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The consumer

Consumer Profile
The population has been ageing rapidly since 1975 but the situation should stabilize by 2030. However, the median age remains quite young at 38.5 years old in 2021 (Eurostat). The population grew at a rate of 0.7% in the year to April 2021 (CSO). According to CSO 2021 data, 19.9% of the population is under 15 years old, 65.3% is between 15 and 64 years old, and 14.8% is 65 years old or over. On average there are 2.75 people per household with 23.5% of households are people living alone and 48% are couples with or without children (CSO, 2016 Census). There are almost as many men as women in the population. Only 64.2% of the population lives in urban areas, below the European average (CIA, 2022). The majority of the population is located east of the island, with a large concentration around Dublin. There is less population in the west because of mountains, lack of infrastructure and jobs. The OECD estimates that the level of education in Ireland is high: 85.5% of adults aged 25 to 64 have a secondary education and 49.9% have attained tertiary education (OECD, 2020). According to CSO data (Q4 2021), some 22.7% of the active population are professionals, 13.1% are technicians, 12.2% are skilled workers, 10.6% administrative professions, 9.6% intermediate professions, 8.7% of managers, 7.7% of employees in care and recreation, 7.7% of operators and assemblers of machines and 7.2% of commercial professions.
Purchasing Power
GDP per capita PPP is USD 93,350 per year (World Bank, 2020). The average annual salary for full-time employees in Ireland has increased by 2% in 2021 to EUR 44,954 (Central Statistics Office). Adjusted gross annual disposable income per capita is around PPP EUR 21,965, up from the previous year (Eurostat, 2020). In the context of the pandemic, household spending decreased by 10.6% in 2020, to a total of EUR 91.9 billion (CSO). The Gini index is 30.6 (World Bank). The difference in income between men and women is estimated at 5.2% in 2019, down from 8.3% the year before (OECD, latest data available). Employees in the information/communication, finance and real estate sectors have higher incomes, while the art and leisure sectors, hotels and restaurants record lower wages.
Consumer Behaviour
In order of importance, the main purchasing factors are quality, price and service. Determinants of purchase vary with age. Young people are more attracted to product or brand awareness, the working-age population is interested in brand and quality, while older people are attracted by quality products. The recession, however, has changed the behaviour of some consumers, who are turning increasingly to discount stores. Retail outlets are where the most purchases are made. A third of consumers prefer to go to a shop where you can pay with a mobile and on average EUR 550 per month are spent at the supermarket. Since the recession, the level of consumer confidence has been moderate. More and more consumers are buying online with USD 4.3 billion being spent in 2020 (+18% y-o-y, eCommerce DB), thanks to product differentiation, a growth in the mobile market and online retailers improving their websites. Consumers are relatively open to international products but around 70% of the population think it is important to buy local products (KPMG, 2022).

Consumers are increasingly less loyal despite loyalty programs with around 45% believing that own-brand and branded products have the same quality (KPMG, 2022). Social networks are particularly important for purchasing decision making. All generations look to social media ads before making a purchase (61% of Baby Boomers, 75% of Gen X, 76% of Millennials and 62% of Gen Z) (Irish Tech News, 2022). The influence is mainly via the opinions of other users. Consumers seem to trust retailers who collect their personal data to make personalized offers.

The main emerging trends are in consumption. The number of vegetarians and vegans is considerably higher, especially in cities. More and more specialty stores and restaurants are opening. Protein products for sports and snacks are also in fashion. The organic sector made significant progress in recent years. According to a study by Bord Bia (2020), 27% of consumers buy organic products at least once a week, and only 12% never buy any. Just under 50% of consumers are willing to pay more for organic products. The second-hand market is developing mainly on the internet and smartphones thanks to the creation of websites and applications. The collaborative economy is progressing in many sectors: food, catering, housing, transportation, etc.

