In charge of Ireland for TMF Group, Ronan Reilly has a thing or two to say about the ease of doing business in his country. His first blog looks at the developments in Intellectual Property in Ireland.
Ireland has truly cemented its reputation as a great place for business in recent years with many major multinational corporations choosing Ireland as their European headquarters. Much of this success has been as a result of making it easy to establish and operate in Ireland.
The efforts have yielded much fruit, not least of which was a top 3 ranking in the latest TMF Group Complexity Benchmark Report – following on from last year's top rating.
Why is Ireland a great place to do business?
One of the reasons Ireland is becoming more streamlined for business is the 2012 Companies Bill, one of the largest pieces of legislation in the history of the Irish state, which consolidates the existing Companies Acts from 1963 to 2013 into one single piece of legislation.
When formally enacted this year, it will encompass a number of measures that aim to reduce the complexity of legal entity management, including allowing companies to appoint only one director (previously two were needed), having no requirement to physically convene Annual General Meetings, and having a single constitutional document (similar to Hong Kong).
Companies will have 18 months to adopt some of the elements of the new legislation and will significantly change the company secretarial landscape in Ireland and ensure Ireland's low complexity ranking at 79.
But that's not all: Intellectual Property developments
Whilst the recent announcement by the Irish government of the phasing out of the "double Irish" tax arrangement has been grabbing headlines, of interest also is the Irish governments' planned introduction of the "Knowledge Development Box" (KDB) to make Ireland a more attractive location for developing Intellectual Property ("IP").
The Irish government is awaiting reports from the EU and the OECD before its planned introduction in 2016. This provides Ireland with a unique opportunity to deliver a best in class regime that is compliant with EU law. The tax rate is anticipated to be around 6.25%, half of the current corporate tax rate in Ireland, and lower than the current UK Patent Box rate (being 10%).
Effect of the Knowledge Development Box
The introduction of the KDB will enhance Ireland's onshore Intellectual Property regime and provide opportunities for international companies to maximise their IP operations in Ireland on an income basis. There has been a steady flow of US tech companies into Ireland over the last few years, resulting in high paying, high quality jobs. The KDB would have an impact in attracting more of these companies to set up in Ireland, whereby the suggested low tax rate should make it attractive for foreign companies to develop IP in Ireland.
Experts looking forward to more positive Irish headlines
The planned introduction of a Knowledge Development Box to Ireland at some point in 2016 is most welcome, as there are already similar tax regimes in the Netherlands, UK and Luxembourg. The benefits are clear in terms of foreign companies deciding to exploit IP with reduced tax; however, the attention of the OECD and the EU needs to be considered carefully by the government before its introduction, given the negative publicity concerning the "double Irish" tax issue. (This is due to be phased out by 2020, as announced late last year.)
It is a fine line for Ireland as there is a balance to be struck between being committed to tax policy which takes into account global political and media focus, including BEPS, but also a tax infrastructure policy that ensures the country competes in a rapidly changing international tax landscape.
Read more about doing business in Ireland
Download the Global Benchmark Complexity Index
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