-term patents, and 10 years, in the case of short-term patents.

Ireland is a party to the Patent Co-operation Treaty and the European Patent Convention. The Patent Co-operation Treaty provides a process for making a single application specifying the member countries in which protection is sought. The European Patent Convention provides a single route to the grant of a European patent, which then operates as a bundle of national patent rights in each of the member countries designated by the applicant.

Trade Marks

Trade marks are protected by statute through an action for trade mark infringement and at common law through an action in passing off.

Statutory Protection

The Trade Marks Act 1996 provides a system of registration for signs which are capable of being represented graphically and of distinguishing goods or services of one undertaking from those of another. The registration of a national trade

23


mark gives its proprietor the exclusive right to use the trade mark in Ireland in respect of the goods and services for which it is registered. Registered trade marks are registered initially for a 10 year period and this term can be renewed indefinitely for successive 10 year terms on payment of a renewal fee.

In addition, protection of a trade mark can be obtained by applying for a Community trade mark. The Community trade mark give protection throughout the EU. Ireland is also a party to the Madrid Protocol which provides a system for making a single application designating the member states in which protection is sought.

Passing Off

Passing off is a common law action that seeks to protect the goodwill that may have been built up in a business. It provides a cause of action in respect of trade marks that have acquired reputation and goodwill. An action may arise where one trader makes a misrepresentation to customers that is calculated to injure the business or goodwill of another trader and which causes such damage or will probably do so.

Electronic Commerce

Ireland has implemented the Electronic Signatures Directive (1999/93/EC) and the E-Commerce Directive (2000/21/EC) in the Electronic Commerce Act 2000 and the EC (Directive 2000/31) Regulations 2003.

The EC (Protection of Consumers in respect of Contracts made by means of Distance Communication) Regulations 2001 implement Directive 97/7/EC (on distance selling) and regulate the selling of goods or services to consumers “at a distance”, for example over the phone or the internet.

The European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004 and 2005 implement the Distance Marketing of Financial Services Directive 2002/65/EC in Ireland. These Regulations

regulate the distance selling of financial services.

Domain Registry in Ireland

There are several top-level domains under which you can register an internet address. The most common TLDs (from an Irish viewpoint) are .com, .eu, .net and .org. The TLD for Ireland is .ie.

To apply for an “.ie” domain name the applicant must demonstrate a real and substantive connection with Ireland. This requirement can be satisfied by having a registered place of business in Ireland or by providing documentation of an intention to trade in Ireland. Where the applicant has a branch registered in Ireland, the company registration number must also be included on the application form.

A new domain name can be registered by contacting an internet service provider (“ISP”) or by submitting an application online. Often the registration fees are cheaper if the application is made by an ISP.

Data Protection

Data Protection is primarily regulated by the Data Protection Acts, 1988 and 2003 which implement the EU Data Protection Directive (95/46/EC). In addition the EU Directive in relation to the processing of personal data and the protection of privacy in the electronic communications sector (2002/58/EC) has been implemented into Irish law.

Commercial Court

Ireland’s Commercial Court has been used effectively since its inception to resolve complicated intellectual property disputes quickly. Either party can apply to have the matter heard in the Commercial Court but due to the strict timelines imposed by the Court, it is a quicker but much a more costly forum of dispute resolution.

24


Tax Advantages

In addition to Ireland’s tax 12.5% corporation tax rate and the R&D tax credit, there is a capital allowance for expenditure incurred on the acquisition of intangible assets.

Expenditure since May 2009 on various forms of intellectual property qualifies for the capital allowance. The cost of the asset (and its protection) can be written off in line with the accounting treatment in the P&L account, or evenly over a fixed period of 15 years. The clawback period was reduced to 10 years from 15 years for expenditure incurred after 4 February 2010.

25


CHAPTER 7EMPLOYMENT LAW AND WORK PERMITS

Irish employment law, much of which reflects the implementation of EU Directives, is comprised of both common law and statute. Potential employers should be aware that there is a plethora of Irish employment legislation.

Key points are set out below:

Residence and Work Permits

The Irish Naturalisation and Immigration Service of the Department of Justice and Equality deals with the visa requirements for entry into Ireland. Entry requirements vary according to nationality.

Persons born in Great Britain or Northern Ireland are treated in the same way as Irish citizens and do not require residence or employment permits.

