After Brexit, Ireland has become a top destination for company formation in Europe. One of the key reasons for that is that post-Brexit, Ireland became the only English-speaking country left in the EU. Entrepreneurs looking to set up a new business need to decide thoughtfully whether to start a company in Ireland or UK based on their specific circumstances and goals. While Ireland and the UK have always been separate jurisdictions, Ireland’s EU membership gives a distinct advantage for companies wanting access to the European single market.
In this blog post, we will dive into a detailed comparison of the key parameters for registering a private limited company in both countries.
Choosing the optimal jurisdiction is crucial whether you are a startup founder, small business owner, or multinational corporation. It impacts everything from taxes, access to talent and markets, to future capital raising ability. With in-depth research into the latest regulations in Ireland and UK, we aim to provide actionable insights to help you make an informed decision.
Some major factors we will analyse when contrasting Ireland vs UK for company registration include:
- Corporate tax rates as well as key tax rates applicable to businesses;
- Ease and speed of registration process;
- Role of national regulator;
- Workforce talent availability;
- Access to EU single market;
- Key company officers.
By the end, you will have a clear picture of whether to start a company in Ireland or UK. Let’s get started!
Table of Contents
Overview of Company Registration in Ireland
The process of registering a company in Ireland involves filing certain forms with the Companies Registration Office (CRO). The key form that needs to be submitted is Form A1. This form provides details on the company name, address, directors, secretary, shareholders, share capital etc. Form A1 should be followed with the Company Constitution. This document lays out the rules for governing the company. It specifies director and shareholder rights, procedures for meetings, etc.
Benefits of Company Registration in Ireland
Some of the main benefits of registering a company in Ireland include:
- Low Corporation Tax – Ireland has a competitive 12.5% corporate tax rate on trading income, one of the lowest in Europe. This makes Ireland an attractive location for setting up a headquarters.
- English Speaking Country – Ireland is an English speaking country, which makes it easy for foreign companies to set up and conduct business here.
- Talent Pool – Ireland has a highly educated workforce, especially in areas like technology, pharmaceuticals, finance. This provides companies access to skilled professionals in their industry.
- EU Membership – As an EU member, Ireland provides access to the entire European market of 500 million consumers. Products can be exported tariff-free across the EU.
- Ease of Doing Business – Ireland ranks very highly on the World Bank’s Ease of Doing Business ratings, which evaluate how easy it is to start and operate a business in a country. In the 2020 rankings, Ireland placed 24th out of 190 countries worldwide.
Did you know that Ireland offers an array of innovative initiatives and well-established funding programs aimed at business development and growth? Learn more about types of support and grants for businesses in Ireland to fuel your venture’s growth and success.
CRO – Irish Companies Registration Office
CRO is the government agency responsible for the registration of business entities, including companies and partnerships. This is the central repository of public statutory information on companies in Ireland and business names. The key functions of CRO include a range of services related to company setup, administration, and dissolution, namely :
- Registering company names and making name reservations
- Maintaining company records and making them publicly available
- Registering changes in company structure – directors, shareholders etc.
- Ensuring annual returns are filed
- Providing certification of company documents
- Initiating strike-off of defunct companies
Key Tax Rates for Irish Companies
When starting a company in Ireland, you need to factor in the following key tax rates:
Corporation Tax
- This tax applies to a company’s profits. The standard rate is 12.5% on income from trading activities like sales of goods and services. A higher 25% rate applies to non-trading income like rents, royalties, interest, dividends etc.
Value Added Tax (VAT)
- VAT is charged on the supply of most goods and services in Ireland. The standard rate is 23%. A reduced 13.5% VAT rate applies to certain items like food and beverage, medical devices, oral medicines, construction services etc. Some services like education and banking are VAT exempt.
Pay As You Earn (PAYE)
- PAYE is the payroll tax deducted by an employer when paying salaries to employees. The tax rates range from 20% to 40% based on the employee’s income level. There are also tax credits and standard cut-off points that determine the PAYE calculation.
Dividend Withholding Tax
- Companies distributing dividends to shareholders are required to withhold tax at 25% before payment. However, this does not apply to distributions made out of trading profits. Only dividend payments made out of investment income involve the deduction of dividend withholding tax.
How Long Does it Take to Register a Company in Ireland
A private limited company can be registered with the CRO within 14 days after they receive your completed application.
Company Officers and Shareholders
- Director – Responsible for managing the company. Can make strategic decisions based on the constitution. Must act honestly and responsibly in the interests of the company. At least one director required.
