Insight
Ireland is ready for a post-Brexit Europe
March 2019
As Brexit uncertainty mounts over whether the UK will reach a deal before it leaves the European Union (EU) on 29 March 2019, one country has played a bigger role in Brexit events than could ever have been imagined: Ireland.
Although Ireland and its border continues to complicate the UK’s exit plans, its attractiveness in terms of international business potential has only increased. In this article, we assess what makes Ireland such an interesting option for international business.
Labour market
Ireland’s corporation tax rate of 12.5% is often seen as the main reason why foreign multinationals choose to locate in Ireland. However, the presence of some of the world’s largest and best-known companies, such as Microsoft, Apple, Pfizer, Google, eBay, Twitter, HP, Intel and Facebook, is testament to the remarkably educated and skilled workforce available in Ireland.
Population trends
Ireland’s population has grown significantly in recent years and now has one of the youngest populations in the EU. The availability and quality of educated young people is a key reason why many companies started to locate and recruit employees in Ireland.
Education
The abolition of third-level educational fees in Ireland increased the number of young people completing third-level education. Young adults with third-level education and professional qualifications are now the rule, not the exception. This means Ireland has plenty of graduates and skilled professionals in the areas needed most by businesses, areas such as finance, engineering, IT, law and science. The availability of these highly skilled people is one of the key attractions for international businesses.
Language
As an English-speaking country located between Europe and the United States, Ireland is ideally positioned to help businesses trade with large global markets such as the US and the UK. Ireland’s educational system places a strong emphasis on language skills, and immigration has created a population with a diverse set of language skills. Businesses trading with some of the largest markets in the world have often located here because of the language skills that Ireland’s people can offer.
Employment, human resources, and labour law
Ireland’s strong labour-relations structures ensure that labour disputes are resolved quickly and efficiently. The two main bodies – the Labour Relations Commission (LRC) and the Labour Court – are responsible for resolving disputes. All employees are entitled to a contract of employment from their employer. Terms and conditions of employment, including disciplinary matters and grievance procedures, should be explained in detail in a company handbook.
Payroll taxes
Employers must apply payroll taxes for all employees. Since 1 January 2019, this must happen in real time as employee payments are made. This includes income tax collected through the Pay-As-You-Earn (PAYE) system, Pay Related Social Insurance (PRSI) and the Universal Social Charge (USC). These taxes apply to wages, salaries and benefits at various rates and increments.
Pensions and benefits
There is no requirement for employers to establish an occupational pension scheme for employees, nor do they have to make pension contributions. However, employers must provide a mechanism that employees can use to fund their own pension through a Personal Retirement Savings Account (PRSA). Some employers offer an occupational pension scheme, but in recent years the defined-benefit, or final-salary, model has all but disappeared because of the high cost of meeting funding obligations.
Business schemes leading to residency
Business people seeking to live and work in Ireland can apply to participate in the Start-up Entrepreneur Programme and the Immigrant Investor Programme. These government schemes are aimed at entrepreneurs with a proven record of success. The Start-up Entrepreneur Programme was designed to enable non-EEA nationals, and their families, who commit to a high-potential start-up business in Ireland, to acquire a secure residency status in the country.
The Immigrant Investor Programme offers several investment options that allow approved non-EEA investors and their immediate family to enter Ireland on multi-entry visas and remain in the country for up to five years.
Brexit
In the wake of Brexit, Ireland will remain a core member of the EU single market and Euro currency, as well as being the only English-speaking country in the Eurozone. Proportionately, Ireland has the third-highest international workforce in Europe: 15% of its workforce is international.
More than a dozen companies have chosen Ireland for their European operations post-Brexit. These include Citibank, Barclays and Bank of America. And with the possibility of a no-deal Brexit, it’s hardly surprising to see businesses transfer their assets out of the UK to safeguard the continued servicing of their EU customers; only recently, Barclays received High Court approval to move €190bn of assets to its Irish subsidiary.
As the turbulence of Brexit negotiations heightens, and uncertainty grows alongside it, Ireland provides an attractive location for international businesses planning for a post-Brexit Europe.