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Brexit –UK Resident Directors of Irish Companies

Under the Companies Act 2014, all Irish Companies directors must be resident in the European Economic Area (EEA).

As the UK left the EU on January 31st with certain provisions until 31st December 2020, the UK’s trading relationship with the EU remains the same and the UK will follow EU rules. All EU regulations will apply to the UK during this time.

Therefore, this year, Irish Companies with UK resident directors can operate as normal without the requirement to have an EEA-resident Director.

However, if after 31st December 2020, there is no agreement in place, UK resident Directors of Irish Companies will need to adhere to Section 137 Companies Act 2014  and appoint an EEA resident director or apply for a Non-Resident Director Bond in order to comply with the Companies Act 2014

A Non-Resident Director Bond covers the company for €25,000 and acts like an insurance policy for the government to cover unpaid taxes or fines. It is valid for 2 years and covers the following;

  • Company fines imposed by late filing of accounts or returns
  • Revenue fines
  • Penalties imposed under the Taxes Consolidation Act 1997
  • Expenses incurred in recovering above fines and penalties

A Non-Resident Director Bond needs to be put in place at company incorporation stage or on the removal of an EEA resident director from the company, it allows the company to operate without an EEA resident director in place. After 2 years, the company must either renew the bond or appoint an EEA director.

It is a criminal offence to not have at least one EEA-resident director of an Irish registered company.

Exemption

If a company has someone managing the business from Ireland or trades in the State, they may be eligible to apply for a ‘real and continuous link’. An application can be made to Revenue to confirm a link exists (trading must already be in place to be approved). Once approved by Revenue, a B67 form is required to be completed and submitted to the Registrar of Companies to confirm the link.

If approved, there is no requirement for a company to purchase a non-resident bond or appoint an EEA director.

Why not read our previous blog regarding the legal and tax implications for Director’s loans here

Should you have any queries on this issue, please contact us on 01 5397999 or info@itasaccounting.ie

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Research & Development (R&D) Relief for employees

Background

Companies can claim a tax credit from Revenue if undertaking R&D activities. A company has the decision to surrender all or part of this tax credit and therefore an employee of the company may be entitled to claim this credit if working in R&D activities.

Am I eligible?

To apply for this credit, you as an employee;

  • Must never have been or are a director of the company or associate company
  • Are not connected to a director of the company or associate company
  • Do not have any material interest in the company or associate company
  • Not connected to anyone who has a material interest in the company or associate company (i.e owns more than 5% share)
  • You must have performed 50% of your duties in conception or creation of new knowledge, products, processes, methods or systems
  • Your employer must be entitled to claim at least 50% of the cost of your wages as R&D expenditure

R&D Relief Limit

Income tax payable in the year of claiming must be at least 23%. See our example below;

source Revenue.ie

Unused Credit

If the full credit amount is not used in 1 year, it can be carried forward to reduce further years.

🤔 Have a query on this or need to include in your tax return, contact us today to discuss on 01 5397999

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