Welcome to Taxbytes for Expats, the top tax tips you want to know as an expat.

The podcast is here to help answer the common queries and concerns expats have when moving to or from Ireland.

Complex taxes explained simply.

We'll focus on the Irish and international tax issues to be aware of to ensure you save time, money and stress.

Hi everyone.

This episode is part one of Stephanie Wickham's chat with Maura Ginti of Gyntax in Ireland, offering specialized tax services for startups and founders businesses and advice for larger projects.

In this episode they discuss how Maura started her firm, why specialists are crucial in the tax landscape, and key advice for founders of startups.

This episode is ideal for entrepreneurs considering moving to Ireland and make sure you subscribe if you enjoy this episode because in part two they'll be talking about key reliefs for startup founders, advice for investors, and some important things to note about the Irish tax system.

Enjoy.

Hi everyone.

Welcome to this episode of Taxbytes for Expats.

And I'm really excited about this episode today because we get to speak to Maura Ginty Maura set up her own tax advisory for gin tax in 2020 and it's going from strength to strength.

She concentrates on Irish tax for business, helps owners and also families.

And before setting up gin tax, Maura had been in KPMG for many years, 16 to be exact.

She worked with all sectors from multinationals to family offices and large Irish businesses.

She's a chartered accountant and a chartered tax advisor and she also has time, not sure how, to be representative on the Chartered Accountants Tax Committee, which lies is on behalf of accountants with revenue and government and policy matters.

And that's just her work life.

She has lots of hobbies and interests outside of work.

She'd prefer to be outside running, but she's keen to join us on the podcast.

And thank you very much for coming on Maura.

It's really, really nice to have you join us today.

Hi Stephanie, how are you doing?

And our times overlapped.

It's probably be annoying for listeners now, but we do know each other for many, many years.

We do.

We go back.

I think I was a very timid and quiet grad in KPMG when our paths first crossed.

And it's great because they've crossed a few times since, haven't they?

Especially as your firm has grown in the last few years.

So that maybe brings me to the first question.

Why did you leave kpmg?

Why did you set up your own firm?

What?

What was the path to where you're at right now?

Yeah, over the years and I know we've mentioned my clients in KPMG were multinationals and family office, but I did really prefer the, the private Irish market and the smaller Irish businesses rather than big projects for multinationals that would take months.

I preferred both the tax work and also the, the people that you meet, the entrepreneurs, the owners who built up businesses from nothing to 30, 40 million businesses.

It was.

And you can do in the last few years, I found you can do as an advice.

Well, I thought just the role as an advisor, you can, you can probably bring more value to the likes of those as an individual and I appreciate the likes of the larger firms and multinationals on a collective basis bring significant value.

But you're really, you're a small cog, whereas I like being a bigger cog in this, in this market.

So it was really the market and I think that market, while the likes of the bigger firms do have clients in that market and probably, and probably are getting better at the segregation with people who are specializing in multinationals and private Irish backgrounds.

Six, seven years ago, it was very much all in the same pot.

So I felt there was, from my own perspective, just I would much prefer to specialize.

And also I see, and you probably see it too, I genuinely believe a tax advisory firm can stand on its own rather than like a conglomerate firm that's in particular, one that's auditing.

Right.

I do feel a distinction and I used to have, I had some clients who were audit clients of the firm and there's significant restrictions, probably rightly so, in providing tax services to audit clients.

And I just think the model will be ultimately separate, a separate advisory practice than the, than the audit.

So I just thought I'd just get ahead of it a bit.

There you go ahead of the curve.

And then in terms of.

I suppose you've kind of alluded to it there, but what's your practice doing day to day, you know, since you've kind of come out and started that journey of building it from the ground up, which is no mean feat.

It's not easily done.

No.

And I'm trying to concentrate on the work that I can add value and that I like doing.

So basically tax advisory work, I feel that in this market, if there's someone that can do, and a lot of people in this market have very good accountants who roll the compliance and their accounts for them perfectly every year and they don't like, they don't need the likes of me in Their, you know, working through compliance.