- Secretary – Responsible for ensuring regulatory compliance. Oversees company filings and administrative tasks. The director can also serve as secretary provided there’s more than one company director
- Shareholders – Owners of the company entitled to company profits. Limited liability means their personal assets are protected. A minimum of 1 shareholder required.
Overview of Company Registration in the UK
Registering a private limited company in the UK involves filing documents with Companies House – the government agency that stores information on all UK companies. The key documents are:
- Memorandum or Articles of Association – governs internal affairs like director and shareholder matters
- Form IN01 – Provides company name, address, directors, shareholders, share capital details.
Benefits of Company Registration in the United Kingdom
Some major benefits of setting up a company in the UK include:
- Low Corporation Tax – 19% corporate tax rate on profits, which is competitive globally
- Ease of Doing Business – UK offers a very business-friendly environment with simple rules for setting up
- Global Business Hub – As a major world economy, the UK offers an ideal base for international operations
- Skilled Workforce – Availability of educated, skilled professionals in fields like finance, technology, law etc.
- Gateway to Europe – Access to the EU single market through trade deals and customs union
UK Companies House
UK Companies House is the Registrar of Companies for the United Kingdom, responsible for incorporating and dissolving companies. It is an executive agency that operates under the Department for Business, Energy and Industrial Strategy (BEIS).
As the UK Registrar of Companies, Companies House key functions are:
- Incorporating and dissolving companies
- Registering company information like name, directors, shareholders etc.
- Ensuring annual accounts and confirmation statements are filed
- Providing incorporation certificates, company reports and other documents
- Maintaining up to date records on all UK companies
By providing these services, Companies House aims to make business registration and reporting simple and accessible for entrepreneurs and businesses in the UK.
Key Tax Rates for UK Companies
When registering a company in the UK, some critical tax rates to factor in are:
Corporation Tax
- This is a tax levied on company profits. The current corporation tax rate is 19% for all companies irrespective of size and industry.
Value Added Tax (VAT)
- VAT is charged on the supply of goods and services in the UK. The standard rate is 20%, while a reduced rate of 5% applies to certain essential items like residential energy, mobility aids, children’s car seats etc. Zero-rated VAT is applicable for goods like food, books, medicines, children’s clothing.
Pay As You Earn (PAYE)
- PAYE refers to the income tax and national insurance contributions deducted from employee salaries. The rates range from 20% to 45% based on set income tax bands. A 0% band also exists for low earnings. Employers are required to calculate and deduct PAYE from their wages.
Business Rates
- Occupiers of non-domestic properties like shops, offices, factories etc. are liable to pay business rates. The tax rates are based on the property’s deemed rental value at a multiplier of 51.2p currently. Certain businesses like agricultural land and small properties qualify for relief.
How Long Does it Take to Register a Company in the United Kingdom
Registration of a private limited company with Companies House takes just 1 working day after they receive your completed forms and payment.
Company Officers and Shareholders
- Director – Responsible for management and strategic decision-making. Must act lawfully and promote the company’s success. At least 1 director required to set up company in UK.
- Shareholders – Own the company and have the right to vote and receive dividends. Limited liability protects personal assets. A minimum of 1 shareholder required.
| Documents | Government Body | Timescale | Key Taxes | Available to Non-residents | |
|---|---|---|---|---|---|
| Ireland | Constitution, Form A1 | CRO (Companies Registration Office) | 3-4 working days (up to 14) since CRO receives your application | Corporate tax, VAT, PAYE, Dividend Withholding tax | Yes – provided you obtain 137 Non-EEA Resident Director Bond |
| United Kingdom | Articles of Association, Form IN01 | Companies House | Typically 1 working day since Companies House receives your application. | Corporate tax, VAT, PAYE, Business Rates | Yes |
Wrapping Up – Is it Better to Start a Company in Ireland or UK
Both Ireland and UK offer very business-friendly environments for setting up companies. Key factors like low corporate taxes, skilled workforce, access to EU markets, ease of registration process etc. make them attractive to entrepreneurs.
Ultimately, the decision depends on your specific business needs. For access to wider EU markets, Ireland may be more suitable while the UK offers a global financial hub. Product regulations also differ, which impacts sectors like fintech, medical devices etc. It is advisable to seek expert assistance like Chern & Co when deciding between Irish vs UK company formation. With years of experience setting up companies for clients across industries, we can guide you in selecting the optimal jurisdiction for your business. Our team stays up to date on latest regulations and legal processes to ensure smooth incorporation in the best jurisdiction for you. Reach out to us today for a free consultation on starting a company in Ireland or UK.
