The e-commerce bill in Ireland
The Irish Government encourages e-commerce business activities, which is why in 2000 it enacted an e-commerce bill. The e-commerce legislation regulates the conduct of electronic businesses in Ireland. Among the provisions of the e-commerce legislation, the most important are: the enablement the of electronic signatures, the legislation regarding the registration of a domain name for an Irish business and the legislation on intellectual property (on matters such as software encoding/decoding of the electronic papers).
What is the law on e-commerce in Ireland?
In 2003, the Irish Ministry for Communications also adopted the European Communities Regulations for data protection and privacy, thus attracting more foreign investors interested in opening online companies in the country. Our team of consultants in company registration in Ireland can provide an extensive presentation on the e-commerce law applicable in this country.
Ireland was one of the first member states of the European Union (EU) that implemented the legislation created at the level of the Community. It is a signatory state of the Electronic Signatures Directive, imposed through the Electronic Commerce Act 2000. It also implemented the Electronic Commerce Directive.
What are the obligations of the e-commerce operators in Ireland?
Foreign investors interested in starting a business in Ireland in the e-commerce sector should know that the obligations available for the e-commerce operators in Ireland are established under the regulations of the Electronic Commerce Directive. Through this law, businesses operating in the e-commerce sector have to follow the national legislation in which the company is registered. Any online company operating as an e-commerce business has to respect the consumer protection legislation and must provide a set of information. For example, it is legally required to display on the website the company’s contact details and to provide protection against spam messages.
Our team of specialists in company formation in Ireland have prepared the video below, which provides a concise presentation on the e-commerce industry available here.
Withholding taxes for e-commerce companies in Ireland
Numerous foreign businessmen are interested in opening a company in Ireland due to the favorable tax regime applicable to local businesses. Amongst numerous tax advantages, Ireland provides one of the lowest corporate taxes available in Europe, of only 12,5%. Irish businesses can benefit from various tax exemptions and incentives, which are available for specific types of companies or specific business sectors.
With respect to e-commerce businesses, the withholding taxes will apply by taking into consideration if the money received by these companies are business profits or royalties in case of digitized products or services. Based on the fact that Ireland has an extended network of double tax treaties, many companies may apply for tax credits which can be deducted when applying for tax returns in Ireland.
What is the VAT policy on Irish e-commerce companies?
Irish e-commerce companies selling goods or services over the Internet to foreign citizens or legal entities may be liable for the value added tax (VAT) in Ireland or in the buyer’s resident country, depending on certain conditions. Some of the most important aspects related to the Irish VAT are presented below:
- • whether the purchase was made from a country that is a member state of the European Union;
- • whether the company in Ireland provides goods or services;
- • whether the person who has made the purchase is considered to be a private customer;
- • whether the buyer is a company that is registered for value added tax purposes.
What is the current state of the Irish e-commerce sector?
Currently, Ireland has a total market of 2,89 million e-commerce users (from a total population of 4,78 million citizens). It is expected that, by 2022, the total number of e-commerce users to increase by approximately 460,000 new customers. The characteristics of the Irish e-commerce market are presented below:
- • the highest rate of daily logs on e-commerce websites is observed in the group of persons with an age of 16-44 years;
- • the highest rate amongst this group is of 92% and it represents persons with an age of 16-24 years;
- • 91% of the persons in the age group of 25-24 years log on daily to e-commerce websites;
- • 89% of the group of 35-44 years old log on daily, while a high rate – of 84%, can be seen in the case of those with an age of 45-54 years old;
- • persons with an age of more than 55 years are characterized by a rate of 77%.
In Ireland, e-commerce companies that sell fashion products represent the leading market segment and the projections for this field of activity show that it will be the leading activity in 2022 as well. Other relevant market segments for the Irish e-commerce sector are toy products and products that are included in the hobby and do-it-yourself (DIY) sector.
Investors who want to open a company in Ireland as an online business must also consider that there are relevant business prospects related to the sale of electronics and media products, food and personal care, but also for the online sale of furniture and appliances; our team of consultants in Irish company formation can assist on the formalities necessary for opening an online business.
The growing trend of the Irish e-commerce market is rooted in the performance of the sector registered in the last years. For example, in 2017, Ireland registered the third consecutive year of growth for the e-commerce market. In the same year, the Irish e-commerce businesses increased their revenues by 45% compared to the previous year and some of the main pillars that have contributed to this growth were the following: improved broadband connection, better browsing platforms, but also the country’s overall employment level.
What are the preferred devices for online shopping in Ireland?
At the moment, Ireland has a high internet penetration rate. It stands at 85,3% and by 2022, the rate will slightly increase, reaching 86,7%. Although Irish consumers benefit from smartphones, that can be used for online shopping, the preferred means of purchase is through desktop devices. This is preferred by 83% of the Irish online shoppers, while the smartphone is used only by 8% of those interested in purchasing their products using online platforms. The third most common way to make online purchases is by using tablets.
What is the value of the Irish e-commerce market?
When analyzing the value of the e-commerce market, it is necessary to know that it currently stands out at $6,775 million (in revenues); the value represents the projection for 2019 and it takes into consideration business operations registered as business-to-client/business-to-private-user (B2C). In 2023, the market is expected to reach revenues with a total value of $10,404 million. It is also important to know that the average spending of an Irish user is of approximately $1,774.
For complete details about establishing an Irish IT company and the services foreign investors can benefit from and additional accounting services you may rely on our representatives in company formation in Ireland. Our team can provide additional information on the procedures for opening a website in this country and we can also recommend you other services offered by our international partners.