So I feel where I add value is probably on kind of more one off projects working and ideally working the existing accountant in things like deals, succession, someone in their 50s, 60s, just maybe not at the stage of retirement, but look into the future and how that would transition.

Or maybe even clients who are pre sale bringing them to sale and getting the business ready.

Even things like revenue audits, like even a second pair of eyes alongside the accountant doing a pre audit review when working with the client to make qualifying disclosure.

All of that kind of cohort of work I advise on and it's quite.

Every day is different.

There's so many different projects out on the go.

It's very engaging and I really enjoy.

Very hard and difficult but at the same time really do enjoy and really enjoy my work.

I think as well what you've alluded to there is really interesting and maybe for people listening to the podcast, I find it's a common misconception that you know, we would go to speak to or somebody might go and approach an accountant and ask quite a specific tax question.

Whether it may be it's about a succession plan or you know, in our case a relocation.

And sometimes local accountants, I often compare them to like a gp, you know, a practice that basically offers a suite of services and can refer you on to a more specialist advisor when that's needed.

And I think what you're saying is your practice has basically grown and grown from that because there's a massive market where often accountants will go, this is not my day to day.

We need an expert.

You're brought in for a specific project, you complete it and then you're at the back, you know, the back of the process, kind of there to provide support.

Watching it from the other side, it's useful for people to understand that that's how the industry works.

I think.

Yeah, it works very well for both accountants and at the other side solicitors also there may be a referral on from there and they're kind of happy out with the likes of me just to one side and just there for the projects rather than, you know, having the client forevermore.

And yeah, and I like having another advisor there as well and kind of two, you know, they've got years of experience with the client and the background and kind of can cut through a lot of the technical points.

Whereas a client may not see the minutiae of the technical which may be the key point.

Exactly.

It's being able to kind of, I suppose simplify or understand the complexity and Every case is different.

Okay, so maybe then if we just kind of do a quick 101 which I think would be useful for anyone listening.

So for anyone starting in business in Ireland, you know, what are the kind of key takeaways you give them about the tax regime here that you think people would do well to understand or appreciate, particularly if they're coming to Ireland from abroad.

Yeah.

So and this comes up a lot, right.

And there's two the conversation and I consider it in one, one, one aspect of the conversation because there's two aspects.

One is the compliance regime in Ireland.

Right.

So that's just ensuring that if you have employees that you meet your payroll obligations vat, you meet all of those obligations.

And again this is one of the key, one of the areas that the high street accountant does very well and can talk, talk you through.

Right.

So we'll park that on general compliance and we'll talk about for a fancy word, structuring.

But this is again a lot of this is day to day stuff that you're, that an accountant can talk you through and very basic.

The first question that everyone, everyone considered is whether to set up your own, you're starting your own business, right.

And that could be either consultancy firm where they usually, you know, you're providing consultancy services, you're an IT professional and have a few potential clients you can just, you can provide services to probably on an ad hoc basis to someone who wants to set up a startup.

Right.

And the key question then is whether you do it on your own, in your own name or set up a limited company.

And for the startup I suppose it's really easy in that startups are all, are generally are a limited company.

If you want to anyway set up a, a business or a high performing business, it's via an Irish company.

There are very people get bogged down in the types of various companies but from a tax perspective they're all the same.

I say this tax you can never be 100% certain.

But I've yet to encounter one that's different.

So for anyone that's going to be a more sophisticated larger business than a company is for them.

For someone who's kind of in someone who maybe has the consultant for example, we just solely think about the tax from a tax perspective.

I always tell, tell them that generally a company makes sense where you're not going to spend all, where you don't need all of your earnings for your lifestyle.

The reason for that is that we're familiar with the income tax regime in Ireland, right.

And the income tax rate, the marginal rate is around up to 52, 55% for an individual, for a company.

We've all heard of our 12.5% rate, which sounds like a great deal for company profits.

Right, so, so you set up a company for your consultancy services.

The company pays tax at 12 and a half percent.

Lovely.

