In the latest of our series to help the Scottish business community, Gareth Magee gives an insight into how to do business in Ireland.
Population: 4.5 million
Loading article content
Capital city: Dublin
GDP: Approx. US$210 billion
Ireland's reputation as a booming economy and an attractive place to do business took something of a battering during and after the financial crisis. But while the much-vaunted Celtic Tiger of the late 90s and early noughties may now seem a distant memory, Ireland is staging a defiant recovery.
The country's credit rating was upgraded in May by Moody's, which returned it to a "stable outlook", while the same month saw the European Commission forecast GDP growth of 1.7% in 2014 and 3% in 2015.
Ireland has long been a popular business outlet for firms in Scotland and currently receives over £500 million a year in Scottish exports. Ireland is also popular with a large number of multinationals, thanks partly to one of the lowest corporation tax levels in the developed world. Its charge of 12.5% has helped it attract firms including Pfizer, Intel, Microsoft and Google (which has its largest non-US presence in Dublin).
That low rate of corporation tax isn't the only advantage on the table for Scottish firms doing business in Ireland. There's also a favourable holding company regime, low tax on dividends and a research and development (R&D) tax credit of 25%. That R&D incentive has encouraged almost 1,000 overseas companies to make the country their European base.
For Scottish firms the similarities to the domestic market may be more important than the differences. Business is conducted in English, while office hours, the time-zone, the easy access and most holidays are broadly the same as in Scotland.
Then, of course, you can factor in the ease of access and a population that understands and is familiar with many Scottish goods and services.
The legal and regulatory structure is largely similar too and most EU directives relating to company law have been implemented in both the UK and Ireland.
When it comes to setting up the most popular option is to become a private company limited by shares. This is especially the case for firms investing into the country, partly due to the limited liability for shareholders.
There are the inevitable drawbacks to investing into Ireland or setting up a base in the country. Ireland was among the hardest hit by the financial crisis and while it has improved recently, economic confidence has been badly dented.
The cost of doing business has increased of late, as in the UK. Ireland's National Competitiveness Council warned in April 2014 that it was still a high-cost place to do business and that costs were being driven upwards, albeit more by external than domestic pressures.
But there are clearly some compelling reasons why a Scottish company may set up an Irish branch or invest into the country. The proximity, familiarity and cultural overlap are among them, but for the growing number of global giants setting up in Ireland there are a host of other factors that make it an attractive place to do business.
Gareth Magee is a partner at Scott-Moncrieff, leading accountants and business advisors, which, through its membership of the Moore Stephens network, helps Scottish businesses realise their international potential.
The full 'Doing Business in Ireland' guide, including information about setting up, and tax laws, produced in association with Moore Stephens International, can be found here.