How to Do Business in Ireland
The Emerald Isle, as Ireland is known, has become a popular place for Brits to set up shop in recent years. Rated by Forbes as the 11th best country to do business and 24th for ease of doing business (2019), Ireland’s presence as a business hub has since grown. With huge multinationals such as Google, LinkedIn and Facebook choosing to establish their European headquarters in Dublin, you're in good company if you’re thinking of doing business in Ireland.
Business Culture in Ireland
Business culture in the Republic of Ireland can be summed up in a similar way to other parts of life in the country: slightly conservative with a punch of humour.
As it’s on the smaller side, building relationships in-person is incredibly important in Irish culture. Expect to have some casual conversation before you get into the nitty-gritty of any meetings - the Irish value this form of communication to build up trust.
Benefits of Doing Business in Ireland
There are some enticing opportunities for those who want to trade or set up a business in Ireland, including:
- Gateway to Europe
- Intellectual property incentives
- Population and skills
- Similar regulatory environment
- Tax incentives for foreign direct investors
Gateway to Europe
Ireland is widely regarded as the ‘gateway to Europe’ for many UK businesses. Since it’s in the EU and eurozone, it provides the perfect platform for companies that want to expand their business into Western Europe.
Ireland is also one of the few countries in the EU where English is the primary language - making it the ideal location for partnerships with British businesses. Flights from London to Dublin are around an hour, which means the commute and time zone make the business environment in Ireland easier to expand into than most.
Intellectual property incentives
The Irish government offers relief in the form of a capital allowance for companies pursuing innovation around intangible assets. Registering intellectual property (including copyrights, trademarks and patents) in Ireland can lead to paying as little as just 6.25% tax on the profits generated by the IP.
Furthermore, research and development activities achieve 25% tax relief, similar to the UK’s R&D tax credit scheme.
Population and skills
With the youngest population in Europe, Ireland is a great place to find junior hires. Moreover, the OECD rated Irish workers as some of the most skilled in the world, with a high quality of workers offering professional services.
In combination, these two factors suggest that doing business in the Republic of Ireland is ideal for those looking to make local hires and find employees to grow with the company.
Similar regulatory environment
Irish legislation is established, and incredibly similar to the UK. This means that if your industry is already subject to regulation, it’s likely that there won’t be much you’ll need to do to prepare.
No changing processes or onboarding new systems in order to comply, and an easy way to access a new market in the hope of growing your trade income.
Tax incentives for foreign direct investment
Those looking to create passive income from foreign property investment can receive more favourable tax conditions in Ireland than the UK. Moreover, IDA Ireland is an organisation set up to offer funding and grants to foreign investors.
You can also be a sole trader when operating in Ireland, as businesses are not required to hold Irish company status. In fact, you can get by simply by adding value added tax (VAT) to goods without registering as an established trader by simply completing a tax return.
However, there are also some added benefits for tax purposes to establishing an Irish branch of your business. For example, resident companies can benefit from a low Irish corporation tax rate of just 12.5%.
Challenges of Doing Business in Ireland
Unfortunately, with the good comes the bad. Here are some of the risks of doing business in Ireland:
- Future business decisions
- Trading in euros
- High competition in certain industries
The UK’s exit from the European Union (finalised in January 2020) presented Ireland with some challenges. Discussions about whether to introduce a hard border were lengthy. Ultimately, the softer ‘Irish Backstop’ was rejected, which has caused some problems between the Republic of Ireland and Northern Ireland.
As such, Brexit has led to huge supply chain issues for products made in both the UK and Ireland. This has led to an increased price of production, and a decrease in profits for most product-based businesses operating in Ireland.
Another disadvantage of doing business in Ireland is the current economic environment. With the onslaught of Brexit and Covid, the Irish economy has suffered, with inflation at 8.2% (down from 8.7% in August but up from 5.1% in October 2021).
This means that residents are likely to be sceptical about spending, and local partners may be more cautious about their trading volumes.
Future business decisions
Ireland is an easy country to set up shop for small businesses, but once you form a company incorporated in Ireland, there may be some obstacles.
For instance, you’ll have to consider the tax liability situation in Ireland. Without establishing a company, you’d be liable for capital gains tax on any income generated from business in the country. But after establishing a limited company, you will have to declare the taxable profits.
It’s a pretty similar set up to the UK, but just requires some extra work to calculate the tax due and submit a second return.
Trading in euros
Another challenge to doing business in Ireland is the relatively high cost of trading in a foreign currency. Without access to an Irish bank account, your company can suffer from fluctuating exchange rates as you convert the euros back to GBP.
Create a business account with Clear Currency to get started with your international payments. We can offer a one-to-one dedicated service and competitive rates.
High competition in certain industries
Those in the medicinal and pharmaceutical industries must be aware that the market is already thriving in Ireland. In 2022, the country’s top exports were in this industry, generating over €5.74 billion.
Although the government offers incentives for research and development in pharmaceuticals, clearly the industry is quite crowded and it could be hard to penetrate the market. Having said that, there may still be room for the right goods and services.
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