Open a Holding Company Ireland

A holding company in Ireland is a type of legal entity incorporated with the purpose of owning shares in other companies (subsidiaries).

The share ownership allows the holding to control the actions of the other legal entities, thus obtaining certain advantages, such as tax-related ones.

The holding company in Ireland is usually not used for trading/commercial activities, but solely for owning controlling interest in other legal entities which can be based in Ireland or abroad. You can receive specialized assistance for opening a holding company in Ireland from our team.

Quick Facts
Legal entities used	The limited liability company in most cases.
Incorporation method	Registration with the Company Registration Office (CRO)
Incorporation time	Approximately 2-3 working days
Types of assets owned by the holding	IP assets, stocks, real estate
Requirement for local bank account (Yes/No)	Yes
Residency requirements for the founder(s)	Not applicable
Advantages	The number of available tax treaties, the participation exemption regime, favourable business climate, etc.
Precautions	Group structures, trading status (trading vs. nontrading for taxation purposes), and other issues.
Shareholding structure	The holding company acts as the parent company.
Minimum Capital	Should not be lower than EUR 100 for the LTD.
Taxation	12.5% for trading and 25% for nontrading companies. A participation exemption can apply to a resident holding company with a participation of at least 5%.
Control	Foreign in most cases
Registered agent requirements	Not mandatory
Accounting and reporting	Annual financial statements, the EU IFRS/GAAP are used.
Number of double taxation treaties	More than 75

Our lawyers in Ireland list the main advantages of basing a holding company in Ireland, the incorporation process and important issues to consider regarding the taxation of the business entity.

For additional information and assistance during the incorporation process, you can reach out to our attorneys.

Holding company incorporation in Ireland

A holding company in Ireland is incorporated as one of the existing types of corporations defined in the Irish company law.

In practice, the private company limited by shares (LTD) is commonly used for the purpose of opening a holding company, as well as for many other business purposes.

Our lawyers in Ireland specializing in company formation list the main incorporation steps for the LTD below:

1. Choose the business name: it is important that the chosen business name is unique and acceptable; the company can be subject to a name change post-incorporation, should the Registrar believe the name to be unacceptable;
2. Choose a registered office: all companies are required to have a physical registered office in Ireland (not a post office box number); this is used for correspondence and formal legal notices from the Companies Registration Office;
3. Prepare the documents: for a LTD, the needed documents are the Articles of Association; this business form does not require a Memorandum of Association.
4. Register the business: all companies are duly registered with the Companies Registration Office; a special form is filled in for this purpose.

The registration form offers information about the company (name, registered address) and its shareholding structure. Please read our infographic about opening a holding company in Ireland:

Other characteristics are listed below:

• The LTD can have between 1 and 149 members and at least 1 director.
• All companies registered under the Companies Act 2014 are required to have a company secretary.
• An LTD with only one director is required to have a separate secretary.
• The secretary and the director(s) are both considered the officers of the company.
• In a private company limited by shares, the liability of the members is limited to the amount unpaid on the shares they own.

The LTD used as a holding company in Ireland is a separate legal entity from its founders. It can enter into agreements in its own name, sue, and be sued.

Find out more about the opening a holding company in Ireland from our video:

Special features of holding companies in Ireland

Irish holding companies are not subject to specific criteria they need to meet, however, their main trait is that they cannot engage in trading activities. They will usually own and have management decision over the assets in their subsidiaries. Additionally:

• they can have one or more subsidiaries under their control;
• their liability is limited to the value of the assets they own;
• they can distribute the assets among the subsidiaries.

It is also quite common for foreign companies to expand their operations in Ireland through holding companies. This happens because of the favorable tax system on corporations. These are taxed at a rate of 12.5%.

It the case of foreign companies, they can set up Irish holdings that would become the main shareholder of the foreign establishment by owning at least 51% of its shares which will attract the favorable tax regime. However, the holding can also take other companies under its umbrella. By far, the private limited liability company is the most employed legal entity for the establishment of a holding.

Control over subsidiaries

Setting up an Irish holding company implies having control over its subsidiaries. This aspect is important as taxation is based on whether the business is based in this country where strategic management decisions must be made in order to be considered an Irish tax resident and benefit from the 12.5% rate.

