A guide to investing in property through your pension in Ireland

Many people are keen to invest in property in Ireland by using their pension, but how do you do it and what are the pitfalls to avoid? Our guide tells you.

For many people looking to make an investment for the future, property is an attractive option. In the past decade, residential property prices have consistently risen across Ireland – recovering from a low in 2012 – and are now back to levels not seen since the height of the ‘Celtic Tiger’ boom in 2007.

Residential property prices in Ireland are now averaging about €280,000, although this does vary markedly across the country, from about €130,000 to €600,000.

But with no sign of a collapse in prices on the horizon, many people see property as a solid investment that can provide returns either in the short-term as rentals and in the longer-term when a property is eventually sold for a profit. Although, of course, all investments come with a degree of risk that should be acknowledged from the outset.

With the capital outlay to buy property being significant for many people, it is unsurprising that some look to use their pension pot to do this, and it is becoming an increasingly popular option.

But how do you go about making such an investment, what are the rules around it and how can you ensure any investment has the best chance of making the returns you desire?

Using your pension fund to buy property



You can use your pension to buy property, but there are certain restrictions on what can be used. For instance, you cannot use your pension to buy property if it is part of an occupational pension scheme.

The types of pensions that are commonly used to buy property are Approved Retirement Funds, Personal Retirement Bonds, Personal Retirement Savings Accounts and Small Self-Administered Schemes.

But in the latter case, along with single-person schemes, there is a European Union directive called, catchily, IORP II, which impacts what assets they can hold. If your pension is this type, it is advisable to seek professional advice, such as from Malone and Co, who are experts in pension funds and the investments that can be made with them.

How a pension can be used to buy property



While there isn’t a generic process of buying a property through a pension, there are certain steps which are common in the process. This includes sourcing a property, ensuring you have the necessary funds in your pension to cover the purchase, organising funds to be transferred to the relevant bank account and dealing with all the legal matters that a property purchase involves.

Types of pensions that can be used



As mentioned, there are four main types of pension fund that can be used to buy property.

Small Self-Administered Schemes have the benefit that a holder can determine how much is contributed to it and what it is invested in – subject to certain restrictions. There are also other flexibilities to it including that regular contributions do not have to be made, unlike some other pensions, which is why business owners and directors often choose this option.

But it should be noted that under IORP II only half of the value of the fund can be used to invest in property.

Meanwhile, an Approved Retirement Fund gives investors a range of options for investment once they have retired, such as shares, bonds and property.

Again, there are certain restrictions on their use for buying property. One significant restriction is that a certain percentage of the fund – usually up to 10% – must be retained as liquidity, which can be used to cover things like expenses. This has to be factored in when looking at properties to invest in, especially in more expensive areas of the country.

Another pension scheme option is the Personal Retirement Savings Account. This is a fund used to save for retirement, either through regular contributions or occasional lump sums, which makes them popular with many people.

Finally, there is Personal Retirement Bond, which is a vehicle a person can transfer their pension pot into when they exit a company-run pension scheme.

There are numerous benefits of buying property through a pension scheme, and many allow you to invest directly in property, be it commercial or residential, and you can also seek out the properties you want to invest in. Maintenance costs can also be paid for out of the pension fund.

In financial terms, in some cases, you can borrow a proportion of the purchase price – but advice will need to be taken before doing this. Also, costs that come with buying a property, such as stamp duty, are absorbed by the fund. And, when the property produces income, it is not subject to income tax.

There are also benefits further down the line – if you sell the property, it is not subject to Capital Gains Tax.

Costs



Of course, there are various costs involved with purchasing a property, which have to be factored into any decisions. These typically include legal fees, insurance, fees charged by letting agents and any local property taxes.

It is also advisable to retain a level of liquidity in the pension pot to ensure any maintenance costs are covered or if there is no rental income being made.



But, as ever, there are certain rules about using a pension to buy property that all buyers should be aware of.

For example, the property cannot be lived in by the owner, nor rented out to a family member; the owner must remain at arm’s length. If it is found that a person closely connected to you is living in the property, it is viewed as a distribution from the pension and will therefore be taxed. In addition, a property cannot be purchased to be a holiday home for your own

Another rule is that a property cannot be bought with the aim of developing it and selling it on. Related to this, any work that is done at the property has to be done by someone unconnected to the owner.

If the property is being rented out, the income from that has to be paid into a bank account that is associated with the pension scheme.

Buying a property overseas is allowed in certain circumstances. One of the stipulations if this avenue is pursuing is that arrangements are made that ensure a trustee maintains control of the property.

Get advice



As this guide shows, using your pension to invest in property in Ireland can be financially rewarding, but it is also a complex process, so it is advisable to get advice from professionals who are experts in these types of investments.

Starting a business is a significant venture and while you may have big ambitions, it can often mean finding additional funds to realise your ambitions. But there are plenty of grants open to start-ups, as our guide shows.

Setting up a business may be the realisation of a dream for many people, but the start is just that – the beginning of the journey. And, often, that journey requires finance to ensure those dreams are fully realised.

Ireland is renowned for being business friendly – it is one of the reasons why so many international businesses choose the country as a European base – and part of that is providing easy access to grants. There are plenty of government-backed schemes start-ups can apply to and this guide highlights some of the more popular.

Local Enterprise Offices



Local Enterprise Offices (LEOs) provide a wealth of support, including advice on the most effective ways to start a company, training and mentoring and financial help for businesses such as sole traders and limited companies.

One of the many grants on offer includes the Expansion Grant. This is open to sole traders, partnerships or limited companies that have been established for 18 months or more and are looking to grow and create jobs. Up to €150,000 can be claimed through this. Applications will need to be through an LEO business adviser.

Another grant that can be claimed is the Priming Grant, which is for assisting with the hiring staff, and is worth up to €15,000. It is open to sole traders, partnerships and limited companies with under 18 months of trading, and there is no obligation to repay it.

For businesses looking to move more into ecommerce, there is the Trading Online Voucher. This provides €2,500 towards building an ecommerce function into a website; for example, online payments or appointment booking. It can’t just be used to upgrade general content on the site. Note also that the entrepreneur has to match 10% of the funding, and also attend a workshop first before claiming the grant.

