Doing Business in Ireland
July 9, 2007
Dublin is a vital, interesting, cosmopolitan city - the only one in Ireland. It has also become very expensive since receiving all sorts of benefits from the European Community.
A dollar does not buy much in Dublin. New office space by the harbor is renting for $100 a square foot - about four times the cost of similar real estate in Delray Beach and more expensive than many sections of Manhattan.
My client started a business in Ireland because of the corporate tax incentive that was established about 10 years ago to draw in foreign companies. The top tax rate has been 10 percent and will now go up to 12.5 percent. That's less than a third of what he would have to pay in the U.S. Of course, it's nearly impossible for him to actually take advantage of this tax incentive because, as a U.S. citizen, he is taxed on his worldwide income. Which means if he ever decides to take money out of his Irish companies, he'll have to pay the normal taxes on it.
The U.S.-based businesses I'm involved with are all LLCs or limited partnerships. Such structures allow you to "flow" your tax obligations through the corporate entity onto your personal account. You pay income tax on what you earn. If you take in a million, 'your tax rate is 39 percent. So you pay the IRS $390,000.
To take money out of Ireland, my client would have to pay the 10 percent or 12.5 percent tax first, and then pay the 39 percent again. That's more taxes, in my book, not less. The only benefit I can see is when it comes to investing corporate profits in new businesses. In the U.S., you invest after the 39 percent is taken out. In Ireland, you'd be investing after only 10 percent was taken. That is good for stimulating new business in Ireland - which is why it's good for Ireland. But why it's good on a personal basis, I still can't figure out.
posted by M. Masterson @ 2:50 PM,
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