There’s no better place in the world today for start-ups in financial services than Ireland. Here’s a quick guide about the most talked about financial service in Ireland.
Ireland is a profitable location when it comes to financial services due to the combination of high productivity and a cost base that is very competitive with other locations having similarly sophisticated eco-system. The International Financial Centre (IFSC) in Ireland started its operation in the year 1987 as a special economic zone. IFSC is a prestigious integrated development located in central Dublin which incorporates world-class office accommodation, educational institutions, executive housing, restaurant, and shopping facilities. The centre’s main strengths include administrating and managing funds, re-insurance, cross border insurance, and specialist finance.
The IFSC currently houses many of the world’s premier financial institutions together with the leading law firms and accountancy and taxation advisors who provide support to them. It is also home to a wide range of internationally traded financial services. It includes banking, asset financing, leasing, corporate treasury management, asset management, fund administration and custody, trading, futures and options, trading and international insurance operations.
Facts and Figures about IFSC in Ireland
- The IFSC in Ireland directly employs 25,000+ people
- There are around 500+ firms currently operating in IFSC
- The centre contributes 7.4% of Irish GDP
- There are firms operating from 20 different countries throughout Ireland
- It accounts for 10% of the multi-national employment in Ireland
- Over 1.8 trillion Euros of funds are administered from Ireland
- The Irish Stock Exchange is the world-leading listing venue for the fund and structured debt products
- Half of world’s top 50 banks have internationally-focused operations in Ireland
Advantages of IFSC in Ireland
Here are a few key advantages that promote Ireland as a location for international financial services.
Extensive Tax Treaty Network
Ireland has a double tax treaty agreement which has doubled in recent years. There are around 72 signed agreements with 68 in effect, and such extensive treaty network provides scope for reducing any tax barriers which may inhibit cross-border trading and investment.
Low Corporation Tax for Trading Activities
The corporation tax for trading activities in the financial centre is as low as 12.5% with expenses generally tax deductible. The plant and machinery are depreciated over an eight-year period on a straight line base.
Employment Incentive Scheme for Few Employees
The Special Assignee Relief Programme (SARP) is an employment incentive scheme for certain employees assigned to Irish based operations. A qualifying individual can claim a 30% tax deduction on their Irish employment income over €75,000 for up to five years under the new SARP scheme.
Tax Regime for Regulated Investment Funds
The funds of regulated investment are exempt from Irish tax on its income and gains. The tax generally only arises for the investors to the extent they are Irish individual investors. Various withholding tax and stamp duty exemptions are also available for Irish investment funds.
Incentives for Technological Development
In a move that is likely to enhance Ireland’s tax competitiveness in this area, the Department of Finance announced earlier this year its intention to introduce a new incentive to locate high-value IP jobs in Ireland – the Knowledge Development Box (KDB). This incentive will provide for a preferential effective tax rate to income generated from IP where certain risks or functions are located in Ireland.
Approval and Documentation of IFSC Companies
Till the end of 1999, the companies wishing to start their business in the Irish financial service centre at the 10% percent corporate tax rate had to secure both taxation certification and approval from the financial service authority. But the system came to an end for both standalone and agency managed companies. The application was managed by IDA’s financial service division where the companies had to seek approval from the Certification Advisory Committee and it involved considering the following factors:
- The reputation, experience and financial strength of the promoting company
- The proposed activities
- The expected contribution to the IFSC’s development
If you are thinking of launching an ambitious new business in the financial service sector, then Ireland is the place to start. We at Business Setup Worldwide can help you with the company formation process. Do contact us today for consultancy services.