Recent changes in UK legislation, namely the provision on the disclosure of information about the beneficiaries of English and Scottish companies, have not only aroused great interest in business circles, but have also made many entrepreneurs think about changing their work patterns. All possible alternatives began to be urgently considered, including a return to classic island “offshore” companies. And here a dilemma arose: on the one hand, offshore companies are beneficial from the point of view of the absence of taxes and financial reporting, on the other hand, they have quite a lot of restrictions, in particular, the difficulty of opening a bank account.
At the same time, European companies, along with many advantages, turn out to be quite expensive to maintain or unprofitable due to high taxes. Considering this, the question arises: is it possible to register a European company in a country with a good reputation and a stable tax system, but without tax obligations? Where can I register a company so that its activities are “transparent” to the tax authorities, but information about the owners is not publicly available?
The solution to the problem was very close. Creating a company in Ireland, namely registering an Irish limited partnership, allows you to combine the advantages of a European company and the possibilities of a tax-free offshore.
Unlike the UK, Ireland has maintained the confidentiality of information about the owners of partnerships and in the near future does not plan to open for public access the register of persons who have a significant influence on the management of the company. In addition, Irish companies are easy to use and, subject to several conditions, are an interesting alternative to offshore and European companies.
Disclosure of information about the owner of the Irish company since June 2019.
In April 2019, the Regulatory Act on the creation of the Central Register of Beneficiaries was signed. (RBO)
As of June 2019, all Irish companies are required to file information about the beneficial owner of the Irish company. This information should be taken into account when registering a company in Ireland. After all, the innovation concerns only Irish LTD companies.
For already registered Irish companies, information on the beneficiary must be submitted within 5 months, starting from June 22, 2019. Now, simultaneously with the documents for registering an Irish company, information on the beneficiary must be submitted.
The central register of beneficiaries became operational on July 29, 2019.
All existing companies are required to submit information about company owners by November 22, 2019.
Irish partnerships are not legal entities and beneficiary information does not need to be filed with a central register.
Legislative processes in Ireland are governed by the principles of English common law, and the main aspects of the activities of companies are regulated by the Companies Act. The most popular form of company is a limited liability partnership (LP). It is the LP that, under certain circumstances, is not subject to financial reporting and mandatory payment of taxes in Ireland.
The structure of an LP company is not the classic one - director and founder, but must consist of at least two partners: a General Partner and a Limited Partner. Either an individual or a legal entity can be appointed as a partner of an Irish LP company. According to Irish legislation, there are no residency requirements for partners, but if the LP company plans to minimize taxes, then a person who is a resident of a low-tax or offshore jurisdiction must be appointed as a partner. The General Partner and the Limited Partner must be different persons.
All aspects of the LP company's activities are specified in the partnership agreement, which is the company's charter. As a rule, the contribution to the authorized capital is usually made by the Limited Partner, and the LP company is managed exclusively by the General Partner. The procedure for distributing profits between partners may differ from the procedure for making contributions to the company’s capital and is specified in detail in the partnership agreement. For example, only one of the partners can make a contribution to the capital, but the profit of the LP company must be distributed among all Partners without exception. When using a nominee service, information about the ultimate owner of the company's assets, the so-called beneficiary, is not publicly available.
Historically, an Irish partnership is not formally a separate legal entity and therefore not subject to taxation. The obligation to pay taxes rests directly with its partners and in the states of which they are residents.
To receive tax benefits, the LP company must fulfill a number of conditions:
its founders must be non-residents of Ireland
the company does not have the right to conduct commercial activities and make profits in Ireland.
In the absence of tax and financial reporting requirements, the LP is required to maintain internal accounting records, but these do not need to be filed with the Registrar of Companies or the Inland Revenue.
How can you use partnerships registered in Ireland?
Most often, these partnerships are used in trade and agency schemes, as an intermediary company. But we should not forget that Irish partnerships can also be an independent business entity (for example, provide consulting services, IT services, advertising services, software development, etc.).
The main advantage of an Irish LP company is that the company can conduct business with European companies, in particular English companies and Scottish partnerships, in a virtually tax-free manner (similar to offshore companies). But is it correct to classify Irish partnerships as offshore companies? To some extent, yes. If two conditions are met, the partnership is practically an offshore company, but from the point of view of the tax authorities, its activities will be absolutely transparent. These conditions are that the LP company has no activities and profits in Ireland, and its partners must be non-residents of Ireland.
Today, Irish LP partnerships are a unique business tool that will allow you to take advantage of all the benefits of international tax treaties, as well as maintain the confidentiality of asset ownership. MaIra Consult experts will help you correctly build an activity scheme for the most profitable use of the Irish partnership.
