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Establish a Subsidiary in Ireland

Establish a Subsidiary in Ireland

The subsidiary is a legal form that can be created by foreign companies seeking to have a presence in the Irish market. Among its key characteristics is the fact that it must be registered as any other Irish company and will be treated the same from legal and accounting points of view.

Below, our Irish company formation officers explain how to register a subsidiary and the most important aspects to consider when choosing this form over others. You can rely on us for support during and after the registration procedure.

 Quick Facts 
 Applicable legislation (home country/foreign country) Foreign country’s legislation (Irish Company Law)

 Best used for

 – trading;

– commercial;

– other types of activities.

 Minimum share capital (YES/NO)

EUR 25,000 if the form used to set up the subsidiary is a public limited liability company. 

 Time frame for the incorporation (approx.)Approx. 3 business days 
 Documents to be filed by parent company

 – application form;

– information about the parent company’s operations;

– proof of legal address;

– bank account number (issued by a local bank).

 Management (Local/Foreign)

A local manager must be appointed; the person must be an Irish citizen. 

 Legal representative required (YES/NO)

 Yes, a local representative must be appointed.

 Local bank account (YES/NO)

 Yes, this is a mandatory condition to open an Irish subsidiary.

 Independence from the parent company

 The subsidiary is a fully independent business form.

 Liability of the parent company The parent company is exempt from any liability in connection to its subsidiary(ies).
 Corporate tax rate

12.5% 

 Annual accounts filing requirements

 Tax returns must be filed no later than 9 months from the end of the financial year.

 Possibility of hiring local staff (YES/NO)

 Yes, a subsidiary can operate through a local workforce.

 Travel requirements for incorporating a subsidiary (YES/NO)

 No, there is no need to travel to Ireland to incorporate a subsidiary.

 Double tax treaty access (YES/NO) Yes, Ireland has 76 double tax treaties, out of which 74 are enforced.

Steps to register a subsidiary in Ireland

The incorporation of a subsidiary is the same as setting up a company in Ireland by a local investor and must respect the requirements of the Company Act. From this point of view, here are the steps to complete:

  1. choosing a trading name and reserving it with the Companies Registration Office (CRO);
  2. setting up a bank account for the deposit of the share capital and future financial transactions of the company;
  3. appointing company officers (director and secretary);
  4. drafting the incorporation documents and filing them with the CRO;
  5. obtaining the tax identification number;
  6. filing for other business permits (if required).

Additionally, an Irish subsidiary can also apply for a VAT number during the incorporation stage.

Should you want to open a company in Ireland in any business field, do not hesitate to reach out to our specialists.

What is a subsidiary and what are the requirements when opening one in Ireland?

Investors interested in opening a company in Ireland should know that amongst the types of companies available under the Irish legislation, there are also the Irish subsidiaries. The subsidiary is the most popular business structure for small or medium-sized companies foreign investors choose to open here and our specialists in company formation in Ireland can offer assistance for opening this legal structure.

The Irish subsidiary is an independent legal entity from the parent company, which can have full foreign ownership. The parent company’s liability will be limited to the share capital invested in the subsidiary, which is what makes this type of company so appealing to foreign businessmen. Subsidiaries in Ireland benefit from the same tax treatment as it is the case of Irish based companies, which means that they can obtain the same tax deductions and similar benefits that are applicable to any domestic business. 

Foreign businessmen who are interested in the procedure of company formation in Ireland under this legal structure should know that the business will be liable to the corporate tax (applicable at the rate of 12,5%). At the same time, the company is required to file the annual reports on its financial activity. 

As a general rule, most of the subsidiaries in Ireland are registered with the Companies Registration Office as limited liability companies, and our team of Irish company formation consultants can offer more details in this sense. They can definitely help foreign businessmen who are interested in setting up a limited company in Ireland in order to establish a subsidiary. The mandatory requirements for the procedure of company registration in Ireland under the form of a subsidiary are the following:

  • a minimum number of two directors, out of which one should have an Irish citizenship;
  • subscribe the minimum share capital – in the case of a private limited company, there are no minimum capital requirements that have to be satisfied; 
  • the subsidiary must hold a registered office in Ireland, just like any other type of business registered in this country;
  • appoint a company’s secretary and have a maximum number of 99 shareholders
  • present the resolution of the parent company which stipulates the decision of registering a subsidiary in Ireland.

In case you need assistance for setting up a subsidiary through a limited liability company in Thailand, our partners from ThaiCompanyFormation.com can help you.

