|The mild south is especially attractive as a retirement haven and for a select group like writers and painters, it is a zero tax haven. If you lack artistic talent, there are other ways to qualify and receive your income, profits, pension or social security check at a zero tax rate.
An Irish company which is beneficially owned by non residents of Ireland, does not do business in Ireland and which is managed and controlled from outside Ireland i.e. has non resident directors, will not be taxable in Ireland. As Ireland is not an obvious tax haven, an Irish non resident company provides an excellent low profile tax avoidance vehicle. For a time during the early 1980s this was also possible in the U.K. The EU objected to a developed country permitting such tax avoidance and so the legislation was changed. In time, the situation will also change for Ireland as it is now approaching the EU economic norm in many areas. Currently, Irish non resident companies enjoy huge popularity.
Legislation introduced in 1995 now requires the disclosure to the tax authorities of: the address of the company's principal place of business which by definition must be outside Ireland; the name and address of any individuals who have "control" of the company. These requirements have tax implications for both the beneficial owners of the company and the company.
Ireland has an extensive network of tax treaties and many of these provide for the exchange of information. Details of the directors and of the registered shareholders already appeared at the Companies Registry but now also are registered with the Tax Department. This increases the likelihood of those details being passed to your home tax authorities. Even if no tax treaty is in place the Irish authorities tend to be compliant in meeting requests for information from overseas tax authorities. Most onshore countries have provisions within their tax legislation whereby any company, no matter where it is incorporated, which is managed or controlled from within their jurisdiction can be considered tax resident and taxable on worldwide income at local rates. Thus, for example, any offshore company whick had U.K. based directors would be deemed by the U.K. Inland Revenue as being tax resident in the U.K. and subject to U.K. tax on its worldwide income. Most other onshore countries have similar provisions within their tax legislation. Therefore, to guarantee that confidentiality can be retained and in order to help rebut any suggestion that the company may be tax resident in the home country of the promoters or any other onshore jurisdiction, the management of an Irish company should be based somewhere fiscally neutral. This will normally necessitate employing the services of professional third party directors.
Most countries have Controlled Foreign Corporation legislation and other anti-avoidance provisions which may allow them to tax the profits of the company as though those profits had been distributed to the shareholders whether they had been so distributed or not. For example, if it is revealed that the Irish company has U.K. resident shareholders then the U.K. Revenue may seek to tax the shareholders as though they had actually received the profits of the company even if this was not the case.
The use of nominee shareholders would not remove the obligation to reveal the beneficial ownership as the nominee agreements make it clear that the real control of the shares rests with the beneficial owner and not with the registered nominee shareholder. The shares may, however be held by a discretionary trust so that the details required to be revealed to the Irish Revenue authorities is the name and address of the trustee rather than the client's own details. Many client are not prepared to use a discretionary trust for security and cost reasons and so Ireland has become less popular with clients seeking a low cost and private company registration solution.
For the reasons stated above it has become increasingly popular to arrange for the shares in an Irish non resident company to be owned by a suitably drafted discretionary trust. Many clients find this objectionable and so do not use Ireland.
The principal advantage of the Irish Republic, for individuals, is that there is a clear distinction between a person's domicile and physical residency for tax purposes. In effect, a "foreign" person resident in Ireland need only be taxed on remitted income back to Ireland. If a suitable distinction is made between capital and subsequent income from capital (i.e. interest) before taking up permanent residence it may even be possible to live in Ireland almostly completely tax free. Another benefit of Ireland over most other potential tax havens is that all permanent residents will be able to benefit from Ireland's sophisticated and extensive double taxation treaty network. Third party investigating tax authorities will be bound by the terms and conditions of the applicable tax treaty and clients will be protected against the almost ubiquitous reverse burden of proof employed by other developed nations. These basic advantages combined with other domestic tax breaks have resulted in Ireland having a significant and wealthy expatriate community. Entry clearance criteria are very similar to those of the United Kingdom with the possibility of Irish passports for those willing to invest IR£ 1,000,000.
Whilst the distinctions drawn between domicile and residence in Ireland for tax purposes are well known, i.e. that non-Irish nationals resident in the Republic are only taxed on external passive income when directly remitted to the country, what is not as well known is the fact that it is also an ideal base for working "international" consultants. Under the Finance Act of 1994, inducements were introduced not to tax Irish based, i.e. resident, executives working on behalf of their employer outside of the Republic on such foreign generated income even if remitted. The rules are complex but very real advantages are available.
(Courtesy of the Baltic Banking Group).
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