When you are forming a company in Ireland, you have to comply with the Companies Act 2014. As set out under this Act, at least one director of the company should be a resident in the European Economic Area (EEA). In this blog post, we will discuss what extra measures you need to do to set up a company in Ireland that has no director that is resident in the EEA.
This issue may particularly affect UK residents. as the EEA has changed in recent years with the UK leaving the EU. Ireland and the UK have many close business ties. It is not uncommon for UK residents to be directors fill the boards of Irish companies. But since Brexit, they no longer qualify as EEA residents. To be able to continue the operation of the company in Ireland it must purchase a Section 137 Bond to the value of €25,000 that will cover any tax liabilities, fines and penalties, in the event the company is unable to pay them.
Fines may be imposed on the company for breaches of the Companies Act 2014 or Tax Consolidation Acts.
This bond is essentially an insurance policy for the Irish government. In the event, the operation dimension of the company leaves the state when there are taxes and other fines due, the bond can be called upon. It must be submitted to the CRO along with the other documents required to form the company.
Residency is an important factor to determine whether your company requires a bond or not. If the directors are an Irish national or a national of one of the other EEA States then you will still be required to purchase a bond to form a company in Ireland.
Section 137 Bonds – FAQs
What period of time does a Section 137 Bond cover?
Once a Section 137 Bond is in place it will allow the company to operate for a period of up to two years without an EEA resident director. This will then give the company time to develop continuous links with the country such as a physical premises and employment.
If the company can prove that it has established these real and continuous links with Ireland then the company may not be required to have a bond in place anymore. A company can apply for this status via the Companies Registration Office and submit a form B67. Separately they must also apply to the National Companies Unit of the Revenue Commissioner of Ireland.
In the event after the two years has lapsed there is still no EEA resident director in the company a further bond may be purchased.
How long does it take to put a Section 137 Bond in place for a company?
When setting up a company without an EEA resident the bond will be required to be in place when the company is incorporated. Section 137 Bonds can take approximately 4-10 business days depending on the service provider.
What service providers in Ireland are there to help you?
Here is a non-exhaustive list of service providers that can help you with a Section 137 Bond in Ireland:
How much does a Section 137 Bond Cost?
Here are some quotes from Irish service providers on the costs related to a Section 137 Bond:
- Compamyformations.ie – €1,957.5 (Including VAT)
- O’Leary Insurance Group €1,575
- Accountant Online – €2,249 + VAT
For more information on the legal side of a Section 137 Bond, you can follow the below link to the irishstatutebook.ie.
Another way around the company requiring a to purchase a bond is to appoint a Nominee Director who is resident in the EEA. A Nominee Director will not hold shares in the company but will be appointed to carry out the procedures in the interest of the other directors and the company.
This blog post is for informational and educational purposes only and should not be construed as financial advice.