Brexit Update – UK Contractors – Implications for a UK Director of an Irish Limited Company

In the event of a “no deal” Brexit, The Irish Companies Office has issued an update on the status of UK resident directors of Irish Limited companies.

UK Resident directors will be classed as NON EEA-residents from 31st October and as a result the company may be required to put a Bond to the value of €25,000  in place where no other director on the board is EEA Resident.

Note this is not relevant if you are member of the Icon Accounting Director Umbrella Company.

What is a bond?

A bond is a guarantee that you will pay a specified amount of money if called upon. The company that underwrites the bond (the guarantor) will honour the obligation to pay an agreed amount if called upon. This bond in primarily in place to cover potential liabilities to Revenue and CRO.

In Practice

In practical terms, this means that a UK resident director of a single director company may need to purchase a bond. The cost of this can vary between €1,700-€2,000 and will cover a 2 year duration.

Exemption

There may be an exemption to the requirement if the company can demonstrate an economic link with its activity in Ireland. This can only be applied for post incorporation and tax registration as the Revenue Commissioners will need to issue a statement certifying the economic link.

New & recent Incorporations

Where a company has just been formed or is about to trade, a bond may need to be in place post October 31st. New incorporations will be required to submit the bond with the incorporation documents.

Summary

In the event of No-Deal Brexit it is important to review your current arrangement to ensure that you meet Irish Company law. Each company is looked at on a case by case basis. Failure to put a bond or certificate of exemption in place falls into the category of a criminal offence.

This will not apply to UK Directors of Umbrella companies or where the UK Director is an Irish resident.

Icon Accounting will be happy to advise you on your circumstances.

For further information on this matter please feel free to contact John Bell john@iconaccounting.ie or 01 8077106