Consumer Recourse to Credit
Consumer recourse to credit rate is one of the highest in the EU. In 2019, Irish households’ debt continued to decline, but remained the fifth in the EU. According to the latest figures from the Irish Central Bank, household debt stood at EUR 133 billion, or EUR 26,979 per person in Q1 2020. Mortgage credit represents the bulk of household debt. Household debt-to-assets ratio fell from 14.9% in Q1 2019 to 14.2% in Q1 2020, and two-thirds of consumer credit is between 1 and 5 years.
Following the COVID-19 epidemic, credit and debit card transactions for groceries grew significantly between March-August 2020, while expenditure on transport and accommodation fell. Household deposits surged during April-May and remain at an all-time high.
The total number of active debit and credit cards in issue stood at 6.2 million at the end of Q3 2019, with debit cards representing for 75% of the total.
Growing Sectors
Tobacco, crockery, household utensils, accommodation, food services, home and garden equipment, telephony, home textiles, household appliances, footwear, transport services, furniture, alcoholic beverages, recreational and cultural services.
Consumers Associations
CCPC , Consumer Protection and Competition Commission
ECC , European Centre for Consumers in Ireland
BEUC , European Organisation for Consumers
 

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Importing & Distributing

Import Procedures
For goods imported from outside the European Union (EU), a customs declaration must be completed by the importer or his agent. This customs declaration must be made electronically using Revenue’s Automated Entry Processing (AEP) system. Some goods are prohibited and some are subject to conditions or may require a licence.

To release goods at import any charges must be paid (customs duty, value-added tax, excise duty). This can be done by the approved deferred payment account or Electronic Fund Transfer (EFT). The following documents must be available if requested by Revenue at the time of clearing goods:

  • invoice
  • certificate of origin
  • import licence and suchlike.

More information is available on the Guide to Customs Import Procedures of the Revenue Commissioners.

As part of the 'SAFE' standards advocated by the World Customs Organisation (WCO), the EU has established a new system of import controls, the 'Import Control System' (ICS), which aims to secure the flow of goods at the time of their entry into the EU customs territory. This control system, which is part of the eCustoms Initiative, has been in effect since 1 January 2011. Since then, operators are required to provide an Entry Summary Declaration (ENS) to customs officials in the country of entry, prior to the introduction of goods into the EU customs territory.

For more information, please visit the website of the Revenue Commissioners.

Specific Import Procedures
You can find the full list of the prohibited and restricted goods on Prohibitions and Restrictions Guide of the Revenue Commissioners. The guide also includes information on licenses, permits, authorisations that are needed to import or export these goods.
Distribution channels
The Irish retail market is made up of small and family owned stores. There are approximately 37,400 active wholesale and retail enterprises across the country (of these, 85% have less than 10 employees). The number of discount firms continues to increase, and the number of self-service stores is rising steadily. Self-service is not confined to small merchandising units. Department stores and gas stations also have incorporated this sales technique into their operations.

According to Retail Ireland, the wholesale and retail sector is the country’s largest employer with 280,000 jobs, accounting for 14% of total employment. Data from the Central Statistics Office shows that the volume of retail sales increased by 0.6% in March 2022 when compared to February 2022 on a seasonally adjusted basis. On an annual basis, retail volumes were 2.9% higher in March 2022 compared with the same period one year earlier. The value of retail sales increased by 0.3% in the month and grew by 4.8% on an annual basis.

E-commerce is growing faster than traditional retail, a trend that was accelerated by the COVID-19 epidemic and the restrictive measures that followed in the spring of 2020. However, as the volume of in-person shopping increased with shops reopening, the proportion of total retail sales transacted online has fallen from the high of 15.3% recorded in April 2020 to 5% in March 2022. According to Retail Ireland, the proportion of Irish consumers who frequently shop online increased to over 50% in recent years. The organic sector is also growing, as 47% of consumers are prepared to pay a premium for organic products (Bord Bia).

