The Republic of Ireland is experiencing a slow recovery from the global credit crisis. Following a 10 percent GDP contraction in 2008-10, Ireland’s economy grew by 1.4 percent in 2011. Amid the global economic slowdown and the ongoing Euro crisis, the Irish economy is projected to grow by just 0.4 percent in 2012, rising to 1.1 percent in 2013.
Reflecting the weak recovery and the effects of the 2010 IMF/EU austerity package, Ireland’s unemployment rate remains stubbornly high (14.4 percent, 5th highest in the EU after Greece, Italy, Portugal, and Spain). Youth unemployment stands at nearly 35 percent, prompting large numbers of young Irish citizens to emigrate abroad. According to the Financial Times, 182,000 Irish people between 18-29 years old have left the country since 2008.
On the positive side of the economic ledger, Irish exports are projected to reach a record €183 billion in 2013. The continued strength of Ireland’s export sector illustrates (1) the composition of Irish exports, which are weighted towards medical devices, pharmaceuticals, computer equipment, machinery, and other high-value products, and (2) the geographic structure of Irish exports, a major share of which goes to non-Euro countries like the United States, United Kingdom and Switzerland. Exports to non-Euro countries represent 65 percent of Ireland’s GDP, the highest ratio in the European Union. The composition and structure of Irish exports provide some degree of insulation from the continuing woes of the Eurozone and permit grounds for optimism about the country’s growth path in coming years.
Against this economic backdrop, the Irish government has launched two new programmes to attract immigrant investors and entrepreneurs from non-EEA (European Economic Area) countries. This article summarises the objectives and features of those programmes.
Immigrant Investor Programme
The Immigrant Investor Programme aims to promote investment in Ireland which would accelerate economic recovery, boost job creation and advance the general public interest.
The following types of investments will be considered for the programme:
- A one-off endowment of at least €500,000 to a public project benefitting the arts, sports, health, culture or education.
- A minimum €1m aggregate investment into new or existing Irish businesses for a minimum of three years. Funding by the investor through a venture capital fund will be considered provided that it can be demonstrated that the net effect is at least equivalent to that of a direct investment. The investment must contribute to creating or saving jobs.
- A minimum €2m investment in a special low interest five year immigrant investor bond with a single 5.1 percent interest payment at the end of the five year investment period (AER 1%). The bond will be issued on behalf of Ireland by the National Treasury Management Agency (NTMA). The bond will not be tradeable on any market, is not transferable, and must be held by the participant for the full five years until it matures.
- A minimum €1m mixed investment consisting of €500,000 in property and €500,000 in immigrant investor bonds. Property investments will be evaluated on their merits by reference to their contribution to the public interest and job creation. In certain circumstances, where the overall investment in property is over €1m and considered to be of particular benefit to the state, a bond investment may not be necessary.
Approved participants and their families in the Immigrant Investor Programme will be granted rights of residence in Ireland by way of multi-entry visas. The initial residence permission will be for a period of five years, which will be reviewed after the first two years to ensure that the investor continues to meet the conditions set out below. After the initial five years have expired, the investor is free to apply for on-going residence in five year tranches. The intention is that the investor would eventually establish a permanent relationship with Ireland.
Applicants will not be required to establish actual residence in Ireland, but would be expected to visit Ireland at least once every 12 months. They will be required to be self-sufficient and demonstrate that they will be able to support their families without the assistance of state funds.
The funds have to be legally acquired and owned by the investor (i.e. not borrowed) and comply with Anti Money Laundering Legislation
Applicants will be required to be of good character and will be required to attest to their bona fides via affidavit sworn in the State. False, misleading or incomplete information submitted can lead to removal from the State as well as revocation of the immigration permissions.
Taxation will continue to be governed by the applicable laws and international treaties and the programme does not alter this in any way.
Start-up Entrepreneur Programme
The Start-up Entrepreneur Programme is aimed at non-EEA persons with entrepreneurial ability and some financial backing who wish to start a business in innovative areas of the Irish economy.
Migrants with a good business idea in the innovation economy and funding of at least €75,000 can be given residency in Ireland for the purposes of developing their business. There are no initial job creation targets as it is recognised that such businesses take some time to get off the ground.
The intention of the programme is to support high potential start-ups that are part of Ireland’s innovation economy. Accordingly, the programme does not cover retail, personal services, catering and similar businesses. Each application will be considered on its merits and the state agencies will play a key role in evaluating the suitability of proposed business proposals.
‘High potential start-ups’ are defined as the following:
- Introducing a new or innovative product or service to international markets
- Capable of creating ten jobs in Ireland and realising €1m in sales within three or four years of start-up
- Led by an experienced management team
- Headquartered and controlled in Ireland
- Less than six years old
Successful applicants would get an initial residence permission for two years to develop the business. After two years have expired, their case would be reviewed; if going well, their permission will be renewed. If the business is failing and the applicant has no prospect of launching another venture or finding another basis to remain in the state, then a different outcome would be likely. Participants can be joined by immediate family provided they can show that they can be supported without the recourse to state funds.
Conclusion: Immigration and Economic Recovery
Ireland significantly benefitted from immigration during the economic boom years, including a large number of migrant workers from the East European accession countries. Subsequently, externally imposed austerity helped precipitate an emigration of young Irish that threatens the country’s long-term growth trajectory. As the country enters the last year of the IMF/EU programme, Irish authorities look to immigrant investors and entrepreneurs to support economic recovery.
About RSM Farrell Grant Sparks
RSM Farrell Grant Sparks is a leading Irish audit, tax and advisory firm, with offices in Dublin, Longford and Belfast. We provide financial services and advice to a client base that ranges from individuals and owner-managed businesses to large corporations and public sector organisations. The firm has extensive experience and knowledge in assisting international companies and groups in creating efficient tax structures across international borders.
About Rory Meehan
Rory Meehan is Head of Taxation at RSM Farrell Grant Sparks. He has over 30 years’ experience as a tax consultant and advises high net worth individuals on personal financial planning, including pension planning. With extensive experience in succession planning, he advises clients about transferring businesses to the next generation, about the disposal of businesses to third parties, and about reorganisations within existing ownership structures. Rory is a past President of the Irish Taxation Institute and a Fellow of that Institute and the Institute of Chartered Accountants
About Carl Donnelly, Tax Consultant
Carl Donnelly is a Tax Consultant at RSM Farrell Grant Sparks in Dublin, Ireland. He assists clients in tax matters across various industry sectors. Carl graduated from the National College of Ireland, where he completed a Bachelor of Arts in Accounting in 2008. He joined RSM Farrell Grant Sparks in 2011 from the tax department of HSOC Consultants Ltd. Carl is located in the Dublin office.
Rory Meehan, Head of Tax
Carl Donnelly, Tax Consultant
RSM Farrell Grant Sparks, Ireland