5 Mistakes Businesses Make When Setting Up an Irish Company and How to Avoid Them

Setting up a company in Ireland is an exciting opportunity for foreign businesses and entrepreneurs looking to access the EU single market, benefit from Ireland’s 12.5% corporate tax rate, and tap into a pro-business environment.

However, many overseas business owners stumble into common pitfalls that can delay operations, increase costs, or create compliance headaches.

In this guide, we’ll highlight the 5 most common mistakes foreign entrepreneurs make when setting up an Irish company, and more importantly, how to avoid them.

1. Ignoring the EEA-Resident Director Requirement

The Mistake:

Many non-EU entrepreneurs don’t realise that Irish companies are required to have at least one director who is resident in an EEA (European Economic Area) country.

If no such director is appointed, the company must secure a Section 137 Non-Resident Director Bond, which comes at an additional cost and has specific conditions.

How to Avoid It:

• Appoint an EEA-resident director to the board (can be a local nominee or trusted partner).

• Alternatively, budget for the Section 137 Bond and engage a corporate service provider to arrange it.

2. Underestimating the Importance of a Registered Business Address

The Mistake:

Using a PO box or an unreliable virtual office provider for the company’s registered office. This can cause missed official correspondence and look unprofessional to clients, banks, and Revenue.

How to Avoid It:

• Secure a credible registered office address with mail handling services.

• Consider providers who also offer director correspondence addresses for privacy.

  
  
  

3. Delaying Irish Bank Account Opening

The Mistake:

Assuming that opening a business bank account in Ireland is quick and easy. In reality, banks require extensive due diligence, especially for non-resident shareholders and directors. The process can take weeks or even months.

How to Avoid It:

• Start the bank account application process as early as possible.

• Prepare detailed KYC (Know Your Customer) documentation: passports, proof of address, business plans, and source of funds.

• Explore fintech alternatives (e.g., Revolut Business, Fire, Bunq) for faster onboarding.

  
  
  

4. Neglecting VAT Registration & Tax Compliance

The Mistake:

Believing VAT registration is automatic or optional. Some foreign entrepreneurs only realise later that they should have been VAT-registered based on their trading activity, leading to backdated liabilities and fines.

How to Avoid It:

• Assess your VAT obligations early, especially if trading goods/services within the EU.

• Register for VAT, Corporation Tax, and Employer PAYE as needed.

• Maintain ongoing compliance with VAT filings, annual returns (CRO), and corporation tax filings (CT1).

  
  
  

5. Overlooking Ongoing Compliance Obligations

The Mistake:

Assuming that once the company is formed, there’s nothing more to do. Missing annual returns, tax filings, and payroll compliance can lead to penalties, late fees, and loss of audit exemptions.

How to Avoid It:

• Work with a reputable Irish company, a secretarial and tax advisory service.

• Maintain a compliance calendar for key filing dates (Annual Return, VAT, CT1, Payroll submissions).

• Consider outsourcing accounting and payroll for peace of mind.

Avoid Costly Mistakes, Set Up for Success

Ireland offers huge advantages for foreign or non-resident businesses, but success starts with getting the setup right from the beginning.

By avoiding these common mistakes and working with trusted advisors, you can ensure your Irish company is compliant, operational, and ready to thrive in the EU market.

Need expert help setting up your Irish company?

Contact us today for hassle-free company formation, tax advice, and compliance services tailored to your needs.