Ireland, the United Kingdom or The Netherlands?

Ireland has gained a reputation as one of the most attractive tax jurisdictions for businesses due to its taxation and economic policies. One major key advantage is its low corporate tax rate of just 12.5% on active business income. This rate is significantly lower than the average tax rates in other European countries, making Ireland an attractive destination for multinational organisations looking to establish a European presence. The low corporate tax rate was phased in between 1996 to 2003 and since then has attracted many tech giants, such as Google, Apple, and Facebook, to set up their European headquarters in Ireland.

Ireland is renowned for having a highly transparent and straightforward tax system, which can provide certainty and predictability for businesses. Ireland also offers companies various tax incentives and exemptions, such as the research and development tax credit (30% on qualifying R & D expenditure), which encourages innovation and investment in research activities. It has a favourable intellectual property (IP) regime, a knowledge development box with a 10% corporate tax rate effective from October 2023, corporate tax exemptions for new start-up companies (2009 – 2026) and its popular securitisation tax regime for S110 entities (entities holding qualifying assets that can include financial assets) that has proven extremely attractive in putting Ireland on the global map for this type of SPV activity.

Ireland also has an extensive network of double tax treaties, allowing businesses to benefit from reduced withholding tax rates on international transactions.

Firstly, the UK has a competitive, sliding scale of corporate tax rates ranging from 25% down to 19%, with the lowest rate of tax payable on profits of less than GBP 50,000. Companies with profits in excess of GBP 250,000 are taxed at the higher rate of 25% with those falling between these bands taxed on a progressive scale. These lower rates are appealing to businesses as it enables them to retain a significant portion of their profits, encouraging reinvestment and expansion.

Businesses and investors are also attracted to the UK because of its fair approach, strong legal framework, and robust financial infrastructure. London is renowned as a global financial hub, with a well-established banking system, access to capital markets, and a favourable regulatory environment. This combination of factors makes the UK an attractive destination for businesses seeking financial stability and opportunities for growth.

To stimulate specific industries the UK has implemented various tax relief programmes. For example, the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) and the Venture Capital Trust (VCT) providing tax incentives to individuals investing in small, high-risk companies. These initiatives encourage entrepreneurship and investment in innovative start-ups.

Research and Development (R&D) tax relief offers generous incentives of up to 230% for companies investing in UK research and development projects. Additionally, the Patent Box offers a 10% Corporation Tax on profits from inventions patented in the UK.

The Netherlands has a competitive corporate tax regime with two taxable income brackets – 19% on corporate profits up to EUR 200,000 with profits in excess of this amount taxed at the higher rate of 25.8%. The Netherlands also offers an extensive network of bilateral tax treaties, ensuring that businesses can benefit from reduced withholding tax rates and avoid double taxation.

The country also has a beneficial tax ruling system that allows businesses to obtain advance agreements from the Dutch tax authorities on uncertain tax positions, providing certainty and reducing tax risks. The Netherlands also offers tax exemptions on dividends, interest, and royalties, making it an attractive destination for holding companies and intellectual property holding structures.

Additionally, they have established various tax incentive programmes to encourage research and development, innovation, and investment in sustainable energy. These programmes offer tax deductions, credits, and other incentives to businesses actively participating in such activities.

It is plain to see the significant advantages to businesses, investors, and individuals of the tax regimes in Ireland, the United Kingdom, and the Netherlands. The low corporate tax rates, transparent tax systems, attractive tax incentives, and favourable legal and financial infrastructures make these countries highly appealing for establishing and expanding businesses, as well having highly skilled and mobile workforces and accessibility to worldwide markets. Therefore, it is no surprise that these jurisdictions have become the preferred choice for many companies and individuals looking to optimise their tax positions and achieve growth.

At Vantru, we provide a full range of global corporate services to both individuals and organisations. With offices in the UK, Ireland, and The Netherlands, we have a team of highly skilled tax professionals who can provide both tax advisory and compliance services, particularly for those seeking to understand the wider implications of a potential expansion strategy.

Book a meeting with our highly experienced team and let’s discuss how we can tailor our services to your business needs.