A holding can have subsidiaries in Ireland, but also abroad and still benefit from the favorable corporate tax. Moreover, as an EU state, it can also benefit from the EU Parent-Subsidiary Directive. Feel free to discuss with our agents the main requirements to meet under this directive.

Transfer pricing rules for holdings in Ireland

Ireland introduced transfer pricing rules in order to ensure inter-company transactions are completed in a transparent manner. In this case, the arm’s length rule applies which provides for the taxation to occur in the country of the receiver. There are also exemptions from this rule that apply to small and medium-sized companies that have less that 250 employees, and a turnover of less that 50 million EUR, assets valued at less than 43 million EUR.

Our attorneys in Ireland can provide more information on transfer pricing rules applied here.

What are the accounting requirements for Irish holding companies? 

The holding company in Ireland must respect a set of regulations with regards to its accounting system. The company’s financial statements have to be prepared in accordance with the regulations of the Generally Accepted Accounting Practice (GAAP), as well as with the regulations of the Companies Act 2014. 

As Ireland is the home of large multinational companies, including US companies, it is necessary to know that the local tax legislation was harmonized in such a way that US companies can use the US GAAP for their subsidiaries operating in Ireland. However, this can be done in specific conditions, which can be detailed by our team of lawyers in Ireland. 

Holding company tax residence

An important issue to take into account when incorporating a holding company, or otherwise wishing to engage in holding activities in Ireland, is the tax residence matter.

A company incorporated in Ireland is considered a tax resident. this means that a holding company registered as per the steps described above is a recognized tax resident.

When a company incorporated in Ireland is regarded as a tax resident in another jurisdiction (under a double taxation agreement), then it will no longer be considered an Irish tax resident.

Moreover, a company is considered an Irish tax resident if it is managed and controlled in Ireland, regardless of the territory in which it is incorporated.

This means that a holding company can be treated as an Irish tax resident even when not incorporated in the country.

In practice, different rules apply to a company’s tax residence in Ireland depending when it was incorporated, before or after January 1^st 2015.

The holding company will be considered a tax resident in the country if it was incorporated in Ireland on or after January 1^st 2015, unless treated as a tax resident elsewhere, as previously mentioned.

For companies formed before this date, a transitional period applied, which has now ceased.

At the moment, the rule for a company that is not incorporated in Ireland is that the company is considered a tax resident if it is managed and controlled in the country.

The general central management control test analyses the following:

• where the company’s policy is being created and decided;
• where the investment decisions are made;
• where the main contracts are concluded;
• the location of the company’s head office;
• the location where the majority of the company’s directors reside.

Other important questions may be included in this analysis to determine whether or not a company is a tax resident in Ireland. If you want to set up a holding company in Ireland our team can assist you.

Holding company taxation in Ireland

Usually, Irish companies must pay a corporate income tax of:

• 12, 5% on profits of trading income or
• 25% on profits of non-trading income;
• 25% or 0% withholding tax on dividends, 20%, 33% or 0% withholding tax on interests and royalties.

The VAT rates to which an Irish holding company is subject to are the following:

• 23% standard rate;
• 0%, 4.8%, 5.5%, 9% or 13.5% reduced rates.

VAT registration is mandatory for supplies of goods when their annual turnover is equal or greater than EUR 75,000.

A lower registration threshold of EUR 37,500 per year can apply in some cases.

Other issues investors can take into account are summarized in the list below:

1. The dividends received by one Irish resident company from another Irish resident company are normally exempt from Irish withholding tax.
2. Only the dividends paid to non-residents are subject to the withholding tax if no treaty was signed with the country of origin.
3. The dividends paid by a subsidiary which is resident in an EU or Tax treaty country and that has been already taxed at least 12, 5% corporate tax in the country of origin are not subject to the withholding tax on dividends.
4. There is no capital gain tax when the Irish holding company has held minimum 5% of shares with voting rights attached to the subsidiary for more than 12 months in the previous 2 years or if the country of the subsidiary is from an EU country.
5. The capital gains exceptions are also granted if the subsidiary is part of an active trading company or it is part of a group that is carrying trading activities for more than half of the time.

Another condition to grant capital gains exemptions is when the subsidiaries are based in one of the countries which have signed a double tax treaty with Ireland.

