Contractors' Questions: How to pay my 'Ltd' Euros from Ireland?

Contractor's Question: I am new to contracting but have just set up my own limited company, and have a business account with HSBC. However, as luck would have it, it looks very likely that my first contract will be based in the Republic of Ireland, and the client will be paying me in Euros. I am therefore looking at the best way of minimising bank charges.

After talking with HSBC, I know I can set up an account with them which will allow me to take payments in Euros but it looks like it might be difficult for me to extract cash from the account, as I will be living there for the contract period and need to have money to hand (for accommodation & food etc), so I ideally would need a debit card. My other option is to open a bank account in Ireland, but I'm unsure how easy this is for a UK-registered company, particularly one which has just started trading. What's the best way to manage my payment situation?

Expert's Answer: It would certainly be advisable to open a Euro account for your contract in Ireland, although I would recommend using a local bank with full current account facilities rather than a UK bank which doesn't have a high-street presence in Ireland.

The process for opening an account for a UK company trading in Ireland is not that onerous. The bank will require some additional information and may charge you for the cost of carrying out a UK company search, but other than that the process is straightforward. We deal with Bank of Ireland and Ulster Bank and have in the past opened accounts for non-Irish companies without difficulty.

One other factor to consider is tax compliance in Ireland. Whilst Ireland does not currently have any IR35 or MSC legislation, there is a requirement for those carrying out their employment duties in Ireland to pay tax in Ireland on a PAYE basis. There is an exemption for short-term contracts (less than 60 working days), but for anything longer you will be subject to tax in Ireland and will need to consider how you are going to deal with this.

You can use your UK company, but in order to be tax-compliant the company would need to be registered in Ireland as an employer, and Irish PAYE should be applied to your salary rather than UK PAYE. This can be a lengthy process (as you have to first register the company with the Companies Registration Office) and can complicate the company's tax affairs as the company effectively becomes tax resident in Ireland.

If you are going to be liable for tax in Ireland, a more convenient option may be to use an Irish umbrella company as they can deal with all Irish VAT/PAYE matters and can then simply pay the net salary/expenses to your personal bank account. I still recommend that you open a personal bank account in Ireland, which should be a very straightforward process for you.

The expert was Páraic O'Dowd, tax partner at Prima Accountants , a Dublin-based payroll specialist for contractors.
 

Tuesday 29th Jun 2010