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FAQ About Dormant Companies in Ireland

Updated on Sunday 25th August 2019

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FAQ-About-Dormant-Companies-in-Ireland.pngA dormant company in Ireland defines a type of legal entity that has been registered with the local institutions, more exactly, with the Companies Registration Office (CRO), but which did not have any business activities since its incorporation; thus, a dormant company is also defined by the fact that it did not have any types of incomes. 
 
Our team of specialists in company registration in Ireland can advise on other characteristics of an Irish dormant company and can also help investors incorporate a dormant company; it is necessary to know that a dormant company can maintain its status for a long period of time, but once the business will become operational, the Irish tax authorities have to be notified on the change. 
 

Why register a dormant company in Ireland? 

 
Opening a company in Ireland and keeping it as a dormant company can be the effect of numerous reasons. For example, a business can be kept as a dormant company in the case in which an investor is not interested in starting a business immediately after its incorporation. Through this option, the investor can easily register a company name with the CRO and, in the meantime, he or she can prepare the launch of the respective business on the local market. 
 
The dormant company is also employed when a business is being restructured or it can be used in the case in which the company’s owner can’t maintain his or her business operating due to illness, travelling purposes or maternity leave. Other reasons can also apply in this case and our team of specialists in company registration in Ireland can further advise on this subject. 
 

Does the Irish dormant company benefit from an audit exemption? 

 
Yes, a dormant company in Ireland can qualify from an audit exemption as stipulated by the Companies Act (Chapter 16 – Special audit exemption for dormant companies). This means that the dormant company does not need to perform an audit on its yearly financial statements, but the regulation applies if specific conditions are satisfied, which can be presented in an extensive manner by our team of consultants in Irish company formation. However, it is necessary to find out that some of the main conditions are the following: 
 
  • a dormant company can be exempted from auditing its financial statements if, in the respective financial year, it did not have any financial transactions;
  • it has permitted assets and liabilities (comprised of those that are allowed for this type of company);
  • if the dormant company satisfies these two conditions, then the company’s directors can make the decision to avail from the audit procedure;
  • this will be decided and recorded in the minutes of the meeting established for this purpose;
  • the Section 365 of the Chapter 16 defines which is the class of permitted assets and liabilities for a dormant company in Ireland
 

When does the Irish Revenue consider a business to be inactive?

 
All companies operating in Ireland have the obligation to register for taxation purposes. The main institution in charge with the taxation of local businesses is the Revenue Commissioners, to which local companies have to provide their financial and accounting situation. According to the Irish Revenue, a business is considered a dormant company (or an inactive company) if it does not have any activity in a given accounting period. 
 
Dormant companies have the obligation to file accounting documents on a regular basis with the Irish Revenue; one of them is to file the financial statements in the eXtensible Business Reporting Language, which is a computer document that includes the GAAP and the IFRS principles. 
 
The dormant company in Ireland is not required to file this as long as its financial statements do not have any income or expenses registered in the accounting period (this is reflected in the profit and loss account) and if the company’s balance sheet has a value of less than EUR 500.  
 

What are the top economic sectors preferred by investors in Ireland? 

 
Ireland is an attractive business destination for a wide range of economic sectors, but the largest number of company registrations was observed in certain economic activities. Investors are invited to contact our team of consultants in company formation in Ireland for legal assistance on the incorporation of a business in a specific economic sector; our representatives can provide advice on the registration of a business in any business activity, but it is important to know that in 2017, most of the companies were registered in the following sectors:
 
  • in 2017, the total number of new companies registered in Ireland accounted for 22,241 new businesses;
  • the services sector in Ireland registered 11,331 new companies;
  • the Irish construction sector was the second most important economic sector, accounting for 5,345 new businesses;
  • the distribution sector in Ireland accounted for 2,933 new company registrations;
  • the Irish industry sector registered 1,410 new companies;
  • the financial sector in Ireland was represented by 1,223 new businesses. 
 

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Paul Sheridan is one of our company formation specialists. He can help you establish your company in Ireland fast and easy.

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