Distribution market players

There are five main grocery retailers in Ireland in the supermarkets channel:

  • Dunnes stores held 22.4% of the market share in 2022 (Kantar World Panel)
  • Musgrave Group, with SuperValu supermarkets (21.6%)
  • Tesco, with the same brand name stores (21.3%)
  • German discounter Lidl (13%)
  • Aldi (12.4%)
Retail Sector Organisations
Retail Ireland - Representative body for the entire retail industry in Ireland

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Operating a Business

Type of companies

Private Company Limited by Shares (Ltd)
Number of partners: Between 1 and 149 shareholders.
Capital (max/min): No minimum capital required. Minimum one share per shareholder.
Shareholders and liability: Limited to capital subscribed.
Public Company Limited by Shares (PLC)
Number of partners: Minimum of 7 shareholders, no upper limit. At least two directors.
Capital (max/min): Minimum share capital allocated: EUR 25,000, of which at least 25% must be paid on issue.
Shareholders and liability: Limited to capital subscribed.
Unlimited Company (UC)
Number of partners: Minimum of 2 directors.
Capital (max/min): Minimum share capital allocated: EUR 25,000, of which at least 25% must be paid on issue.
Shareholders and liability: Unlimited and joint.
Limited Partnership (LP)
Number of partners: Maximum of 20 shareholders, 10 for a partnership in the banking sector.
Capital (max/min): No minimum capital required.
Shareholders and liability: Limited to capital subscribed.
 
Setting Up a Company Ireland OECD
Procedures (number) 3.0 5.2
Time (days) 11.0 9.5

Source: Doing Business - Latest available data.

 

Cost of Labour

Minimum Wage
According to official data, the minimum wage in 2022 is EUR 10.50 per hour.
Average Wage
Average annual salary is EUR 44,954 (Central Statistics Office, Q4 2021).
Social Contributions
Social Security Contributions Paid By Employers: Employers withhold up to 11.05% of employees' salaries for the pay-related social insurance (PRSI). If weekly salaries are less than EUR 410, the PRSI is reduced to 8.8%.
Social Security Contributions Paid By Employees: Employees contribute 4% of their gross income to pay-related social insurance (PRSI). If gross income is less than the minimum wage, the employee is exempt from the PRSI.
 

Intellectual Property

National Organisations
Intellectual Property Office of Ireland (IPOI)
Regional Organisations
For the protection of patents: the European Patent Office (EPO). To control trademarks, designs and models: the European Union Intellectual Property Office (EUIPO).
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

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Tax Rates

Consumption Taxes

Nature of the Tax
Value-added tax (VAT)
Tax Rate
23% (21% between 1 September 2020 until 28 February 2021 due to the COVID-19 crisis)
Reduced Tax Rate
A 9% rate applies to newspapers and magazines, electronic newspapers, magazines and e-books, admission to sporting facilities, hairdressing services, examples of goods and services taxable at 13.5%, electricity, holiday accommodation, restaurant and catering services, repair, cleaning and maintenance services, developed immovable property, building services.

For an exhaustive list of VAT rates in Ireland, consult the Revenue's VAT rate database.

Other Consumption Taxes
Ireland applies excise duties on mineral oils, alcohol products (including spirits, beer, wine, cider, and perry), and tobacco products. Irish microbrewery can enjoy reduced excise duty rates (depending on production quantities). For more information, please refer to the Irish Tax and Customs website.

An environmental tax of EUR 22 cents per bag is imposed upon consumers provided with a plastic bag. A carbon tax is levied on mineral oils, generally at a rate of EUR 33.5 per tonne of CO2 emitted. A tax also applies on sugar-sweetened drinks (20 cents/litre if the sugar content is five or more grams of sugar per 100ml and 30 cents/litre for drinks with eight or more grams of sugar per 100ml).

 

Corporate Taxes

Company Tax
12.5%
Tax Rate For Foreign Companies
With few exceptions, a firm legally established in Ireland is automatically considered an Irish resident for tax purposes. A firm is also considered resident for tax purposes if it is managed and controlled in Ireland.
According to Irish laws, a non-resident company will be deemed to have a permanent establishment in Ireland if it has a fixed place of business in the country through which its business activity is wholly or partly carried on, or if it has an agent that acts on behalf of the company and who habitually exercises authority to do business in Ireland on behalf of the company.