When carrying a business activity in Ireland or elsewhere, the investors should analyze the benefits and the pitfalls of any type of business form. The subsidiary offers the advantage of being independent from the parent company; in the case of a local company set up as a branch office, this advantage will not be applied and, as a consequence, the parent company will be fully responsible for the Irish branch office

As a general rule, conducting the company’s business operations through a subsidiary is seen as providing a higher level of trust for company’s business partners and thus, the subsidiary is a more reliable vehicle for starting a company. Although the branch office benefits from a simpler registration procedure and simpler accounting requirements, the subsidiary is the preferred business structure, as it protects the parent company from the obligation of taking over its liabilities. 

Subsidiaries can have their names registered as Irish trademarks in order to avoid trading name infringements.

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What are the distinctive characteristics of subsidiary companies?

When discussing foreign companies setting up operations in Ireland, the main legal forms available are:

  • the subsidiary;
  • the branch office;
  • the liaison office.

The subsidiary differentiates itself through:

  • its activities, which can be quite varied, as there are no limits in terms of operations it can complete;
  • its independence from the parent company;
  • being offered the same treatment as a domestic company, as it is in fact an Irish company;
  • it can be registered as a limited liability company, which is the most common legal entity in Ireland;
  • from a taxation point of view, it will pay the corporate tax on its worldwide profits.

Out of the 3, the subsidiary comes with most of the benefits, however, it does not suit all foreign businesses. This is why, one of the services we can help you with is choosing the appropriate legal form when setting up an Irish company.

Additionally, the parent company also has certain benefits such as not bearing liability for the subsidiary’s debts and other obligations.

Detailed procedure of opening an Irish subsidiary in 2024

Ireland is a very attractive destination for foreign investors wanting to open companies in this country. The facilities offered by the Irish government refer to the numerous types of companies that can be registered here, the taxation system and low corporate rates, as well as on the right to full foreign ownership of businesses registered in Ireland.

The first step when opening an Irish subsidiary in 2024 is to draft the memorandum and articles of association of the company, which represent the main statutory documents of a newly founded business. If the shareholder incorporating the subsidiary is a foreign entity, a resolution for the incorporation must also be prepared. 

Once all the documents are ready, they must be submitted with the Companies Registration Office (CRO) in Ireland. After the Commercial Register releases the Certificate of Incorporation of the new subsidiary, the registration for taxation purposes with the local tax office must be completed. Companies in Ireland operating as subsidiaries will need to register with the Tax Office in which the legal entity set up its operations. 

The company will have to register for value added tax (VAT) and corporate tax. At the same time, the subsidiaries which employ foreign or local workforce will need to register for social security purposes. Such entities are also required to file VAT returns. It is also necessary to notarize the documents submitted at CRO, a procedure that can be completed at a public notary in Ireland

An Irish corporation must also have a company secretary who is in charge of making sure that legal requirements are fulfilled, including keeping the company’s accounts up to date and making sure annual returns are completed on time. The company secretary may be one of the directors or a different person. You can rely on us for support in setting up a company in Ireland.

The advantages of opening an Irish subsidiary in 2024  – presented by our Irish company formation team

From a legal point of view, the subsidiary is considered a different legal entity than the parent company, having a high level of independence. Furthermore, in the situation in which the Irish subsidiary faces any financial difficulties, the subsidiary will be held accountable and not the parent company, as it is the case when operating through an Irish branch office

The parent company can be held accountable for the debts of the Irish subsidiary only to the extent to which it has participated at the subsidiary’s capital. Furthermore, the Irish subsidiary can benefit from the Parent-Subsidiary Directive, applicable in this country starting with 1st of January 2004. The Directive stipulates a set of tax exemptions and deductions, which are available in specific conditions.   

For example, the Directive allows the exemption on the payment of the withholding tax on dividends to an EU company. Under its regulations, the resident company in Ireland will be required to pay the corporate tax on-inbound dividends received from foreign companies, but an exemption in this sense is granted in certain situations. 

The EU Parent – Subsidiary Directive stipulates that the payment of the withholding tax on dividends can be exempted in the case in which the dividend is paid by a company registered in any country of the European Union (EU) to its parent company operating in another member state of the Community. However, this tax exemption can only be applied provided that the parent company owns at least 10% of the subsidiary’s shares.  

Investors who want to open a company in Ireland as a foreign subsidiary should also know that the profits of this type of business will not be taxed in this country as a general rule, but they may be taxed in specific conditions. This can apply in the situation in which the subsidiary’s profits are repatriated in this country through the payment of dividends, for example. 

