Expand Business to Ireland | Branch vs Subsidiary Company
There are two main options for a foreign company that wants to expand its business to Ireland. The foreign company or ‘parent company’ can choose to register an Irish branch company or an Irish subsidiary company.
When deciding on the legal format to expand a business to Ireland, the parent company will often consider both the tax implications and the level of independence of the company. For instance, both a branch and a subsidiary company can avail of Ireland’s 12.5% corporate tax rate. However, an Irish branch company only qualifies for this rate on sales within the State. Whereas an Irish subsidiary company will receive the 12.5% corporate tax rate on sales in Ireland and internationally. For this reason, subsidiary companies are more commonly used.
Irish Subsidiary Company
An Irish subsidiary company can avail of Ireland’s low corporate tax rate of 12.5% on all sales within Ireland and internationally.
An Irish subsidiary company is a way to expand the business to Ireland with an independent legal entity that is subject to Irish taxation and strict annual filing requirements. Subsidiaries are generally registered as a Private Company Limited by Shares (LTD) and have a corporate shareholder. The Parent company must be the majority shareholder, holding 51% or more of the shares, additional shareholders can be added (up to 49%).
Having a Parent company as the shareholder means that all existing shareholders of the parent company will have the same percentage stake in the new Subsidiary. The parent company’s liability will be limited to the share capital invested in the Irish subsidiary.
How to Register a Subsidary Company in Ireland
Irish Branch Company
A foreign company may choose to register a branch office to expand the business to Ireland and establish a place of business in the State. A branch company, also known as an External Company, is viewed as an extension of the overseas parent company. Depending on the location of the parent company, the branch office will be either a Branch EEA or Branch Non-EEA.
To incorporate a branch in Ireland, a set of legalised and authenticated corporate documents from the parent company are required to be filed with the Companies Registration Office in Ireland. This would usually consist of an Apostilled copy of the company’s certificate of Incorporation and the Memorandum and Articles of Association. The branch office is also required to have a registered address in Ireland, and a person authorised to accept legal service in Ireland.
How to Register a Branch Office in Ireland
Branch vs Subsidiary
| Branch | Subsidiary |
|---|---|
| Extension of the parent company | Independent legal entity |
| Business decisions are made by the parent company | Business decisions can be made independently |
| No shares allocated | Majority corporate shareholder |
| 12.5% Corporation tax on Sales within Ireland only | 12.5% Corporation tax on Sales within Ireland and internationally |
| Accounting is done from the parent company and those accounts are filed in Ireland | Subject to Irish taxation and strict annual filing requirements |
| Must have a registered address within Ireland | Must have a registered address within Ireland |
| Must appoint a registered agent in Ireland | Must appoint at least one EEA resident director and separate company secretary |
The main difference between establishing a branch office and registering a subsidiary company would be the dependency on the parent company, the annual filing requirements, and the taxation implications. Ireland offers attractive tax exemptions to external companies establishing branch offices in the State.
If a subsidiary company is incorporated, it will be subject to Irish corporation tax (12.5%) and strict annual filing requirements. In the situation of a branch office, only the activities of the branch itself will be subject to corporate taxation in Ireland. Companies should take into account that setting up a subsidiary is an independent legal entity and its liability is limited to its issued share capital.
For more information on Irish Branch Offices and Irish Subsidiaries, please give us a call at +353(0) 16461625 or complete our Contact Form and a member of our team will be in touch within 24 hours.
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