Uses of Ireland for German Companies

Author:Mr Fintan Clancy, Elizabeth Bothwell and Kevin Lynch
Profession:Arthur Cox

Originally published 7th February 2011

Ireland has a number of important attributes which make it stand out as an excellent location for establishing business. Attracting foreign direct investment remains a key focus for Ireland and a number of global businesses (such as SAP, Allianz, Bayer and Deutsche Bank) have located part of their European operations here. At an event hosted last year by the German Irish Chamber of Industry and Commerce in Frankfurt, the Chamber chief executive Ralf Lissek estimated that there are 300 German companies operating in Ireland, employing more than 20,000 workers. This demonstrates how many German corporates view Ireland as an excellent location for business.

Ireland has a number of advantages over other jurisdictions and offers a wide range of opportunities for German banks and corporates. It is an EU Member State and a member of the Eurozone. Ireland is an English speaking jurisdiction with a geographical location which offers easy access to both the EMEA and North American markets. Ireland has a highly-skilled workforce, with one of the highest levels of third level education among workers in Europe. Among these workers there is a strong focus on business-related disciplines, over 60% of graduates in the last five years have qualified in business, information communications and technology, engineering or science. In addition, approximately 35% of Ireland's workforce are under 26 years of age which, when coupled with an expected growth in population of 30% by 2020, guarantees a supply of highly educated workers into the future.

A favourable tax regime, including a large network of double taxation treaties and a strong legal and regulatory environment are just some of the excellent reasons for businesses locating in Ireland. One particular advantage for German companies considering investment in Ireland is the 12.5% corporation tax rate for trading companies. Ireland operates a unitary tax system with no local or regionalised taxes so this 12.5% headline rate is the effective tax rate for trading companies. Ireland has 62 double taxation agreements in place including one with Germany. Ireland represents an excellent base for German companies and other multi-nationals to effectively and efficiently manage the profits, functions, and shareholdings associated with their international businesses. Furthermore, Ireland has no specific CFC regime, no capital duty taxes and no thin capitalisation rules all of which confer further benefits for companies utilising Ireland as a corporate base.

Ireland and Germany

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