You do the, undertake the consultancy services in your own name, then potentially your tax rate can be up to 55.

Now, I will say can be up to.

Because it is, it's only above the, maybe around 70,000 that we start really hitting those 50% rates.

Right, so exactly.

It's not, it's not, you know, it's only when you're looking at that kind of income than the, then the rate really increases for, for income of around the 40 or 50,000, then the, the marginal rate.

You probably know it more offhand, Stephanie.

But it's not, I always say, 24, 28%.

24, yeah, 24, 25.

It's lovely.

Right, so this, so just, just to talk it through on the company and just the key point is, lovely company paying tax at 12 and a half percent.

Right?

But if you need that money to live on, right, for your lifestyle, you need to take that money from the company.

And that, that, that, that money that you take, either in salary or dividends, generally more efficient to take it as salary or bonus is in your own name, the same thing, the same tax rate as if you had earned it yourself.

Right?

So if you take your 70,000 salary from the company that you need to live on, then you're probably looking at the 48, 50%.

So as a rule of thumb, if you need all your money that you're earning to live on, then from a tax perspective, a company isn't doing much for you.

Now, there's other reasons for having a company generally limited liability protection and a bit of structure around the business.

You're a separate entity to the business, but we concentrate on the tax.

So that's the first point to bear in mind.

Right?

And a lot of these consultants, the income is going to be a good bit more than what they need to live on.

So it does.

From a tax perspective, the company does make sense.

The company either pays tax on their profits at 12.5% or there's a choice of contributing those profits to a pension and the company contributes money to a pension, your pension fund, as the, as the owner and key employee.

Meaning that the company doesn't pay the 12 and a half percent because it's a reduction.

It's an expense similar to salary expense.

You as owner get to fund your pension scheme.

A lot of people can be skeptical.

You probably have a lot of conversations with clients Stephanie as well about pension schemes and the pros and cons from a tax perspective, especially when you're younger, they do make a lot of sense in that all of that money rolls up tax free.

In a pension scheme, the sensitivities are number one, it's at retirement you get access to it.

And two, at retirement, while you can get lump sums tax free, the balance is regarded as income.

Now on the other side, you generally aren't going to be working or going to have another income stream in retirement.

So you might be receiving 40 grand.

Geez, you've got a nice pension fund if you're receiving £40,000 annually and your tax rate is back to your 24%.

So again, it's not too bad on retirement.

Everything depends on your situation.

But that's generally the choice on an ongoing basis for an owner consultant just to talk it through.

Stephanie.

Sorry.

And laboring come come when they want to retire.

Right.

And generally it's a retirement in those kind of consultancy situations because no one wants to buy.

You know, the company is you.

Yeah.

Doesn't necessarily have a value.

And at that point in time, if you can and we have very.

We have two quite generous reliefs, capital gains tax reliefs.

So you could as a rule of thumb it's possible to at retirement to liquidate the company and pay no further tax on the.

On the profits.

We have this thing called retirement relief.

There are limits at 750,000, which is generally a nice goal for individuals to target.

It can be with every relief.

It can be quite finicky.

But it's just as a just this limited podcast just to be aware of it that it's not.

There are reliefs there for you on retirement.

We also have something called entrepreneur relief, which is a 10% rate.

Again, not the worst in the world.

Or also for people who are and probably a lot of these, a lot of your listeners, Stephanie, are mobile and probably may have the consultancy company in Ireland and may ultimately be moving abroad.

Then even when they liquidate the company, they mightn't be within the scope of Irish tax at all depending on where they are.

So there may be no.

They may not even have to worry about the finickiness of these reliefs and that they.

And the liquidation is just a non.

A non Irish.

An Irish taxable event.

So there's a lot of different scenarios.

But there that that's the general gist.

And again, this is kind of common enough structuring that I would, I would think that most accountants should be able to talk you through.

Yeah, I think it's, you're spot on.

I think most accountants have a really strong grasp of this and I think kind of sometimes where we find clients get value and you've just hit the nail of the head, it's sometimes been able to kind of help somebody figure out, move away from that, you know.

