With the impending exit of the UK from the EU increasing numbers of clients are looking at the Irish Agency Company/IBC ahead of the UK Agency Company/IBC Model as a means of doing Tax Effective Business in Europe.
What is an Agency Company?
An Irish company is formed specifically to operate as a nominee or agent for a principal company – in effect the Irish company acts as a fiduciary or agent for the principal company.
How is it used and implemented?
The two companies sign an agreement which specifies the terms of the agreement between them. All business and sales is then conducted in the name of the Irish company, but on behalf of the principal company. The customer enters into a contract with the Irish company, is invoiced by them and pays the invoices into the bank account of the Irish company. Income is then remitted to the principal company by the Irish company after deduction of an agreed commission.
Ownership and Control of the Company
The Irish company is managed and controlled by the principal company and its officers, as is the bank account of the Irish company. It should be noted that the Irish company cannot trade within Ireland or with any Irish businesses.
The Irish company will pay tax on the profits which it makes on the fees retained in accordance with the agency or nominee agreement.
Why is it Used?
- This structure is ideal for use as a European Trading structure where the receipts of invoices from a Non EU company would not be acceptable.
- This limits the difficulties normally experienced while directly dealing with Non EU companies.
Apart from the practicality point of view as stated above there are also tax advantages
- Low tax vehicle – Tax is only payable on 5-10% of turnover of the parent company.
- Ideal where receipt from Non EU company would not be acceptable.
- Excellent for situations where an onshore profile is required.
- Can be used effectively in EU VAT triangulation situations.
Corporate Structure
The Irish Agency Company is a popular trading vehicle with minimum exposing to Irish tax. An lrish Agency Company is only a subject to lrish taxation on the agency fee that it receives, for example 5% on the gross profit, minus administrative costs of the Irish company. Nevertheless high taxation rate 25%, an lrish company in an Agency structure is a tax efficient and cost effective method for structuring the provision of services, commissions and general trading.
Key Advantages
• Irish company can conduct Agency Contract with Offshore principal.
• All business is conducted in the name of the Irish company. Ready-made Irish Ltd. with VAT available.
• Corporate tax applies only on the agency commission that Irish company receives.
• Financial statements will only disclose the agency fee as turnover. While turnover of the offshore principal is not exposed in the statutory accounts.
Typical Structure
An lrish company in an agency structure can be used for the supply of services, commissions and the purchase and sale of goods. The lrish company will enter an agency agreement with an offshore principal. The lrish company will undertake as agent to enter into contracts, commission agreements, etc. on account of and on behalf of the offshore principal:
• Contracts for the purchase of products or services are concluded by the offshore principal directly or through the lrish company on the instruction of the offshore principal.
• Contracts for the sale of products or the provision of services are concluded by the offshore principal directly (but formalized by the lrish company on the instruction of the offshore principal).
• The lrish company to be instructed by the offshore principal for all action required to be taken.
• lrish company will issue invoices with its VAT number. The lrish company will also sign documents and handle funds.
• The lrish company cannot deal with lrish suppliers/service providers or lrish customers.
Taxation
An lrish company in an agency structure will only be subject to lrish taxation on the agency fee that it receives. The agency fee will generally be equivalent to 5% of the gross profit on transactions undertaken on behalf of the offshore principal. An lrish company in an Agency structure cannot rely on any of the lrish double tax treaties.
OCI Irish Company Package Inclusions
The incorporation fee as quoted below includes the following documents:
- · Original Certificate of Incorporation
- · 2 bound copies of the Memorandum and Articles of Association
- · PDF copies of the above documents
- · Share Certificate/s
- · Minutes of Directors First Meeting
- · Luxury Company Seal
The fee also includes us supplying Irish Registered agent and office service for the 1st year + mail forwarding and full Company Secretarial Service.
The registered office/registered agent/annual company secretarial service includes specifically the following:
- · Electronic Filing of the Companies Registration Office (CRO) Annual Return using our Company Secretarial Software.
- · Sending updated information and documents on time to the CRO and other relevant bodies
- · Looking after all Company Secretarial matters e.g. miscellaneous changes in directors, registered office, shareholders, increase in share capital
- · Holding, updating and maintaining the company’s registers including the register of members, registers of directors and company secretaries and their interests in shares and contracts in the company
- · Preparation of Annual General Meeting (AGM) Proxy Forms, notices and minutes
- · Keeping of AGM, EGM and Directors minutes with register (if required)
- · Keeping custody of the Company Seal (if required)
- · 2.5 hours of company secretary time included
- · Monitoring of company on CORE system (protects against fraud)
- · Provision of Corporate Company Secretary
Price all inclusive $US1,650
Plus (if required):
· For a non-Irish resident Nominee Director: $US1,000 (or)
· For an Irish resident Nominee Director: Price on application
