Expanding your business to a new country can be exciting, but can also be challenging, especially when it involves different legal systems and regulations. In recent years Ireland has emerged as a prime destination for scaling businesses seeking to broaden their horizons and expand into the EU. This strategic move provides access to the EU market, a favourable tax regime, a thriving tech ecosystem, access to skilled talent, a supportive business environment and proximity to the UK market, all of which can potentially propel companies to new heights.
Here are some legal considerations to keep in mind if you’re looking to do business in Ireland:
- The law: Both the UK and Ireland are common law jurisdictions (as opposed to the European continent, which generally uses the civil law system). This means that the legal systems are generally similar and a quick and general understanding of the Irish legal system is easier for UK and US companies than it might be in, for example, France or Spain.
- Language: Ireland, of course, is an English-speaking country, which makes setting up and doing business there relatively easy for UK, US and other overseas companies operating in English. While a lot of other EU countries also operate in the English language for business purposes, it’s the combination of both the language, and the legal system together that sets Ireland apart.
- Establishment: Setting up a local branch or subsidiary in Ireland is also straight-forward. While the UK and Irish legal systems are broadly aligned, there are some differences, however, in company law, contracting, employment law, tax and financial services regulation, etc. For example, contracts under Irish law operate the principle of “privity of contract”, meaning only the parties who directly agree to a contact can enforce it.
- Tax: Possibly the number one query received from companies intending to set up in Ireland relates to the fabled 12.5% corporation tax rate. However, in order for a company to benefit from this, they must establish a presence and have significant economic activity within the state. This involves not only being incorporated in Ireland, but also being centrally managed and controlled in the country (meaning, for example, that most of the directors of the company must be resident in Ireland).
- Employment Law Compliance: Irish employment laws, including regulations related to employee rights, working hours, minimum wage, and termination procedures are generally derived from the EU, and similar to the UK. However, the implementation of the EU directives, and the adjudication systems in the event of a dispute, are different, so HR policies and practices need to be aligned with Irish employment standards.
- Data Protection and Privacy: The GDPR applies to all companies operating within the EU, including Ireland. At present, the EU operates an adequacy arrangement with the UK regarding data protection which means that personal data can flow freely from the European Union to the United Kingdom, where it benefits from equivalent levels of protection, however this may change. Companies with no base in the EU, but who process personal data in the EU, need to have an EU authorised representative to act on their behalf.
By proactively addressing these considerations, overseas companies can establish a strong foothold in the Irish market and successfully expand there. Prioritising legal compliance and seeking guidance can contribute significantly to the long-term success and sustainability of your business venture in Ireland.
If your business is expanding into Ireland and you would like some help, our Consultant Legal Counsel Philip Flynn can help. Philip is a dual-qualified commercial lawyer in Ireland and England/Wales and is based in Dublin. He can help you navigate expanding into this new market and ensure compliance with Irish regulations, minimising potential risks. For more information get in touch on info@legaledge.co.uk
