A foundation in Ireland is generally registered with the purpose of developing non-profit activities. Under the Irish legislation, this structure is seen as a non-profit organization (NPO), which can be registered for mutual or public benefit purposes. Amongst the types of NPOs available in Ireland, besides the foundation, the legislation stipulates structures such as religious organizations, cooperatives, trade unions, self-help groups or residents’ associations.
In order to register an Irish foundation, its founders must select a specific legal entity; in the case of NPOs, only several options apply and our team of consultants in company registration in Ireland can provide assistance on the main options (and on the advantages/obligations deriving from these legal entities) available in this case.
What are the main company types for Irish NPOs?
The Irish NPOs can be registered as companies limited by guarantee, trusts, incorporated associations or as designated activity companies. The latter option is newer, as it was introduced under the regulations of the Companies Act 2014. All these company types provide the possibility of qualifying for a set of tax exemptions.
What are the main tax exemptions for Irish NPOs?
An Irish foundation and other types of NPOs operating here qualify for a set of tax exemptions. Provided that the foundation develops a charitable activity (the term is defined under the Irish law), it can benefit from an exemption on the following taxes: the corporate tax, the income tax, the capital acquisition tax, the withholding tax on dividends, the stamp duty and the deposit interest retention tax.
However, it is necessary to know that these types of structures are generally liable for the payment of the value added tax, but in specific cases, foundations and NPOs can be exempted from the obligation to pay this tax; our team of specialists in company formation in Ireland can assist with more details on the Irish tax system and can also present the tax requirements for charitable structures in this country.
When is an Irish NPO considered a charitable structure?
As stated earlier in this article, any Irish NPO can be founded for a public or mutual benefit purposes. The statistics show that, in Ireland, most of the NPOs are established for mutual benefit purposes, which means that they are founded for the benefit of their members. As a general rule, foundations and Irish NPOs are set up as trade unions, political parties, professional bodies, recreation clubs, sports clubs and others. In this situation, the structure will not be considered a charitable institution.
In order to gain the status of a charitable structure, it must be founded as a public benefit organization; a charitable structure is defined under the regulations of the Charities Act 2009 which stipulates that a NPO must develop various activities that are in the benefit of a community (reducing poverty, preventing poverty, investing in education and other similar purposes).
What are the characteristics of the Irish non-profit sector?
The non-profit sector in Ireland is characterized by both charitable structures and mutual benefit institutions. Most of the Irish NPOs operate as companies limited by guarantee (approximately half of all the NPOs in Ireland are registered under this legal entity); our team of specialists in Irish company formation can provide advice on the procedure of forming this type of company. Besides these, the Irish NPOs have the following characteristics:
- • in 2015, there were approximately 20,000 non-profit organizations;
- • at the level of 2017, their number grew at approximately 29,000;
- • the non-profit sector in Ireland is a large employer, accounting for approximately 150,000 employees;
- • the value of the industry stands at EUR 11 billion and a part of it (of 18%) is obtained through governmental funding;
- • from the total NPOs in Ireland, only 2,700 obtain their funding solely through governmental funds.
As presented above, an Irish NPO is generally incorporated as a company limited by guarantee, as this structure is especially created for this purpose. Besides this, it is not necessary to deposit a minimum share capital and the founders of the structure have the quality of guarantors and not shareholders.
In order to incorporate this type of company, its founders must sign the articles of association and the memorandum. Another similar option is the designated activity company, a business form that must be founded based on a share capital; those interested in setting up a foundation in Ireland can contact our team of consultants in Irish company formation for advice on the advantages provided by these company types.