Enterprise Ireland



Enterprise Ireland primarily helps businesses to expand into different markets – it is usually where businesses go after the LEO to take the next step. While there are a range of funding options that can be applied for, the criteria to secure them are stricter.

Grants that can be accessed includes The Business Financial Planning Grant, which gives funds to engage outside consultants who can help to formulate strategies with the owners of the company and high light potential funding opportunities from external sources.

Other support includes the Market Discovery Fund, which is for funding market research and assessing plans to enter markets outside of Ireland.

Digitalisation vouchers can also be claimed, which can be used to digitalise business processes. These can help a business to stay competitive going forward and improve business efficiency.

Enterprise Allowances



There are also government schemes that aim to help people who are long-term unemployed or have been made redundant to start their own business.

The Back to Work Enterprise Allowance is open to those who have been in receipt of benefits including Jobseeker’s Allowance or Jobseeker’s Benefit for at least nine consecutive months and are aged under 66. This scheme enables the entrepreneur to keep a percentage of their benefit for a maximum of 24 months.

Meanwhile, the Short-Term Enterprise Allowance is open to those who have lost their jobs and are receiving Jobseeker’s Benefit and not undertaking any part-time work. It is paid for a maximum of nine months. Taking this up doesn’t affect a person’s eligibility for grants from bodies such as the LEO.

Support from the private sector



There is more than government support available for start-ups – the private sector is also very active in Ireland.

For instance, there are the regional Business Innovation Centres (BICs). These are private bodies focused on helping people to set up or grow a business.

As well as providing facilities such as incubator spaces and networking events with local specialists and the like, they also offer access to finance such as introductions to local angel investors – successful businesspeople (usually) who provide funds to help start-up businesses to develop.

BICs can also provide advice on which forms of grant or investment are right for your company.

To get involved, you should contact your local BIC directly.

There are also a range of sector-specific investors. For example, there is NRDC, which is operated by start-up hub Dogpatch Labs. NRDC looks to nurture start-ups that meet a unmet market need or solves a problem.

As well as support, mentoring and the offer of workspace, the NRDC has an Accelerator programme where businesses can access up to €100,000.

Support for women



There are also various grants specifically aimed at encouraging women to set up their own business.

On example is Going For Growth, which is aimed at female entrepreneurs who want to grow their companies. The criteria here is that they are the lead shareholder in an established business. Applicants can register at Going For Growth’s website.

There is also the Competitive Start Fund – Women Entrepreneurship, which is run by Enterprise Ireland. This is aimed at start-ups involved in manufacturing or trading services overseas that are led by women, and the businesses go up against each other to secure expansion funds.

The criteria to apply includes having one or more women in the senior management who has at least 25% of the company’s voting share.

Moving to Ireland



Support is not just restricted to local Irish entrepreneurs. As mentioned, Ireland is attractive internationally for its ease of doing business and company set-up process, which is why many organisations move to Ireland to set up shop.

Again, there are a number of funding options that can be applied for. Enterprise Ireland is often a port of call for entrepreneurs and businesses coming from overseas and are investment ready. Any interested companies have to meet certain criteria to be eligible.

For businesses that aren’t ready for investment, Enterprise Ireland has an accelerator programme that includes a grant that covers things like cost of living.

In addition, IDA Ireland, the Irish government’s inward investment promotion agency, helps many companies to come to Ireland and expand every year.

IDA Ireland can provide grants, or provide signposting to where grants can be accessed, including for research, design and innovation and training and upskilling employees.

Get advice



As this guide shows, there are many ways to raise funds for a start-up business, but when looking to do this it is advisable to seek expert advice from a financial adviser such as Malone & Co. At Malone & Co, our financial experts have in-depth knowledge of how to apply for grants, and which one are right for your circumstances. If you want to make your money grow, then investing it can be an effective way to do it. But there are many pitfalls that need to be avoided.

For many people in recent years, low interest rates have meant that money saved in a bank or building society was only growing slowly. As a result, some of those with a nest egg for their future have decided to look at making investments to ensure their money grows faster.

Investments can come in many forms, as described below, and can be short- or longer-term, but the aim is always to provide a return, either regular or in a lump sum at the end of a period of time. However, it should always be considered that there are no ‘sure things’ wen making an investment and sometimes they do go down in value as well as up.

If you are thinking about making an investment, it can seem complicated, but our guide presents advice on how to make your way in investing and ensure any investments have the greatest opportunity to be successful.

What is an investment?



First, let’s start with the basics: an investment is an asset which is acquired in the hope its value will go up and then, in time, it can be sold for a profit. Some assets, such as property that is rented out, can provide a regular income over time, before being sold. Investments can be more profitable than the passive income of cash that sits in a bank accruing interest.

Investments can take on many forms, such as shares, property (commercial and residential), bonds or investment funds.

Define your goals



When you are planning to make an investment, you should be clear from the outset what you want to achieve. For example, are you looking to invest in the long- or short-term? What sort of returns do you want to make? Are you making a one-off lump sum investment, or will you be regularly putting a sum of money in?

Do you want to invest to boost your retirement fund, or to have something in place for a rainy day, or pay for a future event such as a child’s education or a wedding.

Defining your goals will help you to decide what to invest in, when and how long for.

You should also decide how much you want to invest. Firstly, you should ensure that any expensive debts, such as credit cards and loans (but not a mortgage) are paid down. No investment guarantees a return which exceed the monthly costs of expensive debt.

Decide on your risk



As mentioned, investments can go down as well as up, so it is vital to consider how much risk you want to take. Investments with a higher risk profile can bring bigger rewards, but, by their nature, bigger risks too of providing a loss. Meanwhile investments with a lower risk have less chance of losing value, but it might not provide a substantial return.

One way to lower the risk is to diversify by investing in different asset classes or sectors. For example, making just one investment into a single business on a stock market is risky as markets and companies can be volatile. But investing in several companies in different industrial sectors spreads the risk, as while one may perform poorly, another may perform well and mitigate any losses from the other.

As mentioned, there are various options for investments. Below are some of the most popular:

Investment funds



One of the most popular forms of investment is the investment fund. Here, you, along with others, invest capital into a fund, which is then invested on your behalf. Funds can be actively or passively managed. In an active fund, there is a fund manager who buys and sells investments on behalf of the fund with the aim of maximising its gains and minimising any losses. Meanwhile a passive fund just tracks the market in which it sits.

