Why Invest in Ireland?

The Irish Government is committed to keeping Ireland a pro-business location. The country has been an attractive location for inward investors for many years and continues to earn a disproportionately high amount of foreign direct investment. Behind the headline corporation tax figure of 12.5%, there are many additional benefits to investing in Ireland, including a wide range of support services available to inward investors.

Some of these benefits include:

Access to Key Markets

As a member of the European Union (EU), Ireland is part of the world’s second largest economy where goods, people and capital can move freely. Ireland is one of 15 EU member states using the euro as the official currency.

Through Ireland’s major ports, the European mainland is accessible by vehicle within 24 to 36 hours and the country’s four international airports ensure that Europe, the US, Asia and other locations are readily accessible by air.

Low Taxes

Corporate trading profits may benefit from an EU-approved low corporation tax rate of 12.5%, which compares extremely favourably with regimes elsewhere. Aside from certain withholding taxes in respect of which exemptions may be available, there are no restrictions on repatriation of earnings, capital, royalties or interest and there are no restrictions on the import of capital to Ireland.

The Economy

In recent years, Ireland has been the best performing economy in the EU. The 2008-2012 Economist Intelligence Unit Business Environment Ranking placed Ireland 11th globally out of 82 countries, naming it as one of the most attractive business locations in the world.

The National Development Plan 2007-2013 allocation of €184 billion by the Irish Government to heavily invest in science, innovation, infrastructure, transport, enterprise and human capital, continues to improve our attractiveness to overseas investors and to sustain Ireland’s projected levels of economic growth.

Foreign Trade

Ireland has recently enjoyed record levels of external trade. The World Competitiveness Yearbook 2008 ranked Ireland 14th out of 55 countries worldwide for goods export as a percentage of GDP. The 2008 Index of Economic Freedom rated Ireland as one of the most “pro-business environments for foreign business and foreign investment”.

Traditional manufactured goods continue to be important export items, but industrial products such as chemicals, software and medical devices account for the majority of manufactured exports. The pharmaceuticals industry is particularly important, accounting for over 30% of Ireland’s total exports. Nine of the world’s 10 largest pharmaceutical companies manufacture in Ireland.

For almost a decade, US manufacturing operations in Ireland have achieved average after-tax returns on investment of approximately 21%. Ireland has also attracted 25% of all new US investment in the EU over this time.

A Favourable Holding Company Regime

Until recently, investment in Ireland was likely to be routed through a holding company in another European location. Changes to the legislation mean an Irish company can now act as a European/Regional holding or intermediate holding company. The main changes are:

Capital Gains Tax (CGT) on Share Disposals: Irish holding companies are allowed an exemption from capital gains tax on the disposal of shares in their subsidiaries. The exemption is subject to a number of conditions.
Foreign Dividend Income: The Irish tax system taxes the receipt of foreign dividends from trading subsidiaries tax resident elsewhere in the EU or a treaty partner country at a rate of 12.5%. This liability may be further reduced or eliminated by the foreign underlying tax already paid on this income. There is a unilateral tax credit for underlying foreign tax provided there is a 5% shareholding relationship between the companies.

Research and Development (R&D) Tax Credit

Ireland has a R&D Tax Credit to encourage both foreign and indigenous companies to undertake new and/or additional R&D activity in Ireland. This is available to Irish tax-resident companies engaged in in-house qualifying R&D undertaken within the European Economic Area (EEA). In practice, R&D expenditure covers wages, related overheads, plant and machinery and buildings.

The recent Finance Act improved the tax credit which is now available at a rate of 25% of the excess of qualifying R&D expenditure over that incurred in the base year (2003) (if any).This can now also give rise to tax refunds in certain circumstances. It is available in addition to the usual corporation tax deductions for expenditure related to the trade.

Excellent Business Environment

Ireland benefits from a pro-business industrial development policy, a successful social partnership model and a working culture which values “sheer efficiency”.

Educated Labour Force, Competitive Operating Costs

Ireland's young population and high-quality education system present a competitive advantage for any employer. Most of Ireland's third level students major in engineering, science or business studies and a many graduates are proficient in more than one language.

Ireland has one of the longest average industrial working weeks in the European Union (40 hours including overtime) and, because of fewer public holidays, the longest working year.

Excellent Telecommunications

Ireland has one of the most technologically advanced telecoms networks in the world. Continuous government investment has resulted in state-of-the-art optical networks and the telecommunications market is fully deregulated.

Network of World Class Suppliers and Business Supports

Ireland's prominent position as a multinational manufacturing base has resulted in the development of a network of top-quality suppliers. As well as servicing the needs of Irish-based manufacturers, these companies supply facilities across Europe and worldwide. Most suppliers are accredited to ISO 9000 quality standards.

e-commerce

Under Irish law, electronic documents and their paper counterparts are treated equally and there is legal recognition of electronic signatures and use of electronic contracts in commercial and non-commercial dealings.

Transport Infrastructure

The development of a highly effective transport network has been a top priority for successive Irish governments and EU funding has resulted in the construction of a new motorway system which is continuously upgraded and extended.

Special Incentives and Development Agencies

Industrial development agencies offer a range of attractive incentives for companies. These include grants towards start-up costs such as training and employment, and grants in respect of investment in research and development projects. Rent remissions and rent allowances may also be available.

There are two main national development agencies:

The Industrial Development Authority (IDA)

The IDA provides advice and assistance to overseas companies considering setting up an operation in Ireland and to advise those already established here. A&L Goodbody has a strong working relationship with the IDA and can arrange an introduction.
The IDA will in certain cases grant incentives such as capital grants which are available towards the cost of fixed assets including site development.
Grants may also be available to meet the cost of training workers in new projects and there are a number of additional incentives available for companies undertaking research and development programmes in Ireland.
The IDA owns a number of industrial parks with purpose-built factories and can also offer greenfield sites where promoters can erect custom-built facilities.
The IDA’s International Services Programme is specifically geared towards encouraging international services companies to locate in Ireland.
The IDA has offices in the UK, Germany, Holland, Japan, Hong Kong, India, China, Australia and six offices in the US: New York, Chicago, Los Angeles, Boston, San Jose and Atlanta.

Enterprise Ireland

Enterprise Ireland's role is to support the development of indigenous Irish industries and to encourage overseas industries in the food, drink and timber sectors to locate in Ireland.
Enterprise Ireland has 13 offices in Ireland and 30 offices worldwide.

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