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Choose Northern Ireland

WELCOME TO NORTHERN IRELAND... Northern Ireland is one of Europe’s most attractive business locations with an exceptional reputation for delivering strong returns on inward investment. However don’t just take our word for it - over 800 international companies have located here employing over 75,000 people and over 80% of them have reinvested or plan to expand. Add a highly educated workforce and a pro-business environment and you have a winning combination that’s hugely attractive. At KPMG we work with many of those who invest here and we’d be delighted to do the same with you. Please do get in touch with us and we’ll make sure you get the most out of your decision to choose Northern Ireland.

For business. For living.

John Hansen Partner in Charge, KPMG Northern Ireland

Businesses in Northern Ireland have benefited greatly from the government’s drive to make the United Kingdom the top location for international business. While the UK already has one of the most competitive tax regimes in the world, the government continues to reinforce its low tax policy commitment for business. The tax offering within Northern Ireland will be enhanced even further with the introduction of a regional 12.5% corporation tax rate now expected from 1 April 2018. This is only one of the many reasons why so many international businesses, entrepreneurs, innovators and business leaders in every sector choose Northern Ireland. If you would like some more information on doing business in Northern Ireland please get in touch. We look forward to working with you to help your business succeed in Northern Ireland.

The Titanic, Belfast

Johnny Hanna International Tax Partner and Head of Tax KPMG Northern Ireland

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NORTHERN IRELAND DELIVERS…

STRONG TRACK RECORD Northern Ireland has an excellent track record of attracting investment across a wide range of sectors including:

Access to an EU market of 500 million people Access to a young, highly educated, skilled and flexible workforce A proven pro-business environment with a stable UK regulatory system A simple and competitive tax system

 A  erospace technology - a global leader with over 60 companies, including Bombardier and Thompson Aero Seating, involved in areospace design and manufacturing.

At 20% currently the most competitive corporation tax rate within the G20. In addition, a special 12.5% rate, applicable to Northern Ireland only, is expected from April 2018

 R  enewables and energy - there has already been significant investment in this sector; 25% of the world’s full-scale marine energy devices have been developed, tested or manufactured in Northern Ireland.

Strong government support for research and innovation

Part of the sterling currency zone

 F  inancial services technology - Belfast is the world’s top destination for financial services technology investment projects*. First Derivatives and CME are two examples of companies with specialist software development centres in Northern Ireland. *(Source: FT FDI Report 2013)

State of the art communications infrastructure and connectivity at a very competitive cost

 F  inancial services - companies such as Citi, Liberty Mutual, Axa and Santander all have centres in Northern Ireland.

A track record of delivering for international investors

Choose Northern Ireland For business. For living.

 S  ecurity - a growing reputation for innovation and excellence in many areas including cyber security.  ICT and electronics - over 100 global technology companies including IBM and Intel have already established operations.  L  ife and health sciences - a strong track record in delivering innovative research, products and services in many areas. Norbrook, Almac and Randox are just some examples of successful companies in this sector. (Source: Invest NI) Giant’s Causeway, Co. Antrim

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A HIGHLY COMPETITIVE TAX REGIME FOR COMPANIES Tax certainty As part of the UK, Northern Ireland shares the developed, stable and highly competitive tax system which is designed to support continued long term economic development. Corporation tax rate While the current UK corporation tax rate of 20% (expected to drop in UK to 19% in 2017 and 18% in 2020) is already amongst the lowest in the world and compares very favourably with other European countries, there is now a commitment that a special corporation tax rate of 12.5% will apply within Northern Ireland only from April 2018. This will be the lowest tax rate within the G8 and similar to the favourable tax rate which has applied within the Republic of Ireland for many years.

For business. For living.

Excellent tax treaty network Northern Ireland benefits from the UK’s extensive tax treaty network of over 135 treaties. This facilitates the minimisation of foreign taxes and withholding taxes on cross border payments and flow of capital resources. Dividends Dividends received by a Northern Ireland company from its overseas subsidiaries should be exempt in most cases from corporation tax. Furthermore dividends paid by a Northern Ireland company are not subject to withholding tax. Capital Gains exemption for substantial shareholdings While capital gains generally form part of a company’s taxable income, there is an exemption from tax for companies on the disposal by a trading group of substantial shareholdings (of more than 10%) in both UK and foreign companies.

R&D tax credit An attractive R&D tax credit regime allows companies who carry on research and development to claim an immediate extra tax deduction for certain expenditure with different rules applying for large and small companies. The credit either reduces corporation tax or can be taken as a cash refund where the company is lossmaking. The credit can be taken ‘above the line’ for accounting purposes i.e. before tax. Further credits may be available on capital expenditure used for R&D. Patent Box The UK “Patent Box” regime offers companies the opportunity to elect to apply an effective tax rate of 10% on profits generated from worldwide income received from patented innovations. Capital Allowances The UK has an extensive range of capital allowances that permit the cost of certain capital assets such as plant and machinery to be written off against taxable profits using a predetermined writing down allowance each year. Intellectual property The costs of intellectual property, and certain intangible assets is treated as deductible expenditure in accordance with the accounting principles and amortised accordingly. Employer Social Security costs The UK’s social security rate of 13.8% applicable for employers is amongst the lowest in Europe.