When choosing a fund, your decision should, in part, be based on how much you want to invest and how much money you want as a return on that. Investing in investment funds is usually a medium- to long-term investment of at least seven years.

It is possible to invest into a fund monthly – usually a smaller, regular sum – or a one-off lump sum. A financial advisor, such as those at Malone & Co, can provide advice on how to invest most effectively in an investment fund.

Stocks and shares



Here, a stock or share – the terms are often used interchangeably – are purchased on a stock market, such as the Irish Stock Exchange. The value of the shares rises and falls daily, usually in line with the company’s financial performance, or the performance of the wider sector(s) it trades in.

Shareholders are also entitled to a dividend. This is a sum of money given to shareholders, usually a percentage of the company’s profits up to about 5-6%, given out on an annual or six-monthly basis.

Investing in shares can be a long- or short-term deal. Some investors buy when a company’s share price is low, then sell when it reaches a certain level. The gamble here is when to sell up. Others stick in for the long-term, especially if the company provides regular dividends.

Shares can be bought and sold online, or through a brokerage.

Bonds



Bonds are a loan from an investor to a company or government, at a fixed rate of interest for a given period of time. Bonds are relatively low risk investments, and as a bondholder you receive regular interest payments on the money you invested, followed by the return of the sum you invested once the pre-agreed period has ended.

Property



Property is traditionally seen as a ‘safe’ investment in the long- or short-term. Domestic or commercial properties can provide a regular rental income, or a lump sum payment if the property is sold on for a profit later. Many people buy houses or commercial properties cheaply, renovate them and then sell them on quickly for a profit.

With property, some people choose to build up portfolios of investments with a rental income, while others just have one as a nest egg to sell on during retirement.

Of course, the risk here is a fall in the property market, and a building won’t sell for as much as hoped, or the mortgage becomes worth more than the property. There hasn’t been a fall in the market in Ireland for some years, but it is a threat if a recession comes.

Seek advice



Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects of making an investment, including the risks involved, as well as anything from setting up a company and ensuring it is as tax efficient as possible to providing diligence services as part of an M&A deal or funding round in the sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset.

Taxes must always be paid, but an effective tax strategy can ensure that you don’t pay any more than you need to.

Tax policy is always evolving. For instance, in Ireland, the Budget 2022, released in October last year, laid out plans to apply a new minimum effective corporate tax rate of 15%. While this is a raise of 2.5% – although it only applies to businesses with revenues in excess of €750 million – it is still less than many other nations in the European Union and the UK.

But with such evolution comes risks and opportunities for businesses in Ireland, and any chances must be analysed to see if there are any potential benefits for the company in terms of reducing their tax burden.

There are many ways in which businesses can reduce their tax burden too: many companies end up paying more tax than they could due to how they have been structured or not claiming relief to which they are entitled. This is why tax strategy planning is vitally important for businesses.

Our guide gives some tips for how small businesses can look to reduce their tax burden, which can then be used to invest in the business and help to grow the company faster.

If you want more advice on how to plan your business tax strategy, you can contact Malone & Co’s team, who are experts in Irish tax on … today.

Incorporate your business



While there are advantages to being a sole trader, tax isn’t always one of them, so it is worth considering incorporating the business and becoming a limited liability company instead. There are several benefits to this. Firstly, corporation tax is only 12.5%, then there is capital gains tax relief that can be claimed on a business incorporation under certain circumstances. Finally, in limited liability companies, higher amounts can be invested in a personal pension.

Start-up tax exemption



Start-ups in Ireland can qualify for a three-year exemption from paying corporation tax. Businesses with a tax liability of less than €40,000 can qualify for the full exemption. Partial relief can be claimed by businesses with a tax liability of €40-€60,000. Those businesses with a tax bill in excess of €60,000 are ineligible to claim.

In Budget 2022, corporation tax relief for certain start-ups was extended until December 31, 2026.

Claim any available tax credits



Businesses in certain sectors can take advantage of tax credits. The Irish government has put in place many pro-business policies over the years, including tax credits for fast-growing sectors. For instance, Budget 2022 announced the introduction a tax credit for businesses involved in the digital gaming sector, which has experienced rapid growth in Ireland in recent years. Here, businesses can claim a refundable corporation tax credit for money spent in the design, production and testing processes of a game. Relief is set at 32%, with expenditure allowed up to €25 million per product, although the minimum spend on a project must be €100 million, so it is not open to everyone. Note that also the relief cannot be claimed on games made primarily to advertise something or for gambling.

Consider claiming EIIS



The Employment and Investment Incentive Scheme (EIIS) is an initiative that gives tax relief to people who buy new ordinary shares in small- to medium-sized businesses.

Businesses can raise up to €15 million through the EIIS, although only €5 million can be raised in a single 12-month period. Investors can invest up to €150,000 and receive 30% tax relief on that. Another 10% tax relief can be claimed once the holding period has ended, if there is proof that the company has employed more people or spent more on research and development. Shares must the held by the investor for four years.

Pension planning



Pensions can easily be overlooked when thinking about business taxes. For example, directors who are signed up to a Personal Retirement Savings Account could benefit by changing that to a one-man occupational plan, which has a higher funding capacity as employer contributions are more efficient.

Capital allowances



If your business has a lot of fixed assets such as machinery, equipment and premises, then it is worth investigating your capital allowances claim. Capital allowances are a tax write-off, which is calculated on the net cost of an asset or building. Capital allowances can be claimed on items such as: plant and machinery; cars, vans and trucks, software, industrial buildings and certain intangible assets such as copyrights and trademarks.

Capital allowances can be claimed at 12.5% over eight years for plant and machinery and 4% over 25 years for industrial buildings.

In addition, accelerated capital allowance of 100% can be claimed on certain assets, such as alternatively fuelled vehicles, gas-powered vehicles and the equipment required to refuel them, and equipment bought by a business for an employee creche or gym.

Tax credits for R&D



Many businesses undertake research and development (R&D) into new products, and some of the cost of this could be claimed back thanks to the R&D tax credit. The credit can see 25% of the money spent returned, although it is limited to R&D into certain scientific and technical fields.

