This was a question recently asked of one of our businesses, because we keep getting the same queries from our EU based customers. How can we send you work after the final date of Brexit, when you are no longer subject to the same regulations in terms of data protection as us? The company in question deals with the handling of extremely sensitive data, and adherence to the GDPR regulations (these relate to the storage of data), are absolutely fundamental to our continuing trading relationship with a whole host of our EU based customers.
Dreaming of Ireland – If Only We Had Done This Pre-Brexit!
We have been contemplating opening an office, branch or subsidiary in the Republic of Ireland for a number of years, and so vaguely knew what was required. However, the purpose of this article is to give an indication as to the current situation with where the UK has now left the EU, and is not subject to the same regulations, and neither has it remained in the European economic area.
It used to be extremely easy to open an office, subsidiary company or branch in Dublin, Cork or Galway, or indeed any other part of Ireland.
Company Formation Services – Inexpensive
There are plenty of company formation services, registered office addresses that can be used, and the whole thing should really cost less than €300-€400 to set up, and then an annual maintenance fee of somewhere in the region of about €300-€400 on top. A UK company could then go about recruiting and actually establishing an office and a presence in Ireland, and then making the decision at some point as to whether to move across completely to Ireland to take advantage of the extremely low corporation tax rate.
Huge Sticking Point – The Non-EU Resident Bond
Unfortunately the situation at present requires any business wanting to set up an office, a subsidiary company or branch, to take out a bond as a non-EEA or EU residence, if none of the directors are based inside the EU, EEA including Ireland. This essentially means that every two years your company will need to take out a bond, which is in effect insurance for €25,000, to protect the Irish government from your sudden disappearance or collapse, which would leave them with the cost of clearing up the mess. This bond appears to cost in the region of about €2000 every two years, which means that over a 10 year period a company that would have cost you in the region of €3,500 in maintenance fees and setup costs, is now going to cost you in the region of €14,000, if not more.
Large Problem for Small Businesses
This may or may not be an unintended consequence of the decision of the UK to leave the EU, but it does create an enormous problem for any small business wanting to establish themselves in Ireland without a physical Irish office and staff.
Fair and Equitable?
Whilst this might seem very reasonable and fair, it does not equate at all to the company services available in London or other European countries. It could be argued that the use of this bond or insurance is effectively a tariff, protecting Irish companies and businesses against foreign competition attempting to move in and trade remotely but under favourable Irish terms.
In some ways it really makes no sense at all for the UK and Ireland to have such restrictions in place, because they are such close trading partners and there is of course the thorny issue of the Northern Irish border. There are so many connections between the two countries; it beggars belief that UK businesses now fall into the same category as Russian companies wanting to open an office in the Republic of Ireland. The tax issue had not even arisen for us as a small business, because we would be continuing to trade from our UK offices, but having an Irish presence simply to verify that part of our business was still within the EU and subject to EU guidelines and regulations, would be of particular value to us.
Where There is a Will There is a Way..
Of course, there are always ways and means of sorting something like this out, and this is something we as a business will look into in more detail!
Jonathan Fagan is MD of Ten-Percent.co.uk Limited and TP Recruitment Limited, a set of websites involved in a range of recruitment work. Jonathan has been running small businesses for over 20 years and has a number of interests and investments in companies as diverse as transcription, legal recruitment and a bit of marketing. He is an author of a number of guides and books, together with a children’s novel. In his spare time he enjoys playing golf, cricket, coaching girls’ football, operating a parent taxi, lots of running and paddleboarding on Bala Lake and the River Dee. He is a strong believer in a good work-life balance and regular blogs on making money vs enjoying life. Jonathan’s website is https://www.jonathanfagan.co.uk