The historic City of Derry

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SUPPORTING A WINNING ENVIRONMENT FOR INNOVATION Tax Treaty Network

For business. For living.

R&D Tax Credit Patent Box

Low Tax Policy

Holding Company Regime

Corporation Tax Rate

Carrick-a-Rede Rope Bridge, Co. Antrim

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Choose Northern Ireland For business. For living.

LIVING & WORKING IN NORTHERN IRELAND Northern Ireland offers a first class environment for living as well as for doing business. With a population of 1.8 million, Northern Ireland benefits from an excellent education system, a world-class healthcare service and an affordable property market. Prices in Northern Ireland tend to be lower than those in other UK locations and in the Republic of Ireland. With little congestion and efficient public transport, visitors are attracted by a beautiful unspoilt, environment, vibrant social and cultural scene and ease of access to other countries. Leisure and pleasure Northern Ireland’s cities are being revitalised with millions being invested in regeneration. There is a new cultural vitality, pride and optimism. You can cross Northern Ireland by car in about two hours – north to south, or east to west – but in between there is a rich variety of scenery, activities, and a host of cultural attractions and leisure opportunities. Easy access to EU and beyond Northern Ireland provides a competitive location close to mainland Europe. A comprehensive network of air and sea routes provides fast and efficient access to the rest of Europe and further afield. There are daily scheduled flights to destinations such as New York, Paris and Amsterdam and over 160 ferry and freight sailings each week to Britain and Europe. The first-rate road network has minimal levels of congestion and brings most of Europe within 24 – 48 hours.

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Visa and employment permits* EU/EEA citizens have the right, not just to take up employment in Northern Ireland, but also to live there and enjoy the same treatment and conditions as local citizens in regard to pay, working conditions, access to housing, vocational training, social security and trade union membership. For non EEA nationals, and depending on personal circumstances, entry visas and employment permits, may be required. Jobseekers from outside the EEA are required to apply for permission to work under the Points Based System from the Home Office. For further information, please see www.ukba.homeoffice.gov.uk/workingintheuk. *Source: www.delni.gov.uk

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Choose Northern Ireland

OUR SKILLED WORKFORCE

For business. For living.

The country’s education system is regarded as among the best in Europe and consistently outperforms all other UK regions in academic qualifications. The region has two world-class higher education universities and a network of further education colleges with the emphasis on Science, Technology, Engineering and Mathematics (STEM). Each year in Northern Ireland over 4000* students graduate with business qualifications.

The workforce in Northern Ireland has a strong work ethic, is highly skilled and adaptable. Northern Ireland has one of Europe’s youngest and fastest growing populations and there is a steady stream of well-educated people for knowledge based companies seeking a loyal workforce.

Northern Ireland is also increasingly multilingual, with a wide range of skilled people able to converse fluently in languages in addition to English. *Source: Higher Education Statistics Agency

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Choose Northern Ireland

PERSONAL TAXES The personal tax regime of the UK applies equally to Northern Ireland. Employee income tax and social security is accounted for through the payroll withholding tax system. This is known as the PAYE system. The income tax year runs from 6 April to 5 April each year. The proposed rates of personal tax and social security for an employee/shareholder for the 2016/17 tax year are set out below:

For business. For living.

Tax/Levies 2016/17 Personal allowance Income tax

Rate £11,000

20% up to £32,000 40% from £32,000 to £150,000 45% thereafter Social security Employee: 12% on earnings between £8,112 and £43,000 and 2%thereafter Employer: 13.8% above £8,112 Capital gains tax 18% up to £32,000 28% thereafter 10% rate for entrepreneurs’ relief Inheritance tax 0% up to £325,000 40% thereafter

Low Personal Tax Burden As with the rest of the UK, the personal tax burden in Northern Ireland is one of the lowest in Europe when income tax and employee social security contributions are combined. Companies are required to operate a payroll withholding tax system (PAYE) in respect of cash payments and benefits in kind, e.g. medical insurance and company cars provided to employees. This applies irrespective of whether the employment is a Northern Ireland employment or a foreign employment. Share based remuneration is generally inside the scope of the PAYE system. If employees have taxable income (including share remuneration) which is not accounted for though the PAYE system, it is necessary to file an income tax return under the self-assessment system. Reliefs and Incentives There are a number of reliefs and incentives which can significantly reduce the personal income tax burden and the rate of tax arising on capital gains by UK tax residents. These include: Entrepreneurs’ Relief It is possible to reduce the capital gains tax rate on gains of up to £10 million arising on the disposals of shares and other business assets, provided certain conditions are met, to just 10%. Overseas Workday Relief Income tax relief is available for certain UK resident employees who carry out both UK and overseas employment duties on the proportion of their earnings that relates to duties performed overseas and which is not remitted to the UK.

