Country Law Factsheet

Irish Law

Name:

Republic of Ireland (Eire); languages: English and Irish.

Political Structure

The Republic of Ireland is an independent democratic republic situate on the westernmost part of Europe on the island of Ireland. It is a full member of the European Union since 1973. The Republic of Ireland occupies five-sixths of the island of Ireland, the other one-sixth being occupied by Northern Ireland which is part of the United Kingdom of Great Britain and Northern Ireland. The Republic has a bicameral parliament (Dáil Éireann) and a Senate (Seanad Éireann). It has a President (An tUachtarán) as head of state. Any legislation must pass through the Dáil and the Seanad and must be signed into law by the President before it comes into operation.

Monetary control and investment

The country conducts its economy on a full market basis without any restriction on inward investment nor on the repatriation of funds. It is a full member of the Euro currency zone.

Normal business structure

Business may be conducted by an individual or jointly with individual partners. In those circumstances, the business proprietors are jointly liable for all of the debts of the business. An alternative system is that the business proprietors may use a private limited company where the shareholding is controlled by private individuals or a public limited company where the shareholding is offered to the public through the stock exchange flotation. Where a company is utilised, the liabilities of that entity are limited to that entity. Such limited companies are incorporated under the Companies Acts and must comply with very strict legal requirements regarding trading and the filing of full returns in the Companies Registration Office. A private limited company must have at least two directors and a company secretary. There are different requirements for a public limited company.

There are no restrictions on non-Irish citizens opening businesses in Ireland although in the financial sector, they have to meet the strict requirements of the relevant financial regulator. In manufacturing areas, consideration must be given to environmental and health and safety laws which must be addressed and taken into account.

When considering whether to start up a new business, it is always advisable to consult a professional, whether it be a solicitor (general lawyer) or an accountant.

Property

The main ownership of property, whether by individuals, partnerships or companies, is freehold or leasehold. Freehold is absolute ownership in perpetuity. Leasehold is a limited ownership for a set period of time, usually at a rent which may be subject to a rent review every 3/5 years depending on the term of the lease. Leaseholds mainly apply to commercial property and include the terms and conditions of the letting. Property can also be leased in the short term for residential purposes.

There is no restriction on the selling or leasing of property to non-Irish or non-EU nationals. All property transactions are conducted through solicitors, as it is the solicitor who checks for the purchaser that the vendor (the seller) has good title to sell the property being sold, that there are no mortgages or charges affecting the property, that the planning permission is in order, that all tax implications have been dealt with and to ensure that the purchaser acquires a good title, the Deed of which will then be stamped and registered in the appropriate registry.

The legal system

The legal system consists of two branches:

  1. Solicitors, who may be single practitioners or unincorporated bodies of partnerships. They may not be limited companies. They advise on all types of matters: business establishment, divorce, property transactions, litigation, and so on.
  2. Barristers, who work as single practitioners and conduct cases in the Courts, tend to specialize in particular areas of law. They are not allowed to enter into partnerships with one another, nor with any other body or any other branch of the legal system.

Both branches, solicitors and barristers, have the right of audience in all Courts and may become Judges in those Courts.

The Courts are comprised of:

  1. the District Court (the lowest court) which sits in local villages and towns throughout the country;
  2. the Circuit Court which sits in main centres throughout the country;
  3. the High Courts which sits in Dublin and Cork and deals with the most serious legal matters;
  4. the Court of Appeal, sitting in Dublin, to hear appeals form the High Court; and
  5. the Supreme Court which sits in Dublin and decides matters of pure law, and constitutional issues.

Taxation

In effect, it must be remembered that every property transaction has a tax implication. There are a number of taxes which apply both to individuals and to companies.

Primarily, they are:

  1. Value Added Tax: applied at 23% on supply of services; 13.5% on provision of goods, supply of buildings, building services; 4.8% on livestock, dogs and horses; 0% on certain exports and services.
  2. Income Tax: the lowest rate is 20% on individuals and the top rate is 40% over the relevant tax-free threshold plus universal social charge at rates commencing at 0.5% up to 11% of income.
  3. Corporation Tax on limited companies is at 12.5% on trading income and 25% on non-trading income.
  4. Capital Gains Tax at 33% is payable on all gains made on sale of certain assets (including property).
  5. Capital Acquisitions Tax consists of two taxes: Inheritance Tax which applies at 33% over the relevant tax-free threshold is payable where a person inherits property, and gift tax which applies to gifts made between living individuals and is also taxed at 33% over the relevant tax-free threshold. There is a credit if both taxes arise on the same event.
  6. Stamp duty tax is a tax payable on the transfer of property. It varies from 1% to 7.5%, depending on the nature and value of the property being transferred.
  7. Commercial rates tax is a fluctuating local tax paid to the local authority whose area the business property is situated.
  8. PRSI (Pay Related Social Insurance) tax is an insurance and health contribution collected by the central government from the wages and salaries, payable as to a maximum of 4% by employee and 11.05% by the employer, based on the salary/wage paid.
  9. Vehicle Tax on vehicles, private and commercial: this varies depending on the vehicle being taxed.
  10. Stock transfer tax is payable on the transfer of shares in private and public limited companies at 1% of the value of the shares being transferred (or at property rates if main asset owned by the company is non-residential property, such as a land site).
  11. Local property tax is an annual charge on residences arising at from 0.1029% to 0.3% of value.

 

Wills and Probate

Upon death, property may be left by a Will, which is a properly attested legal document made by the deceased whilst living. By this document, the deceased disposes of his/her property as he/she wishes subject to some statutorily imposed obligations to cover the inheritance of the surviving spouse and the deceased’s direct dependents. It is important that a solicitor be consulted to ensure the proper drafting and execution of the Will and also to ensure that all tax implications have been considered.

 

The above information is issued as a general guideline only. Before purchasing or investing in property or conducting businesses in Ireland, specific advice should be taken from your legal advisor or accountant to ensure that all relevant areas have been investigated and that proper advice has been given.