HSBC Treasury Management Profiles 2018 -

Current section, Introduction

Introduction

Ireland has a well-developed regulatory regime, a highly educated workforce and favourable tax rates; all have proven attractive to foreign investors. The IMD World Talent Ranking 2017 placed Ireland 14th in terms of the most competitive economies worldwide. After six years of austerity, following the 2008 global economic slowdown, economic growth returned in 2014, and surged to more than 26 per cent in 2015. In 2016, the economy grew 5.2 per cent outstripping all other eurozone countries. The European Commission predicts growth of 4.8 per cent in 2017 and 3.9 per cent in 2018. Exports, which account for approximately 40 per cent of the country’s economic output, have been a primary driver of the country’s economic recovery. In the nine months to September, the value of exports rose 2 per cent year-on-year to EUR90 billion. Exports of pharmaceutical and medical products, which accounted for 25 per cent and 10 per cent of total exports respectively in 2016, rose 13 per cent. The impact of the UK’s decision to leave the European Union, the UK accounts for 13 per cent of Ireland’s exports, poses a challenge to future trading relations between the two countries; the National Treasury Management Agency has stated that it expects Brexit will act as a headwind to Irish growth prospects in the short term. Uncertainty also remains over the impact of potential changes to US tax and trade policies, to which Ireland is highly exposed – the USA is the country’s largest export market (26 per cent of total exports in 2016). Domestically, a strong labour market, low unemployment (6 per cent in October 2017), and longer working hours are contributing to increased household consumption; the volume of retail sales saw an annualised increase of 3 per cent in the nine months to September.

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Legal and regulatory

  • Foreign exchange and domestic currency (EUR) accounts can be held by residents both domestically and abroad. Resident domestic currency accounts are convertible into foreign currency
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts can be held abroad and are convertible into foreign currency
  • Approximately 4000 financial institutions and 500 non-financial companies are surveyed by the Central Statistics Office each year for balance of payments purposes
  • From 15 November 2016, all Irish companies are required to create and maintain a Beneficial Ownership Register

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Taxation

  • Residents are taxed on their worldwide income
  • Non-residents are taxed only on Irish-sourced income only
  • A corporation tax rate of 12.5 per cent applies to the trading profits of active trading companies
  • Ireland is a signatory to the Multilateral Competent Authority Agreement (MCAA), under which information will be exchanged between tax administrations, giving a single global picture on some key indicators of economic activity within multinational enterprises. The first exchanges under the MCAA will begin in 2017-18 based on 2016 information

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Payment instruments and systems

  • Cheque use is in terminal decline due to a preference for electronic credit transfers for both high-value corporate and low-value retail payments. Payment cards are the most popular payment method in Ireland, accounting for over 60 per cent of all cashless payments in 2015. Adoption of mobile payments is high and it is expected that the Revised Payment Services Directive will enable mobile payments to be made more easily
  • Ireland has three national payment systems: TARGET2-IE, an RTGS system; STEP2 , for low-value domestic and cross-border SEPA payments; and the IPCC, for paper-based payments. In November 2017, the RT1 instant payment system was launched. This pan-European system supports the SCT Inst scheme for SEPA credit transfers

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Cash management

  • Domestic and cross-border notional pooling and cash concentration are permitted between resident and non-resident accounts
  • Automated collection methods are used by the majority of medium-sized and large businesses in Ireland
  • Ireland is a popular location for regional/global cash pool structures and treasury activities due to its relatively low corporate tax rate (12.5 per cent)

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Electronic banking

  • Electronic banking is commonplace in Ireland. There is no bank-independent electronic banking standard. Large companies can use SWIFT for corporates
  • Internet and mobile banking services are provided by all of the country’s banks for both corporate and retail purposes. Ireland’s postal service, An Post, offers the mybills.ie service, which allows bills to be paid online
  • Online and mobile banking services were used by an estimated 64 per cent and 78 per cent of individuals in 2016

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To read the full report on Ireland and to discover more on these and other topics, including banking and trade, please click on the Download PDF option.

Sources:

  • Central Statistics Office
  • United Nations COMTRADE database
  • National Treasury Management Agency
  • International Monetary Fund

The materials contained on this page were assembled in April 2017 (unless otherwise dated).

 

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