If BREXIT was a musical show, it could become one of the longest running shows in history. It does appear that the UK will be leaving the EU in some form and the long-term trend of non-EU companies (including the UK) wishing to setup in Ireland, the only English-speaking country in Europe, will continue.
While the headlines show large IT and financial services companies using Ireland as their European Headquarters, many small to medium firms have the same needs and are taking action. I field quite a number of queries from owners of UK companies about establishing an office Ireland, so I thought I would write an article about some of the key issues of tax, legal, office space and recruitment that are key for making a decision.
Firstly, I asked Catherine McGovern a tax director with PKF O’Connor, Leddy & Holmes Limited on her experience to date with BREXIT, she responded by saying “we are receiving a large number of queries from small to medium companies wanting to set up in Ireland. That said, gone are the days where you could use your accountant as a name plate for your company. You are now required to provide evidence of a commercial presence and activity in Ireland in order to receive tax registration. Revenue for example may be looking for evidence of trade contracts, office lease, employee contracts etc.”
She has found that companies are setting up in Ireland to, firstly, to meet regulatory requirements and secondly for VAT registration. Companies that wish to trade with Europe, who previously routed their goods via the UK, are commonly using Ireland as their new point of entry to the EU, to reduce their excise bills. In practice there is a lot uncertainty around BREXIT and tax complexity, so tax advice is essential.
A significant issue when establishing a new location for a company revolves around sourcing office space for staff. I consulted Kate Ryan, an associate director with BNP Paribas Real Estate Dublin, on the availability of office space given the impression in some quarters that Ireland and particularly Dublin is full. She advised that “In terms of supply, with approximately 250,000 sq. of new office space due to be delivered in 2019, we see no signs of a lack of supply in Dublin. It is also worth noting that at present, close to 50% of this space has been pre-committed (tenants have already signed leases in advance of completion), demonstrating continued strong demand and no sign of oversupply either. Essentially there is a good supply-demand balance in the office sector at present.”
When quizzed on the competitiveness of commercial rents in Dublin she provided the below graphic showing rent in Dublin at €670sq.m to be comparable to other popular European cities for prime office space and significantly cheaper to London for prime office space at €1,365sq.m.
She added that “prime suburban rents in Dublin are very competitive running at less than half of what is being achieved in the city centre (e.g. Sandyford rents averaging c. €260 per sq.m with the highest recent rent achieved standing at €306 sq.m for a prime Grade A building). In other suburban office locations such as Citywest rents are lower, ranging from €160-270 per sq.m, again depending on property type.
You may be transferring staff from overseas offices or/and hiring in the local market. I asked Remco Koteris, CEO of HK&P International, about the availability of staff. He advised that the local market is very competitive, but they have been fortunately able to use their international network to source the quality staff needed for their clients in the Dublin market. In terms of staff costs he noted that the “hourly rates in Ireland are roughly in line with rates in the UK, but about 10% – 20% lower than in the Netherlands or Luxembourg for example”
To give a view from outside of Dublin, Kinsale Accountancy firm Fitzgerald & Partners said they have seen a huge increase in UK firms setting up in Ireland as part of their contingency planning and are getting enquiries daily from the UK SME sector.
Cormac Fitzgerald Managing Partner advised in response to this demand they have established a new business innovation hub in Kinsale to cater for UK firms looking to set up a base in Cork. He added “Kinsale is an obvious choice with its proximity to Cork Airport. We have got huge feedback from our recent Doing Business in Kinsale stakeholder project and have seen a flurry of new business and firms setting up here.”
Ireland will continue to be an attractive location for non-Eu countries due to a business-friendly environment, quality staff and European access. It will be necessary to get the appropriate advice on tax, legal, office locations and recruitment to ensure it is right decision for your company.
Author; Frank Mulcahy Principal & Personal Financial Manager at Trinity Financial Management
At TFM we work with Expatriates to help them navigate their complex financial affairs when abroad. Contact Frank on email@example.com to discuss your needs.
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