Establishing a ‘Real and Continuous Link’ for Your Irish Company to Avoid the Non-Resident Bond

Ireland’s favorable business environment and competitive tax system have made it a preferred destination for international businesses seeking to establish their presence in Europe. However, in order to fully benefit from Ireland’s corporate tax advantages, companies must navigate certain regulatory requirements. One such requirement is demonstrating a ‘Real and Continuous Link’ to Ireland, which is crucial for avoiding the non-resident bond. In this article, we’ll explore the concept of a ‘Real and Continuous Link’ and provide guidance on how your Irish company can meet this requirement effectively.

Understanding the ‘Real and Continuous Link’

The ‘Real and Continuous Link’ is a legal concept in Irish tax law that serves to distinguish between companies that are genuinely conducting business activities in Ireland and those that are merely using Ireland as a tax shelter without a substantial presence in the country. This concept is crucial for determining whether a company qualifies for the benefits of Irish tax residency, including a reduced corporate tax rate.

The Irish Revenue Commissioners use various criteria to assess whether a company has a ‘Real and Continuous Link’ to Ireland. These criteria include the location of board meetings, the management of the company’s affairs, the presence of key decision-makers in Ireland, and the level of economic activity conducted within the country.

Tips for Establishing a ‘Real and Continuous Link’

Maintain a Registered Office in Ireland: One of the first steps to establish a ‘Real and Continuous Link’ is to have a registered office in Ireland. This provides a physical presence and an official address for your company in the country.
Appoint Irish Resident Directors: Having Irish resident directors who actively participate in the management of the company can strengthen your case for a ‘Real and Continuous Link.’ These directors should be involved in strategic decision-making and be physically present in Ireland for board meetings.
Conduct Core Business Activities in Ireland: To demonstrate a genuine link, it’s essential to conduct significant business activities within Ireland. This includes having a physical presence such as offices, employees, and customers in the country.
Maintain Comprehensive Records: Keep detailed records of board meetings, financial transactions, and other business activities conducted in Ireland. This documentation can serve as evidence of your company’s substantial presence in the country.
Establish Banking Relationships in Ireland: Maintain bank accounts with Irish financial institutions and conduct your financial transactions through these accounts. This further demonstrates a commitment to operating within the Irish business environment.
Seek Professional Advice: Consult with tax and legal experts in Ireland who are well-versed in the ‘Real and Continuous Link’ requirements. They can help you structure your company’s operations in a way that aligns with Irish tax regulations.
Stay Informed: Keep up to date with changes in Irish tax laws and regulations, as these may affect your company’s compliance with the ‘Real and Continuous Link’ criteria.

Conclusion

For an Irish company, establishing a ‘Real and Continuous Link’ to Ireland is essential for benefiting from the country’s advantageous tax regime and avoiding the non-resident bond. By maintaining a registered office, appointing Irish resident directors, conducting core business activities within the country, and adhering to other guidelines outlined in this article, you can strengthen your company’s case for a ‘Real and Continuous Link.’ Seeking professional advice and staying informed about regulatory changes will help ensure that your company maintains its tax-resident status in Ireland.