In the situation of an Irish based company that operates several subsidiaries, investors are entitled to obtain a tax deduction on the funding costs associated with the investments in these subsidiaries, but there are certain conditions that have to be met, which can be detailed by our team of consultants in company registration in Ireland

The EU Parent – Subsidiary Directive applies to a wide range of business entities. For example, investors operating certain categories of cooperatives or mutual companies can benefit from the provisions of the Directive. Also, the Directive is applicable to funds and savings banks, but also to associations that perform commercial activities. It is important to know that companies operating as European companies (Societas Europaea) may also benefit from thisDirective.  

The Irish subsidiary from a taxation point of view

As mentioned above, opening a subsidiary in Ireland implies paying the corporate tax on its entire profits, which can be quite beneficial. The standard rate of this tax in Ireland is 12.5% which is one of the lowest in Europe, so it is quite advantageous for a foreign entity to establish its headquarters through a subsidiary entity in this country.

The payment of the corporate tax in Ireland will further attract:

  • corporate tax returns that must be filed within 9 months from the end of the accounting period;
  • the payment of the tax must be done no later than the 23rd day of the month at the end of the respective accounting timeframe for large companies;
  • for small companies, the payment must be done the same way.

Also, the Irish Revenue Officerequires for preliminary taxes to be paid in the:

  • 2 installments for large companies;
  • one installment for small enterprises.

Apart from the income tax, the subsidiary is also required to register for social security and pay the related contributions when hiring employees.

Are there any tax benefits for Irish holding companies? 

Yes, holding companies in Ireland can benefit from numerous tax advantages, which is also applicable in the case of holding companies that own shares in businesses operating as subsidiaries.  For example, Irish holding companies can obtain an exemption on the payment of the capital gains tax on the disposal of shares of a subsidiary, in the case in which several conditions are met and our specialists can offer an extensive presentation on the matter. 

One of the main requirements is to own share rights in a subsidiary that is a tax resident of the EU or, if not, the subsidiary must be a tax resident of a country with which Ireland has signed a treaty for the avoidance of double taxation

Further on, the holding company is required to own at least 5% of the subsidiary’s share capital for a period of minimum 12 months. It is also necessary for the holding company to have the right to at least 5% of the subsidiary’s profits and to own minimum 5% of its assets.  

The exemption on the payment of the capital gains tax will be applicable if another condition is satisfied, which stipulates that the subsidiary has to develop a business activity that can be considered a trade. Our team of specialists in company registration in Ireland may offer further information on this subject.  

This relief on the capital gains tax can also be applied in the case of asset transfers developed through groups of companies (intra-group transfers). A group is defined by a parent company and its 75% group of subsidiaries, which can be registered in Ireland, at the level of the EU or the European Economic Area (EEA) or in a contracting state of an Irish double tax treaty

Our experts in Irish company formation matters created this video below which shows the main steps to follow when opening a subsidiary in Ireland:

What is a wholly-owned subsidiary in Ireland? 

Another way of starting a business activity in Ireland is by setting up a wholly-owned subsidiary.  As its name suggests, the wholly owned subsidiary is characterized by the fact that the parent company owns a large share of the subsidiary’s stocks, which can increase up to 99%.  

According to the stipulations of the Irish Companies Act 2014, Section 8, a company can be considered a wholly owned subsidiary of another enterprise in the case in which the latter is the only representative of the subsidiary. Other stipulations are presented in the same section and our team of consultants in company registration in Ireland can provide a complete definition of the term. In case you want to open another type of company, for example, an offshore company in Belize, we can put you in contact with our partners.

Why choose the subsidiary in Ireland in 2024

At the level of 2024, the subsidiary is one of the most popular business forms among foreign companies in Ireland due to the lack of harsh formalities when it comes to registration.

The Irish subsidiary can be used for a wide variety of activities, among which trading and information technology are only two of the most prolific in 2024.

If you decide to open a subsidiary in Ireland in 2024 and need guidance, our experts in company formation are here to help you.

In terms of economic results, the Central Bank of Ireland projects that:

  • the GDP ( Gross Domestic Product) will shrink in 2024 due to rising interest rates from the European Central Bank;
  • even though the GDP is expected to expand slowly, the modified domestic demand (MDD) is expected to increase;
  • growth is expected to be 2.5% in 2024, 1.9% in 2025, and 2% in 2026.

The 2024 Budget predictions state that MDD will expand by 2.2%, with consumer expenditure, which makes up the majority of MDD, predicted to grow by 3.2%.

Investors can contact our representatives in company formation in Ireland for information related to company registration under a subsidiary and for other details related to the taxes applied to companies. Our consultants can also provide advice on the advantages of registering a branch office in Ireland, another option available for foreign companies that want to expand in this country.