Nationals from member states of the European Economic Area (“EEA”) (comprising the EU and Iceland, Liechtenstein and Norway) and Swiss nationals who wish to become resident in Ireland are not obliged to but are entitled to apply for a residence permit. These individuals must be in a position to support themselves without recourse to state assistance, for example individuals must have sufficient health insurance and financial resources. EEA nationals and Swiss nationals do not require permission to work to take up employment in Ireland but should apply for a PPS number. Citizens of EU Member States, Bulgaria and Romania have the same right of access to Ireland as other EU citizens with the exception of access to the labour market.

Non-EEA nationals must seek leave to land and must register with the Garda National Immigration Bureau, in the event that they stay in excess of three months. Some Non-EEA nationals require entry visas to enter

the State. If they intend to stay for more than three months, a Certificate of Registration must be obtained and, if they intend to work, they must obtain an employment permit.

The Department of Jobs, Enterprise and Innovation issue employment permits to non-EEA nationals who have successfully completed the formal application process. All non-EEA nations require an employment permit to take up employment in Ireland. There are a number of permits available, namely Green Card Permits, Work Permits, Contracts for Supply of Service Permits, Spousal and Dependent Permits and Intra-Company Transfer Permits. A distinction exists under Irish law between an employment permit that is required to undertake employment or self-employment in Ireland and a visa that, once validly issued, gives the holder a right to travel to and enter Ireland.

Bulgarian and Romanian nationals require an employment permit to take up employment in Ireland. This requirement only applies to the first continuous 12 months of employment in the State. Thereafter Bulgarian and Romanian nationals are free to work in Ireland without any further need for an employment permit.

Any Non-EEA national who wishes to pursue business activity in a capacity other than as an employed person, for whom an employer would have to obtain a work permit, must obtain a business permission from the Department of Justice and Equality.

The current Business Permission Scheme which is currently being operated by the Department of Justice and Equality sets out a number of conditions which applicants must meet and which are considered too onerous. As a result, Ireland is not capitalising on this potential source of economic activity.

26


The Department of Justice and Equality have recently announced the approval of two new residence schemes – the Immigrant Investor Programme, and the Start-Up Entrepreneur Programme which are due to be formally launched in March 2012. The initiatives are aimed at facilitating and encouraging non-EEA migrant entrepreneurs and investors to invest in Ireland. In return, successful applicants to the new Immigration Programmes, and their families, will be given permission to reside in Ireland for an initial period of two years, renewable thereafter.

The general range of financial commitments required under the Immigrant Investor Programme will vary from €400,000 for endowment related investments to approximately €2 million for low interest bearing Government bonds.

The Start-Up Entrepreneur Programme will enable migrants to reside in Ireland for the purpose of developing their business provided they have a good business idea in the innovation economy and have secured funding of €75,000.

Industrial Relations

Employers are not obliged to recognise or negotiate with trade unions, although there are some industries where it is the common practice. Ireland has a "voluntarist" system of union recognition.

There is significant industrial relation machinery in Ireland. Any trade dispute may be referred by an employee to the Labour Court under the Industrial Relations Act 1946-2004.

Minimum Notice and Terms of Employment Act 1973-2005

This act provides minimum periods of notice to be given by employers and employees when terminating a contract of employment. Certain categories of employees are excluded from the provisions of the act. Under the Terms of Employment (Information) Act 1994 an employer

is required to supply an employee with a written statement of the terms of the employment.

Protection of Workers (Fixed-Term Work) Act 2003

This act prohibits less favourable treatment of fixed term workers as compared to their permanent colleagues unless such treatment can be objectively justified. The act also regulates the use of successive fixed term contracts and requires employers to state in writing the reasons for successive use of fixed term contracts.

Protection of Employees (Part-Time Work) Act 2001

This act implements Directive 97/81/EC concerning the framework agreement on part-time work. There is no requirement to work a minimum number of hours to come within the protection of the act. The act prohibits less favourable treatment of part-time employees compared to that of full-time employees unless there are objective grounds justifying such treatment. The act prohibits an employer penalising an employee for invoking his rights under the act.

Employees (Information and Consultation) Act 2006

This act imposes information and consultation obligations on employers and is being introduced on a phased basis. Since 23 March 2007 the act applied to employers with over 100 employees and from 23 March 2008 it now applies to employers with at least 50 employees.

The act provides for the establishment of a general framework setting out minimum requirements for the right to information and consultation for employees from their employer on matters that directly affect them. Once the act applies to an employer and the employer refuses, following a request by a minimum of 15 employees to negotiate an agreement or where the agreement cannot be reached within 6 months of commencing negotiations, the default

27


Standard Rules (set out in the act) will apply to that workplace.

