Economic overview
With the new Budget Law, the Irish government has committed over 48 billion euros to support the economy and society for the next three years. There are two broader chapters: pro-environment measures and those in support of disadvantaged people. In particular, the new Climate Action, Climate Action, provides for an increase of € 7.50 on the current rate of the Carbon Tax applied per tons of carbon dioxide emissions. This will bring the tariff down to € 41 per tonne.
The carbon tax will increase by the same amount each year until 2029. The increase will be applied to petrol and diesel from 13 October this year and to all other fuels starting from 1 May 2022. It is estimated that the revenue “Green” should amount to 412 million euros in 2022. The money raised through the Carbon Tax will be spent only on schemes and initiatives functional to tackle climate change, including, for example, new grants and low-interest loans that will help owners to invest in the energy efficiency of their home, or, they will be directed to farmers to encourage them to adopt more sustainable farming methods. In total, it is estimated that this investment in 2022 will support energy saving measures, including photovoltaics, in at least 22,000 homes, in addition to the development of cycling.
Regarding the OECD agreement to which Ireland joined just last month, the 15% rate will apply from 2023 to multinational companies with revenues exceeding 750 million euros, as agreed in the declaration of the Inclusive Framework on the Beps of the last 8 October.
Main sectors of industry
Ireland is poor in natural resources: raw materials are lacking and fertile soils are scarce. For centuries the country’s economy has depended on that of Great Britain. In recent decades, incentives and concessions have been granted to the industrial sector. In addition, the funds allocated by the EU have made a significant contribution to Ireland’s economic recovery, allowing for the renewal of many infrastructures. The country quickly moved from a mainly agricultural economy to a very advanced and dynamic economy, supported by investments from large telecommunications and information technology companies.
Very important is the breeding of cattle, sheep and horses, which is practiced in the extensive areas of grass and permanent pasture that cover about 49% of the entire surface of the country. Agriculture absorbs 7% of the active population and is still not very mechanized and not very productive. Barley (used for beer and whiskey production), oats, wheat, potatoes and sugar beets are grown.
The industry is mainly located in the area around Dublin. The most developed sectors are those linked to agriculture: chemical industry (production of fertilizers and fertilizers), textiles (wool and cotton mills), distilleries and breweries. High-tech industries have recently taken on great importance: electronics, information technology, the production of medical equipment, chemistry-pharmaceuticals.
Road and railway communication routes have been strengthened in recent years, also favored by the growth of the tourism sector which has various accommodation facilities. The trade, quite active, still has one of the main partners in the United Kingdom; however, exchanges with other European Union countries have intensified.
Taxation for businesses in Ireland
Basically, Ireland is carrying out a transition towards a system of territorial income taxation, which is very advantageous for businesses, especially multinationals.
The standard corporate tax rate in Ireland is 12.5%. However, start-ups, which start their businesses before 2014, are exempt from the tax, if they meet certain conditions. This exemption applies in the first three years from the start of the activities, according to the following table:
Less than € 40,000 Full exemption
40,000 euros – 60,000 euros Partial exemption
More than 60,000 euros No exemption
The exemption does not apply to companies that carry out real estate, research and exploitation of oil and minerals.
A limited liability company must also meet the following minimum requirements:
- The company must have an administrator who must be resident in the EEA;
- The company must have a company secretary who can be a natural person or an entity. In companies with several directors, one of the directors may also perform the function of company secretary;
- The company must have a registered office. It may be located in a place other than the company’s business address, but it must be in Ireland and cannot be a PO box number; And
- The company must submit an annual declaration to the Business Registration Office (CRO).
Investing in Ireland
In recent years, foreign investments are progressively increasing, exceeding 30% of the total. In addition, Ireland can have a very young population and a working class that is among the most educated and competent in the world. Today Ireland is certainly one of the EU countries with the lowest level of taxation on business income, but it is also a country where there are many benefits for recruitment, training, and for companies that invest in research.
The country has a favorable business climate. The corporate profit tax provides for a 12.5% rate on all company profits. Including profits from subsidiaries or branches of non-Irish resident companies. In addition, the tax credit, up to 30%, for research and development activities carried out in Ireland and the tax deduction, at 12.5%, for expenses in research and development must be reported. In addition, companies, which use patents or transfer them for use, enjoy tax deductions for the costs incurred for the acquisition or license to use intellectual property rights. In general, Ireland offers a quality, young, native English-speaking workforce with specialized skills.
From the point of view of the general incentives for foreign investment in the country, Ireland has adopted the strategy of encouraging some key sectors such as the chemical-pharmaceutical-health sector, the IT and telecommunications sectors, as well as that of international services. As these business areas contribute to the creation of specialized jobs, research and development of new technologies. However, the territories of the country that remain the most incentivized are still the coastal area and the Midlands (the “Border, Midlands and Western Region”), because they are less advanced, especially due to the lack of infrastructures.