Why You Should Set Up Your Group Holding Company in Ireland

Jan 29, 2025

Time to read:

minutes

Who should read this?

Business owners and entrepreneurs looking to establish a European corporate presence should read this article.

This guide is particularly relevant for international companies considering Ireland as a location for their group holding structure.

Key Takeaways:

Ireland offers the lowest corporate tax rate in Europe at 12.5%, combined with an extensive network of double taxation treaties covering 75 countries
As the only English-speaking country in the EU post-Brexit, Ireland provides seamless access to the European market while maintaining strong ties with the US
Setting up a company requires minimal physical presence - only a registered office address (which can be outsourced) and one EEA-based director
A holding company is exactly the same as a normal company, it's just called a holding company because of where it sits in the group structure (it holds shares in the other companies)
The Irish holding company structure allows for efficient tax planning through its participation exemption and foreign tax credit system
Companies can maintain their existing personal holding structures while benefiting from Ireland's corporate tax regime
Ireland's stable political environment and highly educated workforce make it attractive for long-term business planning
The vibrant startup ecosystem and presence of major tech companies demonstrate Ireland's business-friendly environment

Ireland has emerged as a premier destination for international business, offering a unique combination of advantages that make it particularly attractive for establishing group holding companies.

With the lowest corporate tax rate in Europe at 12.5%, Ireland has an advantage on the rest of Europe when it comes to structuring your international business. As the only English-speaking country remaining in the European Union post-Brexit, Ireland provides a natural bridge between Europe and the English-speaking world.

Understanding Group Holding Structures

Before delving into the benefits of Irish holding companies, it's important to distinguish between group holding companies and personal holding companies.

Let's break down what we mean by different types of holding companies using a practical example.

A group holding company is a business structure that helps you manage and control multiple companies operating in different countries. Think of a successful Irish software company that wants to expand across Europe. They might set up their main holding company in Ireland, which then owns and controls separate companies (called subsidiaries) in France, Germany, and Spain.

Each local company could handle that country's sales, employ local staff, and would follow local rules - but they're all ultimately owned and controlled by the Irish holding company.

This structure offers several advantages. The Irish holding company can:

Collect profits from all the subsidiaries in a tax-efficient way
Make strategic decisions for the whole group
Share resources and expertise across all companies
Manage the group's finances centrally
Protect each subsidiary from risks affecting the others

When we talk about collecting profits "tax-efficiently", here's what that means in practice.

When we talk about tax-efficient profit structures, here's what makes the Irish holding company approach valuable. Let's say you're a French business owner with companies across the EU. Rather than each subsidiary paying the local corporate tax rate in their country (which might be 25% in France or 30% in Germany), you can structure your operations so that the profits flow to your Irish holding company first.

These profits would then be taxed at Ireland's significantly lower 12.5% corporate tax rate.

For example, if your German subsidiary generates €1 million in trading income, instead of paying German corporate tax at 30% (€300,000), you could structure the business so that this profit is taxed in Ireland at just 12.5% (€125,000).

This same principle applies across all your international operations - the profits can flow through your Irish holding company, taking advantage of Ireland's low tax rate.

This structure is completely legitimate and is one of the main reasons why many international businesses, from small companies to large multinationals, choose to set up their holding companies in Ireland.

A personal holding company, on the other hand, serves a different purpose - it's designed to manage an individual's or family's private wealth and investments. While this can be useful for personal asset management, the focus of this article is on group holding companies and how they can help your business operate efficiently across multiple countries.

Why Ireland Makes Business Sense

Setting up a company in Ireland is straightforward.

You only need a registered office address in Ireland, which can be facilitated through a virtual office service provider.

Shareholders can be located anywhere in the world, and director requirements are minimal - only one director needs to be resident in the European Economic Area (EEA). Even this requirement can be circumvented through a Section 137 bond, providing maximum flexibility for international businesses.

The only real paperwork challenge, is that all directors and any shareholder owning more than 25% of the shares will need to apply for an identification number with the CRO.

The Irish Tax Advantage

Ireland's 12.5% corporate tax rate has attracted major US technology companies, including Google, Facebook, and Apple.

However, these tax benefits aren't exclusive to large multinationals - they're equally available to businesses of all sizes.

It also helps that Ireland has an extensive double tax treaty network covering 75 countries. Ireland's extensive network of double tax treaties means you can move money between your Irish holding company and companies in those 75 countries without paying tax multiple times on the same income.

Without these treaties, you might end up paying tax on the same money in both countries - first where it was earned, and then again in Ireland. These treaties prevent this double taxation, making it much more efficient to do business across borders.

The Foreign Tax Credit system in Ireland helps prevent double taxation on foreign-source income. This means that when your subsidiary companies in other countries pay local tax, Ireland will generally provide credit for these taxes against any Irish tax due on the same income.

Structuring Your Group Holding Company

The versatility of the Irish holding company structure is one of its key advantages. Don't let the image above scare you, it's not too bad. You first start with the Irish Group Holding Company and maybe one of the subsidiaries (they can be in any country). The trading company can make sells, hire employees etc etc. The Irish Holding Company can receive any profits from the trading company and would normally be where any investors put their cash.

Your personal holding companies can remain at the top of the structure, with the Irish group holding company acting as an intermediate holding company.

This structure allows you to maintain existing arrangements while optimising your tax position through Ireland's advantageous regime.

Share classes can also be created in any currency which might assist you with contributing cash to your company or paying up profits from one of your subsidiaries in the same currency.

The Irish Advantage Beyond Tax

Ireland offers more than just tax benefits.

The country boasts a highly educated workforce, with one of the highest proportions of science, technology, engineering, and mathematics (STEM) graduates in the EU.

The political environment is stable and business-friendly, providing certainty for long-term planning.

Additionally, Ireland's vibrant startup ecosystem and strong track record in attracting international investment create a supportive environment for businesses of all sizes.

How Can Open Forest Help?

‍Open Forest offers the cheapest and fastest incorporation packages in Ireland including holding companies for €99 including CRO fees, VAT and access to the Open Forest platform so you can keep track of all of your legal, tax and accounting obligations - at no additional cost.

Choose from one of our incorporation packages here and we will take care of the rest.

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Frequently Asked Questions (FAQs)

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Do I need to relocate to Ireland to set up a holding company?

No, you don't need to relocate. You only need a registered office address in Ireland, which can be provided through a virtual office service. Directors can be based anywhere in the EEA, and if needed, you can arrange for non-EEA directors through a Section 137 bond.

How does the Irish holding company structure work with existing companies?

Your Irish holding company can act as an intermediate holding company, with your personal holding company remaining at the top of the structure. Your local operating companies can then be established as subsidiaries under the Irish holding company.

What are the main tax benefits of an Irish holding company?

The key benefits include Ireland's 12.5% corporate tax rate, extensive double tax treaty network, participation exemption for qualifying dividends, and foreign tax credit system that helps prevent double taxation on foreign income.

How long does it take to set up a holding company in Ireland?

The process typically takes 5 working days once all required documentation is in place. Open Forest can do all the work for you.

What are the benefits of having a holding company in Ireland?

An Irish holding company allows you to benefit from Ireland's low 12.5% corporate tax rate and extensive tax treaty network when doing business across multiple countries. This structure is particularly valuable for international businesses, as profits from your overseas operations can flow through Ireland at this lower tax rate before reaching you as the business owner in your home country.

How much to set up a holding company in Ireland?

Registering a Company in Ireland - A Step by Step Guide

August 2024