The tax credit is calculated against the year before the current financial year. The credit is taken from the business corporation tax liability, although it can also be paid in cash by the Revenue.

Avoid common tax pitfalls



There are also certain tax pitfalls that businesses can unwittingly fall into; it is easily done, if a business is growing quickly, the focus can be on that, rather than the minutiae of tax, but it can be a costly mistake.

For instance, director’s loans can be a minefield, especially close companies – those with five or fewer shareholders. Here, when loans are made to a director, the business must pay the Revenue a 25% ‘deposit’ of the net amount of the loan. This amount is only refunded by the Revenue when the shareholder has repaid the loan. The deposit is lost if the loan amount is written off.

Another pitfall can come if a business has been chosen for audit. Care must be taken on preparing the accounts correctly and, if any underpaid tax is found, it should be disclosed at the beginning of the audit. This will lower any penalties and avoid any prosecutions.

If the business isn’t being audited but discovers an error that means tax has been underpaid, a voluntary disclosure can be made.

Get advice



As this article shows, the tax system in Ireland can be complex and finding ways to reduce a business’ tax bill can be difficult, which is why a tax strategy should be considered and, if it is, seeking the expertise of those with specialist knowledge of tax legislation is always worth doing.

Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects of tax strategy planning and ensuring a business is as tax efficient as possible, as well as anything company-related, from setting up a company to providing diligence services as part of an M&A deal or funding round. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset.

Every year local entrepreneurs launch companies and overseas businesses make a move into Ireland seeking to take advantage of the business-friendly climate and fulfil a need in the marketplace. But not all businesses have a physical workspace, at least when they start up, or are working out of a bedroom and may not want that location to be known to the public.

Nevertheless, every business in Ireland needs a registered office address as a matter of law, so every company must ensure it has one. But what is a registered office address? Why is one needed? How does a registered office and a trading address differ? How can an agent one set up? This article answers all these questions and more.

Registered office address – what is it?



It is the law that all businesses in Ireland require a registered office address. This this has been the case since the Companies Act 2014 came into force. It requires that it must be a physical address: a PO Box will not suffice. However, it doesn’t matter where the address is.

Registered office addresses are important because every official letter, legal notices and such like are sent by the Companies Registration Office (CRO) and other governmental agencies to it. In addition, there is a right for people to go to a registered office address and view forms relating to the company. A postal worker must be able to physically hand over letter to someone at the address.

Vital business papers, including the company register and seal, should also be stored there. If they are not held safely at this address, the CRO must be told the location where they can be found as soon as possible.

The CRO’s website is searchable, and people will be able to find the registered office address there. In addition, it must be included on the formation documents of the business.

But there are limits to what can be done at these addresses. They are for official communications from bodies such as the CRO, the Revenue, Intellectual Property Office etc. Registered office addresses are not allowed be listed in the contacts section of a business’ website or in its marketing collateral.

Registered office addresses also doesn’t mean the business qualifies for things like corporation tax or VAT. The CRO’s rules state that these don’t qualify as proof the business is conducting operations in Ireland, or it’s controlled and managed here.

Note: if a registered office address is changed, then the CRO must be informed as soon as possible to in order for the business to continue to receive all governmental letters in a timely fashion.

Who uses registered office address services?



Any business can use registered office services from firms such as Malone & Co, but they are often taken up by businesses from overseas that are just moving into the Irish market and don’t have bricks-and-mortar operations here – yet – but need an address to help get them set up.

Sole traders or start-ups that are working out of a domestic residence can also make use of registered office services, because then they do not have to put their personal information on the CRO’s website. It can also give credibility to potential clients – some of whom may get offput when they see a domestic address.

Trading and registered office address – what are the differences?



Registered offices and trading addresses do not need to be different, but it is perfectly legitimate to want to separate them.

Trading addresses are where a business conducts its regular operations – where goods are made or sold or services provided. Sole traders and limited companies must have a trading address.

They are also needed if the business wants to set up arrangements to pay for corporation tax. Likewise, if the business wants to apply for a VAT number, that address should house equipment that is needed to run it.

Registered offices addresses also don’t count as a place where the major judgements affecting a business are made. With overseas businesses, this can be somewhere other than Ireland – but if they want to take advantage of the Irish 12.5% corporation tax rate, it has to be in Ireland.

Some businesses may choose to establish virtual offices until such time as a physical location been found and bought or an agreement to rent a space has been signed.

Registered office services



Authorised agents can deliver a registered office address. How much it costs to provide this service depends on the agent and the level of service provided with it. Services can include opening, scanning and forwarding on official communications the day of arrival and keeping important papers safe.

Again, it should be noted that the registered office address is not allowed to share those of the firm that audits the company’s books – even if they handle the company’s accounts there as governmental organisations do not recognise these.

Bespoke packages from Malone & Co



If you need a registered office address, then Malone & Co can help. Malone & Co offer a tailored service, that sets up an address that our team can run for you, including handling and sending on communications from government bodies. Our packages can be tailored to each business’ individual requirements.

Call Malone & Co today on +353 1 458 0911 and our friendly team will explain the process and what it entails and what is needed from you to enable us to set it up. We will also discuss how much this will cost – although our fee structure is transparent so at all times you know how much you will pay.

This process can be completed in a matter of days, and with as little fuss as possible, leaving you to get on with running your business.

This is just part of a wide array of company secretarial services that Malone & Co provides. Other services Malone & Co provide include company incorporations, registering business names, maintaining statutory records and compliance reviews and minute keeping.

Malone & Co also provide a wide range of accountancy services including ensuring it is as tax efficient as possible to providing diligence services as part of an M&A deal or funding round in the sector. We also deliver in-depth analysis to ensure any deal achieves the value hoped for at the outset. For any business owner there will be a time to leave the company, but how you exit and what happens to the business afterwards needs to be carefully planned if all parties are going to get the best value from it.

When you are running a business, the future is always in mind. Whether it is looking at developing the next product, selling into new areas or countries or diversifying into additional markets, all good businesses have a plan for where they want to be in the coming years. Understandably, these priorities take most of a business owner’s time and thoughts, especially in smaller businesses, but consideration should also be given to how to exit a business and what happens to it afterwards.