Statutory Leave

The Maternity Protection Acts 1994 and 2004

These acts give rights to employees in respect of maternity leave of up to 42 weeks, and their subsequent return to work. Under the legislation an employee is currently entitled to maternity leave of 26 weeks during which time the employee will receive a social welfare payment. The employee may also avail of an additional period of 16 consecutive weeks of unpaid leave.

There is no legal obligation on an employer to pay an employee her salary when she is on maternity leave but many employers in Ireland make up the difference between the social welfare payment and the employee’s usual salary.

An employee also has a right to return to the same or similar job after the maternity leave has ended.

The Carer’s Leave Act 2001

This act entitles employees to a period of up to 104 weeks unpaid leave to provide care and attention to a person in need of such care. The employee has the right to return to his or her former job at the end of the leave period.

The Parental Leave Acts 1998 and 2006

This act entitles employees to take up to 14 weeks unpaid leave to look after a child under the age of 8 years. The employee has the right to return to their former job at the end of the leave period.

The Adoptive Leave Acts 1995 and 2005

These acts entitle an adopting mother to up to 40 weeks leave to look after an adopted child during which time the employee will receive a social welfare payment. As with maternity leave,

the employee is entitled to an additional period of 16 consecutive weeks unpaid leave. There is no obligation on an employer to pay an employee when on adoptive leave. Again, there is a right to return to the same or similar job after the adoptive leave period has ended. These acts also give rights to a sole male adopter.

Equality Legislation

Article 40 of the Constitution provides that: "all citizens shall, as human persons be held equal before the law".

The Employment Equality Acts 1998 and 2007 prohibit discrimination on the grounds of gender, age, disability, religion, family status, marital status, race, membership of the travelling community and/or sexual orientation.

Organisation of Working Time Act 1997

The Organisation of Working Time Act implements EC Directive 93/104/EC and sets out statutory rights for employees in respect of rest, maximum working time and holidays. It prohibits employees from working in excess of an average of 48 hours per week (with very limited exceptions). The Organisation of Working Time Regulations, 2001 were introduced to oblige employers to keep working time records for each employee. The records to be maintained by employers on their employees include the number of daily and weekly hours worked by the employee, any annual leave or public holiday leave and any payment to each employee in respect of that leave and the daily break and rest periods taken by each employee.

Business Transfers

An increasing amount of legal protection for employees is now implemented by virtue of Ireland's membership of the EU. Of particular interest to an enterprise acquiring an already existing Irish business is the European Communities (Safeguarding of Employees Rights on Transfer of Undertakings) Regulations, 2003. The legislation protects employees and their rights where the identity of their employer

28


changes and imposes an obligation on both old and the new employers to inform and consult with employee representatives where there is a transfer of a business.

Redundancy

The Redundancy Payments Acts 1967-2007 seek to provide financial help to workers who lose their job on account of redundancy. An employee who is made redundant is entitled to a statutory lump sum from an employer which is calculated on the basis of the length of service and level of earnings. Where statutory redundancy payments are made by employers, they may obtain a rebate of a portion of that payment from the State. This rebate was significantly reduced in 2012.

Unfair Dismissals Legislation

The Unfair Dismissals Acts 1977-2007 are designed to protect employees from being unfairly dismissed from their jobs and give to all employees to which they apply an entitlement to redress in the case of unfair dismissal. These acts provide that a dismissal is unfair unless the employer can prove that it was fair. If the employer cannot show that the employee was fairly dismissed, and the onus is on the employer to do so, the employee may be entitled to compensation up to a maximum of two years remuneration. The acts also give employees protection where they have been “constructively” dismissed.

The National Minimum Wage Act 2000

The National Minimum Wage Act 2000 provides that the minimum wage for an experienced adult employee from 1 July 2011 is €8.65 an hour. An experienced adult employee for the purposes of the National Minimum Wage Act is an employee over the age of 18 who has an employment of any kind in any two years.

Absence from Work Due To Illness

There is no obligation in Ireland on an employer to pay an employee when they are absent from work due to illness. Subject to certain criteria being met an employee may be able to claim social welfare benefit from the State.

The National Employment Rights Authority

The National Employment Rights Authority (“NERA”) monitors employment conditions through its inspection services and can enforce compliance and seek redress.

Forums for Employee Claims

There is a variety of forums in which employees may pursue their claim under employment protection legislation, including Rights Commissioners, the Employment Appeals Tribunal and the Equality Tribunal. Choice of forum will depend on the claim being made.

Where an employee has a claim under common law, e.g. wrongful dismissal or breach of contract, he would bring such a claim in the Circuit Court or High Court.