Odyssey, Belfast

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Choose Northern Ireland For business. For living.

PERSONAL TAXES

continued

Remittance Tax Regime applicable for expatriates UK tax resident individuals who are domiciled abroad (e.g. US citizens) are subject to UK income tax and capital gains in the normal manner. However they can elect to pay only tax on their foreign income and gains on a remittance basis (i.e. only when the income/gains are remitted into the UK). Remittance Basis – Business Investment Relief Foreign income or gains remitted to the UK by a person taxed on the remittance basis will be relieved from tax if invested by way of a qualifying business investment within a specified time period. Relocation expenses and allowances There are a number of other tax relieving provisions available to employees coming to work in Northern Ireland including tax free relocation expenses and accommodation subsistence costs and travel expenses incurred by non domiciled individuals travelling to the UK to attend a permanent workplace. Share Incentive Schemes It is possible to obtain revenue approval in respect of certain tax efficient share schemes e.g. share options schemes, and restricted share schemes, which can result in profits made upon the disposal of the shares being treated as capital rather than income.

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Choose Northern Ireland For business. For living.

SETTING UP YOUR BUSINESS Company set up Before you start doing business in Northern Ireland you need to decide if you are going to operate through a branch or company. Most fast growing businesses choose to operate through a company. Northern Ireland companies are registered with Companies House and can be formed having public or private status, and with limited or unlimited liability. Nearly all companies operating in Northern Ireland are private limited companies. A company must have at least one shareholder, which may be an individual or corporate entity, along with a minimum of one director in most cases. A Plc company requires a secretary. Government financial assistance Northern Ireland offers an attractive and competitive support package of cash grants for recruitment and support for R&D and training tailored to each company’s needs. Invest NI works in partnership with investors to ensure all the necessary support is given throughout the lifetime of a commercial venture to develop and expand the business and to improve capability and international competitiveness. Invest NI support can include:  Revenue grants towards start-up costs, interest relief, factory rental costs, training costs, marketing development costs and R&D expenditure (R&D capital spending can be written off against income)  Pre-employment training grants  F  inance investment in the share capital of a company and government loans at commercial and concessionary rates  P  roperty tax exemptions for properties used for manufacturing purposes.

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Financing Aside from equity and bank financing, Northern Ireland has a growing business angel and VC environment. Levels of angel and VC funding have increased in recent years, particularly in financing and developing high potential innovative companies. Business support Northern Ireland’s success in attracting inward investment ensures a wide range of financial, accounting, tax and legal services are available. There is also a strong legal framework for development, exploitation and protection of intellectual property rights. Northern Ireland Science Park (NISP) The Northern Ireland Science Park is an environment and network that provides focus and support for knowledge based entrepreneurs, investors and global corporations. It fosters innovation to help companies grow together by collaborating, developing skills and seeking commercial opportunities. NISP manages the Halo Business Angel Network.

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Courtesy of Tourism Northern Ireland

Choose Northern Ireland

HOW KPMG CAN HELP We understand the pressures faced by businesses of every type and size when locating to a new jurisdiction. We’re the adviser of choice for a wide range of startups and established business who choose Northern Ireland. Our approach is based on simplicity and total commitment and includes support and advice on:  Company set up and tax registration

For business. For living.

 Fundraising  Corporate and operating structures  M  aximising group tax benefits and minimising group tax costs  Shareholder and employee tax matters  Intellectual Property planning  Expat tax matters  R&D tax credits  Patent box application  Routine compliance matters (legal & tax)  Outsource accounting  Accounting advice and assistance  Statutory & US GAAP Audit

What’s more, we can draw on the experience of our colleagues globally For further information, please contact one of our team or visit www.kpmg.ie

The historic City of Derry

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YOUR KPMG NORTHERN IRELAND CONTACTS JOHNNY HANNA

TOM ALEXANDER

International Tax Partner and Head of Tax KPMG Northern Ireland

Tax Partner

Tel: +44 28 9089 3812 Email: [email protected]

PHILLIP MCMAW

DAVID NELSON

Tax Partner

Tax Partner

Tel: +44 28 9089 3741 Email: [email protected]

For business. For living.

Tel: +44 28 9089 3880 Email: [email protected]

Tel: +44 28 9089 3878 Email: [email protected]

MATHEW SCOTT Tax Partner Tel: +44 28 9089 3810 Email: [email protected]

The Dark Hedges, Co. Antrim

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