Business exits can take many forms. Some entrepreneurs run a business until they retire before handing the reigns on, while others have a plan to grow a business to a certain point and then exit, perhaps just a few years after it was formed. But whatever the reason to exit, it needs to be carefully planned if it is to realise the desired value and leave the business in safe hands going forward. This article provides some handy pointers.

Choose the form of exit



There are various ways that an owner can exit a business, including generational succession, a management buy-out, IPO – a listing on a stock market – or a sale to external parties. Each type of exit has its own advantages and disadvantages, which will need to be considered to ensure you make the right exit for your needs.

Many entrepreneurs that have set up their own business dream of handing it onto their children when they retire. But it isn’t as simple as just handing over the keys to the office to them, there are plenty of legal considerations that have to be made in advance.

Likewise, selling the business to the existing management team in a management buy-out has the advantage that it maintains continuity, and it is handed to people who know how it works, its markets and its customers.

An IPO – initial public offering – on a stock exchange can raise a lot of money as you sell your shares in the company. It can also mean you retain a stake in the business, should you wish to. But it does leave the company beholden to shareholders, and the vagaries of the stock market – as the adverts always say, investments can go down as well as up.



Selling to external parties, such as another business, is another common way to exit a business. This often has the advantage of delivering a good price, and the business knows the sector and, in some cases, can put more resources into the business to enable it to grow.

But whichever exit method is chosen needs to be considered carefully first and then extensively planned to ensure it delivers the value you want it to.

Put plans on paper



It is reckoned that only about a fifth of Irish businesses have a formal succession plan. Of course, many business owners have plans for their exit from a business, but that may be only in their head, or just talked about – after all, it could be something that happens many years in the future. But if those plans are to have the best chance of coming to fruition, they need to be on paper so all relevant parties know about them – including accountants and lawyers.

The plan should address all the major issues that are important to you, such as the long-term future of the business, the value you are looking to receive for the business and whether you intend to retain any stake in the business.

Full or partial exit



Retaining a stake or not in the business is a key tenet of any succession roadmap planning. It can smooth a transition if you retain a seat on the board of directors and provide some consultancy – especially in small and/or family-run businesses.

Likewise, if you are selling to another business, do you want to stay in place for a transitional period – anything from one to three years is common – or exit completely when the deal completes? Staying on can help with the post-deal transition, but some entrepreneurs don’t like going back to being employees again after running their own business – and this can lead to tensions down the line that can affect both businesses.

This is why a full exit from the business can be preferable. You life goals will also play a part, especially if the exit is motivated by a desire to retire.

Talk to others



Succession roadmap planning should not be done in isolation. If the company has a board of directors, they can offer opinions on how the succession should be undertaken and can help put the roadmap together.

Likewise, if you are planning to pass the business onto a family member or members, or the existing management team, involve them at the earliest moment to enable them to prepare and have the best chance to successfully take over the reigns when you do step down.

Long-term vision



Indeed, succession planning is best viewed as a long-term strategy, rather than something done in haste when you are actively seeking to step down.

A long-term exit strategy – looking at anything from five to 15 years in the future – can ensure that everything is in place when you do leave, so the transition is as smooth as possible for staff and customers. In a small business, where a family member or existing manager is lined up to take over, if they know your exit plan they can have the time to be trained and mentored – possibly by you – in how the business runs, or gain relevant qualifications, so that they do not face a steep learning curve when you do exit, which can harm the business.

There also has to be realism in the plan: know what a good market value would be for the business if it is to be sold, and what appetite there is out there from other businesses to do deals.

Looking in-depth at the business when planning for succession could also identify where there are gaps in experience in the management team, and then suitable people can be recruited to fill that gap.

Regularly revisit the plan



A succession roadmap should not be a one-off planning event, rather a continuous process. It should be regularly reviewed and adjusted and improved as necessary as the business develops and economic circumstances change. Your circumstances may also change – illness, changing life goals, for instance – which can also necessitate the revision of a plan.

Ensuring the succession plan remains up to date will mean that it has the greatest chance of success for everyone.

Get advice



But whatever your ideas for succession roadmap planning, it is crucial to get advice before pen is put to paper. The financial aspects of any succession deal can become difficult, so it is always worth seeking specialist advice from those with specialist knowledge of succession planning in Ireland – including its legal structure, history and local norms.

Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects of succession planning as well as anything from setting up a company and ensuring it is as tax efficient as possible to providing diligence services as part of an M&A deal or funding round in the sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset.

Recruitment and retention have been difficult in the accountancy sector in Ireland in recent years, but Malone & Co have strategies to help ensure firms retain the best employees.

Recruitment in the accountancy sector has been problematic for some years now. While accountancy services are in great demand from businesses of all sizes across Ireland, the number of people qualified to do this simply hasn’t kept pace.

There are several reasons behind this; demand has increased for services, while COVID-19, saw some of those working in accountancy practices quit and follow their passions in other sectors, while others have retired.

This lack of personnel has served to drive up wages – which is great news for employees – but it is providing headaches for those who run accountancy firms, who are seeking to plug any skill gaps they find and often struggle to do so. This is not limited to firms in the capital – the scenario is repeated across the country is places such as Limerick, Wexford and Kildare.

Of course, this can lead to accountancy practices poaching employees from each other. While poaching is often frowned upon, it is something that has gone on since the dawn of the profession: employers always want the best employees, and some are willing to go to great lengths to recruit them from their rivals.

Employees moving on also cause problems for employers. There is the expense of having to recruit a replacement, plus there is the disruption to the internal team and to the relationship with customers that it can cause. Accountancies build strong relationships with clients, but these take time to build and having to rebuild those from scratch repeatedly can affect efficiency – as well as potentially annoying the client.

This is why employers must do all they can to retain their existing staff. And it isn’t just about who offers the biggest pay packet or greatest number of employee benefits; having worked in accountancy practices for some time, it is often these three things that make the difference for employees:

• Do you see me? • Can you hear me? • Does what I say matter?

Do you see me?



Employees do not want to feel like an anonymous cog in a machine, no matter how large or small a firm is. Management should always seek to know all their employees. It may seem like a small thing, but being able to ask about, for instance, their children, makes employees feel valued.