29


ABOUT EUGENE F. COLLINS

A leading full service law firm of over 100 people, Eugene F. Collins’ expertise covers an extensive range of practice areas with a particular emphasis on our four departments:

OUR SERVICES

Corporate & Banking Litigation and Dispute Resolution Property Corporate Recovery and Restructuring

We also have a range of specialist areas which complement the four key departments including:

SPECIALIST AREAS Alternative Dispute

Resolution Employment and

Employee Benefits Life Sciences and

Healthcare

Asset Finance Energy and Natural Resources

M&A and Corporate Finance

Banking and Financial Services

Environmental and Planning

Media and Defamation

Business Regulation and Corporate Governance

EU and Regulatory Affairs

Private Client

Capital Markets Foreign Direct Investment

Private Equity

Commercial Property Immigration Product Liability

Company Secretarial Information Technology

Projects and Construction

Competition Insurance and Reinsurance

Technology

Construction and Projects

Inward Investment Telecoms

Data Protection Intellectual Property Transport

Debt Recovery Leisure and Licensing

30


KEY CHARACTERISTICS OF EUGENE F. COLLINS

Year Established 1893

Number of Partners 22

Number of Consultants 3

Number of Solicitors 54

Number of Legal Executives & Trainee Solicitors

21

Total Professional Staff 78

OUR FDI EXPERIENCE

The firm has been associated with inward investment for many years. For example, Eugene F. Collins’ started acting for Kraft Foods (then Alfred Bird & Son) in 1934, when it first established operations in Ireland. We have remained the preferred legal counsel for all the Johnson & Johnson group companies since 1977.

Some of the other well-known companies that have invested in Ireland with which we are proud to be associated include:

Vodafone Egis Projects

Marks & Spencer Shell Exploration and Petroleum

Harvey Norman BMW

New Look Boodles

Dun & Bradstreet JD Sports

Whirlpool Inditex (the parent of Zara)

Credit Agricole Creditor Insurance

31


CLIENT LOYALTYThe reason why we think that clients stay with us is that we are a firm committed to partner involvement in managing each client’s legal requirements and to providing a quality service with a solutions-driven commercial approach. The firm’s core ethos is to provide an efficient client orientated service at all times. This is what our clients say about us, as reported in this year’s legal directories:Eugene F. Collins is spoken of highly by clients. "They have been very responsive and solution-focused. Over all I would say they have been great to deal with and value the relationships they have with clients."

"The firm would be as competent as a number of the other prominent law firm in Dublin,"

"The firm is timely and complete and would have no hesitation in giving them a new instruction."

IFLR 1000, 2011The team ‘has the right approach in dealing with commercial activities’.

Eugene F. Collins provides advice in ‘a considered though practical manner’.

Eugene F. Collins comes in for high praise for its ‘responsiveness’ and ability to ‘put itself in our shoes’.

Eugene F. Collins acted for the European Commission on a policy-making case on crisis cartels, marking the first time the EU Commission intervened in the Irish Courts.

Eugene F. Collins ‘provides excellent levels of expertise and service’

Eugene F. Collins ‘sees the bigger picture’ and is praised as successfully combining the ‘the necessary evil of the “i dotting and t crossing”’ with its role ‘as a trusted adviser’.

Eugene F. Collins gives ‘in-depth analysis of the issues’. Legal 500, 2011

Sources praise Eugene F. Collins for offering a partner-led service as well as good value for money, adding that “it takes a "pragmatic and flexible" approach.

This firm's expanding corporate team is becoming a major player in the Dublin market, and “has a good understanding of the nuances of commercial law and offers competitive prices.”

This well-rounded banking practice benefits from the strength of the firm in areas such as corporate, restructuring and insolvency.

This firm has a highly active real estate practice which impresses clients with its broad range of work. The team has well recognized retail expertise. The property lawyers benefit from close co-operation with their colleagues in the corporate and insolvency departments, allowing them to assist with a variety of financing and restructuring issues.

Sources say: "With this firm you know that everything will be well prepared, down to the last detail."

Chambers, 2011

32


OUR FOREIGN DIRECT INVESTMENT TEAM

For further information please contact any of the partners in our Foreign Direct Investment team

Deborah KellyLead [email protected]

Gerard [email protected]

Garrett [email protected]

Anthony E. [email protected]

Lenora [email protected]

John [email protected]

Nicola [email protected]

David [email protected]

Eugene F. Collins, Temple Chambers, 3 Burlington Road, Dublin 4T: 202 6400 | F: 667 5200 | www.ef c.ie

33

http://www.efc.ie/



