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Advantages of a Private Limited Company

18 October 2012 By Ann Donnelly

There are many advantages of a Private Limited Company in Ireland:
  • In Ireland a limited liability company enjoys low corporate tax rates & beneficial cash flow. Ireland's Corporate Tax Rate of 12.5% is one of the lowest in the World.
  • Google is using a network of Irish companies to save millions in taxes. Filings that Google lodged with the US regulatory authorities indicate the multinational's effective tax rate has dropped from 39 per cent to 31 per cent, indicating it is saving approximately €100 million a year in taxes via its Irish business.
    Google has two Irish based operations, one of which, Google Ireland Holdings Ltd, received $388.55 million (€330.5 million) in royalty payments in 2004, its first year in operation. Royalty payments for intellectual property developed in Ireland are not subject to Irish tax, so the multinational may end up paying relatively little in Irish tax on this income. In 2005 the Wall Street Journal reported that an Irish subsidiary of Microsoft was helping it reduce its tax bill by at least $500 million annually. The hitherto unknown subsidiary, Round Island One Ltd, made an after-tax profit of $3.8 billion in 2004, and paid $324 million in Irish corporate tax. (Source: Irish Times)
  • Setting up a limited liability company offers just that - limited liability. Shareholders in a limited liability company are only liable to lose the share capital they subscribe. For sole traders and in partnerships, the individuals personal assets are at risk if there is a claim against the organisation.
  • A company is a legal form of business organisation. It is a separate legal entity and, therefore, is separate and distinct from those who run it. The company (and not the individual shareholders) is the appropriate person to be sued in the event that debts are incurred by the company which remain unpaid, despite demand. (Source: Companies Registration Office)
  • Scope for greater company pension scheme to be secured through a limited company.
  • A limited company has a greater ability to raise finance by the issue of shares and also under the Business Expansion Scheme.
  • Owners of businesses looking for outside investors or investors looking to invest in unquoted companies may be able to take advantage of the tax incentive known as the Relief for Investment in Corporate Trades, otherwise known as the Business Expansion Scheme (BES). The Scheme provides individual investors with tax relief in respect of investment in certain manufacturing, service, tourism, R & D and plant cultivation companies, companies formed for the purpose of constructing and leasing advance factory buildings and certain music recording activities. By so doing the BES can substantially reduce the cost to an investor or his/her investment. It also enhances the ability of eligible companies to attract outside investment. (Source: Revenue Commissioners)
  • Ownership of a limited company can be spread over a greater number of people.
  • Personal tax advantages can accrue for directors of a limited company.
  • There may be a greater degree of business credibility of trading through a limited company.
  • Registration of the limited company name protects it from use by another limited company.
  • The CRO may have to refuse a name, if:
    - it is identical or similar to a name already appearing on the register of companies;
    - it is offensive;
    - it would suggest state sponsorship.
    (Source: Companies Registration office)
  • Ireland is becoming increasingly attractive as a holding company location for foreign investors particularly where it is combined with a trading activity such as headquarter activities, treasury or research & development.

Over 1,050 overseas companies have chosen Ireland as their European base and are involved in a wide range of activities in sectors as diverse as e-Business, engineering, information communications technologies, pharmaceuticals, medical technologies, financial and international services. (Source: IDA Ireland)

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Tagged With: Frequently Asked Questions, Advice