Being seen also means that success should be rewarded. If employees are performing well and going above and beyond to win contracts or provide excellent services to clients, then their superiors need to show their appreciation. This could be anything from paying out bonuses – although it is always advisable to have a bonus structure in place if this is done – to taking a team out for a meal or drinks. Sometimes, a simple email saying how much you appreciate their work can have a motivational effect.

But this should not be done in isolation, it should be part of a wider company culture that promotes hard work, individual growth and clear routes to career progression.

Employees can quickly become disillusioned if they feel they are stuck in a particular role with no perceived chance to move up the hierarchy and are therefore more likely to leave to progress their career elsewhere.

To counter this, employers should have a range of training opportunities and mentorship programmes available to help employees to advance their career. Not only is this more likely to engender more loyalty from talented employees and keep them motivated, it will also save the employer the cost of having to recruit replacements externally, which can be time-consuming, costly and prone to not providing optimal results.

Employers should take time to speak to each employee to understand their ambitions and map out a route for them to realise their goals within the firm.

Can you hear me?



Management should never appear to be remote, faceless or uncontactable. It can lead to a ‘them and us’ developing culture in a firm, which can harbour grievances and lead to employees feeling undervalued and therefore more likely to quit.

Therefore, it is important for the management of a firm to regularly consult employees and ensure they have a voice. This can be through various mechanisms such as employee bodies, employee surveys and grievance procedures.

On an individual level, regular performance reviews are important for both employer and employee. It gives the employer the chance to tell the employee how they are doing and provide praise for a good job – which, as mentioned, is motivational – or give pointers to improve performance. But it also gives the employee the chance to air any grievances or needs they may have to help them do their job more effectively.

Fairness is also important. If management are thought to be unfair on an issue – such as with how bonuses are distributed – it can lead to employees resigning. It doesn’t matter if management feel they are right, they must be seen to be fair and consistent with all employees.

Does what I say matter?



No employee wants to feel undervalued. It is one thing having feedback mechanisms for employees, but if these are not listened to and do not result in positive change to, for example, working practices then it can be demotivating for employees.

Employers should look to be flexible to accommodate employees’ needs and wants. For instance, requests for flexible working arrangements should be heard. In the post-COVID era many employees want hybrid working arrangements – working some days in the office, others at home – to give them a better work-life balance.

This is all part of employee wellbeing, which is vitally important. An unhappy employee will not work to their potential and could look for other employment.

A key part of wellbeing is mental health, and employers have an ‘open door’ policy for any employees that may be struggling with their mental health. Encouraging employees to talk about any problems they are experiencing is beneficial for all sides. It gets a problem into the open, stops it becoming a bigger problem and means it can be addressed and ensure the employee can achieve their potential. Being open is also known to help engender loyalty in employees.

Employees are also the people at the ‘coal face’ and can have a better perception of what is happening in the market, or with a client, than those in management are more focused on the strategic direction of a firm. Suggestions they have should always be taken seriously.

Conclusion



Employee retention is vital for accountancy firms that want to thrive. The Irish economy is set for growth again, which will drive the requirement for accountancy services even higher in the coming years, and top talent will be in ever more demand to service that. With only a limited pool of talent in Ireland – and only a certain number completing their qualifications each year – accountancy firms will need to fight hard to keep hold of their best employees. But by ensuring these key questions are covered, they are much more likely to be successful in that endeavour.

Irish real estate enjoyed a strong 2021 and this has carried into 2022. While many people may be looking to invest in it now as a result, there are some rules that should be followed to ensure it is successful.

In 2021, the Irish economy bounced back strongly from the ravages of the COVID-19 pandemic, posting 3% growth, the only positive numbers in the European Union. As part of this, the real estate investment market also kick-started again, having ground almost to a halt during the pandemic lockdowns.

In all, €5.5 billion was invested in the Irish real estate during 2021, of which 41% was invested in residential, 30% in offices, 18% in industrial & logistics and 6% in retail, according to research by CBRE Research.

The uptick in the Irish real estate market is anticipated to continue during 2022, although it is thought that it will be 2023 by the time volumes return to pre-pandemic levels. It is also anticipated that there will be a greater focus on the sustainability of real estate during the course of this year, with interest in insulation, energy-efficient heating and lighting etc.

Many people see investing in real estate as a relatively safe form of investment over the medium- to long-term, often giving solid returns if the estate is rented out, while the total asset often accrues in value over time and will deliver a worthwhile profit when sold. This applies when investing in domestic property, such as houses and blocks of flats, or commercial property, such as offices and warehousing.

Nevertheless, there are pitfalls to investing in property and there are some general rules that real estate investors should stick to if they want to do everything they can to ensure that their investment does make money for them in the short-, medium- and long-term.

This article outlines some rules for investors to think about before taking the plunge and making the deal – whether it is for commercial or residential properties or any other form of real estate.

Location is key



This may sound obvious, but the location of the property you are investing in is paramount, and time should be taken to investigate the area a building is in before deciding to purchase. You should, wherever possible, invest in prosperous areas, rather than sub-grade locations. There are good reasons for this; sub-grade locations tend to have higher maintenance costs, property management expenses and vacancy rates – as well as lower rental incomes. There is also greater demand from tenants for buildings in more prosperous locations. However, there are plenty of attractive areas to invest in in Ireland, from the capital, Dublin – which is, understandably, the costliest in terms of property cost – right across the country. Many cities have prosperous areas, whether you want to invest in residential, commercial or other forms of property.

Do your due diligence



Allied to the location rule, research prior to making an investment is crucial. Effective due diligence can highlight all sorts of problems with a building or buildings that may not be visible on an initial viewing, so it is important to ensure that it is as thorough as possible. While this may bring additional costs, up front due diligence can save a lot of problems – and much greater expenses – later down the line if it discovers an issue.

Due diligence can also highlight problems that might not appear obvious. Even things like weeds can create problems, if they are the wrong sort that can run rampant and affect a building’s structure if left unchecked.

In addition, the old adage that if a deal looks too good to be true it is, holds true. If the owner is looking to sell and the price seems cheap for what it is – then beware. While the chances are there is nothing seriously wrong with a building, if there is, then is can be ruinous.