For information on the taxation measures taken to address the COVID-19 crisis, consult the dedicated pages on the website of the Irish Tax and Customs Authority.
Capital Gains Taxation
Capital gains are generally taxed at 33% (40% for the transfer of life insurance contracts and investment units held in offshore funds) with exceptions provided for qualifying gains from the sale of shares in companies that reside in the EU or in countries that have a tax treaty with Ireland. The cost of acquisition or improvement of an asset is deductible from the nominal gain. Capital assets may be transferred between Irish resident group companies without liability for capital gains tax.

A participation exemption applies to capital gains obtained by holding companies (Irish resident) on the disposal of shares in firms that are resident in Ireland, the EU or countries that have a tax treaty with Ireland. In order to qualify, the holding firm must hold a participation of at least 5% and the interest must have been held for a continuous 12-month period ending within the 24 months preceding the date of disposal.
Main Allowable Deductions and Tax Credits
Deductible expenses must be incurred wholly and exclusively for the purposes of business transactions and/or to generate revenue. As such, entertainment expenses are nondeductible. Revenue expenditure incurred up to three years before a business activity begins is generally deductible. Depreciation is non-deductible but can be offset by capital allowances. Generally, deductions can be claimed for royalties, management service charges, and most interest charges paid to foreign affiliates, provided the amounts do not exceed what would be paid to unrelated entities. Contributions to certain employee pension schemes are deductible in the year they are incurred.

Expenditure on scientific R&D and payments for the acquisition of know-how in general are allowable deductions, as are the costs of obtaining or extending patents and obtaining and renewing trademarks. These expenses give rise to a tax credit of 25% which can be used to offset the tax debts of a firm established in the tax year during which expenses were incurred. A Knowledge Development Box (KDB) regime allows for profits from patented inventions and copyrighted software earned by a company residing in Ireland to be taxed at an effective rate of 6.25%.

Companies are entitled to a deduction, as a trading expense, for qualifying donations to approved charities, educational institutions, schools, churches, research foundations, sports bodies, and other approved organisations that satisfy certain conditions (the donations must be above EUR 250).
Local taxes, VAT not recovered and the employer’s share of social security contributions are tax-deductible.

Net operating losses can be carried forward indefinitely or be offset against other income of any nature, either in the current or preceding accounting period. Following the COVID-19-induced crisis, temporary loss relief provisions permit an interim claim to be made for the carryback of trading losses incurred or expected to be incurred in the period commencing on 1 March 2020 and ending on 31 December 2020.

Other Corporate Taxes
Companies may be subject to other taxes, including stamp duties (rates of 1% to 2% for transfers of residential property, 7.5% for transfers of non-residential property, and 1% on transfers of shares); local property taxes ("rates" on the occupation of commercial real property; plus a tax on residential real estate at 0.18% for real estate valued up to EUR 1 million, 0.25% for values over EUR 1 million) and industry-specific taxes such as a construction operations tax and a shipping tonnage tax (that can replace the corporate income tax). An additional "profit resource rent" tax applies to certain petroleum activities (from 25% to 40%).
A carbon tax is levied on mineral oils (e.g. auto fuels, kerosene) that are supplied in Ireland. The rates of carbon tax on oil and gas broadly equate to EUR 33.5 per tonne of CO2 emitted (shall be increased to EUR 100 by 2030).

The employer contributes 11.05% of employees' salary for social security (Pay-Related Social Insurance - PRSI).

Gross premiums paid for non-life insurance policies relating to risks located in Ireland are taxed at 3% (plus 2% for the Insurance Compensation Fund), reduced to 1% for certain life insurances.

An exit tax charge applies on unrealized gains of companies that migrate or transfer assets offshore, without an actual disposal, such that they leave the scope of Irish tax. The tax rate is 12.5% but is subject to an anti-avoidance provision that applies a higher rate of 33% in certain circumstances.

A capital acquisitions tax may apply on gifts and inheritances at a rate of 33%.

Other Domestic Resources
Irish Tax and Customs
Doing Business Website, Consult the Doing Business Website to obtain a summary of taxes and mandatory contributions in Ireland.
 

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of double taxation treaties
Withholding Taxes
  • Dividends: 25%
  • Interest: 20%/33% (paid to deposit holders of certain Irish banks)
  • Royalties: 20%

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