The differences between Irish and UK Companies

By Sinead Floody, 13th Oct 2017

Why Choose Ireland?

This is a question we are asked a lot by entrepreneurs looking for the perfect location to set up their new business venture. With a lot of predictions being made by economists, it is still unclear as to how Brexit will directly affect Ireland and indeed, the UK itself. It is clear, however, that Ireland will remain in the EU and become the last English-speaking country in the union. Ireland already holds the title as the only English-speaking country in the eurozone, making it an attractive option for to those looking to gain access to the European market. With all the uncertainty that Brexit brings many UK companies are looking to move their head offices to Ireland and other in EU countries.

In this article, we will examine some of the key differences between incorporating a business in Ireland and the UK.

Company Types 

Both Ireland and the UK are cost-effective locations to incorporate a business and the company types available are relatively similar. The most popular company type for private and commercial businesses ventures is a Private Company Limited by Shares (LTD) in Ireland and a Public limited company (PLC) in the UK. In both countries, a limited company is a separate legal entity; shareholders and directors are not liable for the company’s debts. If the business fails, the members have liability only to the unpaid amounts on their shares.

In Ireland there is also the option of registering a Designated Activity Company (DAC), this is very similar in nature to an LTD. A DAC is suitable for companies that are incorporated to complete a specific or sole purpose and for legal reasons wish to have the company powers restricted (e.g. a Joint Venture). The UK has a company type called a Community Interest Company (CIC) which is similar to that of an Irish Company Limited by Guarantee (CLG), registered for charitable purposes.

All company types in Ireland are required to have a minimum of at least one director and a separate company secretary, in contrast with the UK, where a secretary is not required for a limited company. Ireland is flexible on this requirement, however, as a corporate entity or a non-resident natural person can sit as secretary of the company once they have the required knowledge to fulfil the appointment. Private companies in both the UK and Ireland can operate with only one shareholder/owner.

Companies in Ireland and the UK possess many similarities such as the requirement of a registered office in the jurisdiction in question and the requirement of an objects clause in non-for-profit entities. Both are easy to register and both can avail of audit exemption below certain thresholds.

Taxation 

Both Ireland and the UK charge corporation tax, however, the rates are notably different. Ireland charges just 12.5% corporation tax on trading profits as opposed to the high rate of corporation tax offered by the UK, at a staggering 20%. Ireland has double taxation agreements with more than 70 countries around the world, making it an attractive jurisdiction to do international business.

Legislation

Company Law in the Republic of Ireland (ROI) is more up-to-date – the Companies Act 2014 repealed the previous Companies Acts (1963-2013) and introduced new company registration requirements, removing the red tape from company formation. This new law introduced the option of having only 1 director on a limited company, similar to the existing rules in the UK. The UK is legislated by the Companies Act 2006, which by its name is more dated than the current ROI company law.

Ireland has also been awarded the highest Tax Transparency Rating by the OECD and is currently making efforts to implement the 4th and 5th EU Anti-Money Laundering (AML) Directive to ensure effective AML regulation.

Summary

To summarize, when choosing whether to register your company in either the Republic of Ireland or the UK, remember the following points:

•   Ireland’s corporation tax is an extremely low 12.5%, compared to the UK’s high rate of 20%
•   Ireland has up to date company law; the Companies Act 2014
•   Ireland is currently the only English-speaking member of the Eurozone once Brexit occurs
•   Ireland has no plans to exit the European Union
•   Ireland has recently been awarded the highest Tax Transparency Rating by the OECD
•   Ireland has double taxation agreements with a large number of countries around the world
•   It is now easier to register a company in Ireland with the introduction of the Companies Act 2014

Should you have questions on any of the topics covered in this article, please contact the company formation experts at Company Bureau.