Buy for cash flow from the off



If you are buying a building, you will want it to be cash generative as soon as the deal has completed. Look for those that are mostly occupied already – or if it is a new build, where there are commitments in place for new tenants – so that it will be cash generative from the start net of mortgage payments and all other expenses that owners incur.

Moreover, look at how much rent is being brought in and whether rent levels are at market value and comparative with similar properties in the area. There could be potential to increase rent levels, or to renovate and then raise the rent level.

If the building, when bought, isn’t generating cash, then you will need to ensure that you can stand any losses for a potentially significant period of time. A strategy that assumes tenants can be brought in, or the property can be renovated and then sold on quickly, is risky: if it doesn’t go according to plan can leave an investor paying bills and making a loss for a significant time.

Be aware of taxes

Tax always has to be a consideration, and there are various rules investors – domestic and foreign – need to be aware for. For instance, stamp duty must be paid on real estate acquisitions, which ranges from 1-7.5%, depending on the type of property being purchased and the price of it, with few exceptions. VAT of 13.5% may also be chargeable as well as the purchase cost in certain circumstances.

Once the deal has been completed, there are also registration fees involved with registering the property and the new owner with the Property Registration Authority. How much this costs depends on the form of property that has been acquired.

If a residential property has been acquired, the owner must pay property tax. Importantly, this cannot be passed onto a tenant. In a commercial property, the owner has to pay rates to the local authority, but in this case the cost can be passed onto an occupier.

Foreign investors can also take advantage of tax saving structures. For instance, if the investor is seeking to rent the property, then it could pay for them to set up a Real Estate Investment Trust (REIT) – subject to meeting certain conditions – as REITs do not have to pay corporation tax on the income and gains made from a rental property business.

Get advice



As this article has shown, investing in real estate in Ireland can be profitable. But the financial aspects can be complicated for investors, so it is always worth seeking advice from those with specialist knowledge of the real estate sector in Ireland – including its legal structure, history and local norms.

Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects of real estate investment as well as anything from setting up a company and ensuring it is as tax efficient as possible to providing diligence services as part of an M&A deal or funding round in the sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset. Remember, while Ireland may share a land border with the UK, the regulatory regimes can be quite different, which can trip up unwary investors.

The calamity of Covid-19 of the past two years has left no business unscathed. The familiar facades of many local shops and long-standing community businesses have been erased or replaced. But many enterprises have not only managed to weather the storm but found opportunity within it.

“It’s out of such economic challenges that opportunities arise” says Damien Malone, founder and Managing Partner of the Dublin and Kildare based Accounting and Tax firm, Malone & Co.

It’s no surprise that Damien is optimistic. His business has grown significantly in the past two years and the team now includes 20 accountants from three professional institute bodies, four tax advisors, a solicitor, two bankers and accounting and payroll technicians. Along with the day job, Damien is the chairman of the Damone Investment group that is a niche micro and small asset/investment group with equity, debt and property holdings in Ireland and the UK.

What has allowed Malone & Co. to prosper despite the pandemic? According to Damien, it’s simplicity and communication — They offer clients a no-frills, value adding, customer centric based compliance and advisory service where the focus is on the constant evaluation and improvement of their client’s businesses and profitability. They recognise that all business owners’ primary objectives are the safeguarding and maximization of their hard-earned profits and cashflow.

In short, Malone & Co. has succeeded by helping others to survive and thrive during an unpredictable and difficult time.

“We work with SMEs and business owners who want to build bigger, better, scalable more profitable, sellable businesses for themselves and their families,” Damien says. “Our client base includes some of the most entrepreneurial minded business owners in Ireland, indigenous companies looking to enter and crack new markets, and international brands and investors that have commercial interests in Ireland.

“We also have a niche area which is working with SME owners that have a desire to build property portfolios through leveraging their business profits.”

Building a Strong Team

Malone & Co. also has its own internal tax department that employs former “Big 4” and “Top 15” staff. By adapting a policy of only recruiting top, experienced talent, the business has built a team of multidisciplined professionals who are routinely retrained on emerging regulatory requirements, amendments in legislation and, of course, the “tricks of the trade” to ensure clients’ affairs are structured as efficiently as possible from a tax perspective.

Recent recruits include Director of Client Services Lesley Mac Cormaic, a practice veteran with 20 years’ experience across a diverse range of owner-managed companies, professional firms, regulated entities and the not-for-profits. Another recent recruit is Joanne Kelly, who is well known in banking circles and now the in-house Anti Money Laundering Compliance lead for Malone & Co.

Eyes Toward the Horizon

Damien has exciting and ambitious plans for 2022 with expected, continued growth and further international expansion: “We want to try and get as close to Big 4 style service, delivery and advisory whilst adhering to our core principle which is cantered around cultivating our client/trusted advisor relationship.”

As Ireland continues to attract unprecedented levels of foreign direct investment, not only does Malone & Co. support international entrepreneurs and corporations looking to expand into the Republic of Ireland, it also helps Irish SME clients do business internationally. This is aided by its membership of several international professional service networks and associations such as IR Global, Centuro, ISFIN and Fusion Tax Network.

Malone & Co. streamlines the complexity of doing business internationally by staying on the cutting edge of modern practice. Damien explains: “We use automated solutions that make it easy for clients to upload bills and receipts using their desktop, mobile device, email, or scanner – giving us access to the documents you need, when you need them”

SMEs doing business in the Republic of Ireland would be wise to take a note from Malone & Co. Where some see difficulties, others find opportunities.

Malone & Co. provides accounting, auditing, bookkeeping, VAT, payroll, company secretarial services, and corporate services. This also includes tax evaluation and planning for business, personal and family, tax residence planning for internationally mobile clients, tax efficient remuneration of owners and key staff, and revenue audits and investigations.

Malone & Co. is an established firm of Chartered Tax Advisors affiliated to the Irish Taxation Institute, the premier Irish body for Tax Advisors and members of the Association of Chartered Certified Accountants. They have offices in Rathcoole West Dublin and Naas in Co. Kildare. More high net worth individuals are making their homes Ireland, with an eye on increasing investment opportunities in the country.

The Irish economy has been performing strongly for many years – even in 2020 when the country was in lockdown – so it is perhaps no surprise there are now more ultra high net worth individuals (UHNWIs) and high net worth individuals (HNWIs) than ever before in Ireland.