Ireland has an extensive tax treaty network and has signed approximately 73 tax treaties with countries worldwide.

Under the controlled foreign companies regime, certain rules apply for the undistributed income that arises from non-genuine arrangements.

In addition, for accounting periods after 1 January 2022, the exemptions applicable under the regime do not apply when the controlled foreign company is a resident in a country included on the EU list of non-cooperative jurisdictions.

Non-Irish resident investors are usually exempt from Irish tax on any gains derived on the sale of listed shares in Irish companies.

The withholding tax on dividends paid to foreign companies is not charged if one of the following conditions is met:

• the parent company is resident in an EU country and at least 5% shares are owned by that company in the Irish company,
• if it’s a legal entity resident in an EU/tax treaty country that is not under the control of Irish resident,
• if the legal entity is resident anywhere but is ultimately under the control of persons who are resident in an EU/tax treaty country, or
• if it’s a publicly traded company.

The accounting requirements for a holding company can seem lighter compared to other businesses that engage in commercial activities, nonetheless, this business will need to fully comply with the reporting standards, the bookkeeping requirements, as well as the annual submissions that remain mandatory for any Irish-incorporated business. Our team of Irish accountants can tell you more about these requirements. 

Our Irish lawyers can help companies comply with the tax regulations available in the country.

Investors who open a holding company in Ireland benefit from a business-friendly regime, along with a low tax system that is also straightforward.

In addition to the low-tax regime, holding companies in Ireland benefit from the extensive double tax treaty network, along with other advantages such as the taxation regime for foreign dividends.

General company formation issues in Ireland

As seen above, company formation in Ireland is subject to a set of mandatory steps and requirements.

As the registered office needs to be based in the country, investors can also be presented with the option of using a virtual office for a holding company in Ireland.

What this means is that the company will have a registered address at a pre-determined address in Ireland, all whilst not being mandatorily at that address at all times.

Given the nature of the holding company’s activities, the team can work from a different location, while the incorporation process for the company will be in compliance with Irish laws.

A virtual office in Ireland is typically located in a modern office building and in a central location in an Irish city, meaning that the business will have the advantage of retaining a professional business image.

Under a virtual office service, the company’s founders and personnel will have access (upon request) to dedicated office space and other solutions for business (such as video conferencing meeting rooms and others).

An increased flexibility for the entire team, as well as reduced business operating costs are other common advantages of using a virtual office for a company, or holding company in Ireland.

These business solutions are usually decided upon during the early company formation stages, as the address of the virtual office will need to be used for company creation.

Nonetheless, our team can also assist investors who wish to change the registered address of the holding company once the business has been incorporated or some time afterwards.

Our team or lawyers in Ireland has highlighted the main tax advantages for holding companies in the country.

Other non-tax factors that can be taken into account when opening a holding company in Ireland relate to the fact that the country is an English-speaking one, and access to a pool of qualified employees.

Investors will find that the professional and administrative services provided for in Ireland can also constitute an important advantage for basing a company in this jurisdiction.

The favorable combination of both tax and non-tax advantages for holding company creation in Ireland makes the country a suitable choice for investors. Our team of Irish lawyers can assist clients in other legal matters too, such as debt collection cases or trademark registration.

Why choose Ireland to open a holding company?

One of the basic reasons for which investors choose to open an Irish holding company refers to the country’s corporate taxation system. Ireland has signed over the years numerous double taxation treaties and it now has an extended network of agreements on the avoidance of double taxation; besides this, the country provides one of the lowest corporate tax rates in Europe, which makes it an ideal business destination for starting a holding company. 

Also, as an EU and OECD (Organization for Economic Co-operation and Development) member state, Ireland provides a well-regulated jurisdiction for holding companies. Due to the participation exemption, Irish holding companies may dispose of their shares in any other company within the European Union or a country Ireland has a treaty with, thus obtaining a from a capital gains tax exemption.

This exemption applies if at least 5% of the ordinary shares have been held for minimum a year and if the trading condition is respected. For complete information about the participation exemption for holding companies you can ask our lawyers in Ireland. No matter the way you choose to start a business in Ireland, our team is at your disposal in order to help you comply with all the legal requirements available in this country.

For more details about opening a holding company in Ireland, please contact our Irish lawyers.