Consultancy Knight Frank’s 2020 Wealth Report found there were nine billionaires and 1,343 UHNWIs – people defined as worth more than €27 million – resident in the country. Meanwhile, 100,000 HNWIs – those worth at least €900,000 – were also living in the Republic. The latter figure had almost doubled in the five years from 2014 to 2019.

Knight Frank predicts these statistics will swell further in the next five years, with the number of billionaires set to rise by 33%; overall, UHNWIs by 17% and HNWIs by 35%. [www.irishexaminer.com/news/arid-30985842.html]

But with the economic uncertainties brought on by the Covid-19 pandemic, wealthy investors are also looking for investment opportunities with solid returns. Many are diversifying their portfolio of investments, spreading the risk in the event of a more sustained economic downturn. Fortunately, however, Ireland offers a diverse range of investment opportunities across the country.

Ireland as a destination for HNWIs



Ireland does not just have its own home grown wealthy individuals – there are plenty of thriving businesses and financial institutions that are making people rich – it is also a top destination for global HNWIs coming into the country. According to Chinese research company Hurun Institute, Ireland was rated the third favoured destination in the world behind the US and UK for Chinese millionaires in 2018. [www.independent.ie/business/irish/dark-horse-destination-ireland-is-new-favourite-for-millionaire-chinese-emigrants-37102673.html]

The Institute cited several reasons for why Ireland was the destination of choice for Chinese HNWIs. These included the high standard of living, strong social welfare, internationally regarded educational facilities, and not forgetting the stunning scenery and places of historical interest. In addition, the low tax burden in Ireland was a big attraction.

Allied to this is the Immigrant Investor Programme (IIP), which is also likely to be attractive to overseas wealthy individuals. The IIP gives investors Irish residency – and EU residency – in exchange for an approved investment in Ireland’s economy. Applicants have to demonstrate they have a wealth of at least €2 million – and that it has been legally acquired – and invest a minimum of €1 million into one of the IIP’s approved schemes.

But once applicants have been successful, they do not have to relocate their entire families as soon as they arrive – which is a stipulation in similar schemes run by other countries. Indeed, once an investor has had their permanent residency approved, they only have to reside in Ireland for one day per year.

Another, more recent, reason why overseas HNWIs have come to Ireland is that it is now the only native English-speaking country in the European Union, following the UK’s protracted exit at the end of 2020. This means Ireland is a convenient place to access the single market and the other 26 countries that comprise the EU. It is also part of the euro, which has been a stable currency for many years.

Traditional investments



Of course, traditional ways to invest such as stocks and shares are still popular among HNWIs and can provide decent returns – although with the old caveat that stocks can go down as well as up in value. Ireland’s main stock exchange is the Euronext Dublin and all stocks trade on the Euronext, the pan-European trading platform.

Private equity also continues to be a popular investment for wealthy individuals. With interest rates at an all-time low, private equity investment has remained popular because of the higher potential returns. While the major private equity firms may be generally inaccessible to HNWIs looking to invest thousands or even as much as a €1 million as they don’t want a fragmented portfolio of investors, there are plenty of smaller funds that are ambitious and buying up high growth – and potentially high profit – companies.

Investing in property



One of the most common forms of investment by UHNWIs is in property, be it residential or commercial. Dublin is understandably the focus of this and there are numerous high-profile developments being built, with more planned. Commercial property prices in Dublin are reasonable compared to cities in the UK and therefore investors can get more for their money in relative terms. Prices are rising in Dublin – or they were before the pandemic – and generally deliver a healthy yearly rental yield.

Investments can be made through vehicles such as real estate investment funds (REIFs), which tend to have three main investment strategies. The first is ‘hold and rent’, where property is bought and then retained and rented out – and is the most common strategy. ‘Hold and sell’ sees large property portfolios acquired, which are then sold off in smaller lots or individually; however, these are relatively rare. The final strategy, ‘develop and sell/rent’ sees plots of land, or part-finished developments acquired and then developments, are finished or new ones started. The properties are then sold or rented out once built.

Similarly, infrastructure projects such as schools and hospitals are becoming increasingly popular, often offering long-term revenue streams. Through the use of investment trusts, HNWI individuals are finding infrastructure projects increasingly accessible.

It is also worth noting that if, as hoped, the Covid-19 pandemic eases later this year, the government is likely to spend on infrastructure projects to help kick-start the economy.

For more socially conscious investors, renewable energy is becoming an increasingly popular option. As well as contributing to the development of a more sustainable and lower carbon future, renewable energy can also provide attractive returns – more than 75% over five years, compared to just 9% for fossil fuels, according to recent research by Imperial College London and the International Energy Agency. [www.forbes.com/sites/davidrvetter/2020/05/28/just-how-good-an-investment-is-renewable-energy-new-study-reveals-all/?sh=6c8eee834d27]

Alternative investments



While traditional investment routes remain popular, other types of investments are gaining popularity in Ireland among HNWIs. For instance, alternative assets, which encompasses private capital, hedge funds, mutual funds and investment trusts, all are proving popular with wealthy investors.

And it is easy to see why: Preqin estimated in 2018 they would be worth $14 trillion globally by 2023. [reports/Preqin-Future-of-Alternatives-Report-October-2018]

Alternative assets have an established track record in providing healthy returns to investors for an acceptable amount of risk. Consequently, investments are being made in areas that have previously been overlooked as too ‘niche’, with investors looking to broaden their portfolios.

Other assets are becoming more popular as investments including Irish wine and whiskey. Several investment vehicles have been set up in recent years focused on buying aged, rare or sought-after wines and whiskies on behalf of an investor and holding it for them. Returns have been good – about 10-12% – and are becoming a more established option for investors.

Getting advice



For wealthy investors, managing assets can be a challenge, and that’s why getting the right advice is vitally important. For wealthy individuals, it isn’t just about managing money in the most tax effective way, it can be about anything from family matters to philanthropy. Skilled accountants can provide advice on all these issues, as well as things like legal and audit compliance. Malone & Co https://www.maloneaccountants.ie/ can assist with this and our extensive contacts and networks can be leveraged to try source suitable investment opportunities.