Well, why is corporate tax so good in Ireland?

Oh, it's 12 and a half percent.

It's actually looking at the overall holistic approach and structure that somebody might use.

Which actually brings me to my next question, which was for founders, somebody who's, you know, coming back to what you said there about the high performance startup and that kind of conversation we just had, being more around a consultant, do you generally recommend that they would have perhaps a more complex structure, for example, a holding company that holds the shares in the trading company that sits underneath.

What's your viewpoint on that?

Yeah, that's the million dollar as always.

And Stephanie, you know, as a tax advisor, it would be great if we could see into the future and see exactly what, what will happen and what will transpire.

So just that's the common one for founders, right?

As in when we say founders, we mean people who are setting up a business and the intention to go global, to go unicorn, right?

Yes.

And often the question is whether they, rather than holding their interest in the trading company directly, whether they hold it by a personal holding company.

And there's all sorts of reasons, kind of non tax as well.

But we just concentrate on the tax here as to why that might be suitable.

Right.

But from a tax perspective, it can work very well in certain cases and not so well in others.

And broadly the key tax tax point to bear in mind is that there's a relief if the individual sells their shares in that company.

Right.

And we mentioned the, the entrepreneur relief earlier on.

A 10% rate is a lovely rate in Ireland.

Right.

But the issue, the main sensitivity is it only, only the problem only applies on the first 1 million of gains.

Right.

After that your, your capital gains tax rate is 33%.

So if you have, if you're anticipating, I always tell clients if you're anticipating your exit to be around up to 2, 3, 5 million.

Right.

My thinking would be to keep your structure pretty, as simple as that, and just have your holding directly claim your entrepreneur relief.

And the balance at 33% isn't the worst.

It comes out in around your effective rate in around 20 something percent.

Not the worst answer in the world.

Right.

And also it may mean that you're a little bit more flexible for doing other things and targeting other reliefs.

But now when you speak to founders or people who want to found their business they're not in their heads.

It's not.

They're not doing this and devoting their lives.

Five million is not the.

Is not the goal.

No, it's not like 24 hours.

So in those cases.

Right.

So and just to talk through the the answer in where the.

Where you've a holding company the real beauty of holding company and there are conditions.

Right.

So the holding company needs to have relatively I say simple but you can get more complex where the holding company is 5% of the shares in the.

In the subsidiary.

The sale of the subsidiary can be exempt from Irish tax completely.

It's called the Ireland's participation exemption holding company regime or 626B.

All of those terms are used interchangeably.

So it's no tax.

Which sounds like a great result.

Right?

Brilliant.

Great.

But clearly the issue is that your.

Holding company get it out holding company.

Has made a lovely gain and all the money is stuck in your holding company of something called a cash box.

Which is which in fairness you've saved yourself in that instance around the 33% because the.

As in slightly under a 33% effective rate because the impact of the entrepreneur relief if you have a hundred million sale is going to be tiny.

Right.

The sensitivity the money is then stuck in the holding company which for someone if your exit is at that point.

Right.

That's, that's.

That's fine because no one needs 100 million to day to day living expense.

Right.

Generally these are.

This is where then you have angel investors.

You want to go again or not maybe devote your whole existence to it but invest in other companies and then your holding company can go off and invest.

So where people try and get to is a hybrid model where the individual has shares in the company themselves and then shares in the holding company where I say the crystal ball and I've talked about commercials here as knowing the exit price.

Another thing the holding company can sometimes be an absolutely disastrous result.

For example where you've had loads of dilution you might start off owning your trading company 100%.

But I mentioned that 5% test and you can see it with you know venture capital investment that you're holding is diluted.

Diluted, diluted down in particular maybe for not even found.

Maybe co founders are People who come in at 10% and think, oh, I've got 10% of the trading company, I'll set up a holding company.

The exit here is going to be 20, 30 million for me.

But with further investment, your holding is diluted down and that's a very inefficient result because the holding company, when it sells its shares, it's paying 33% capital gains tax and you don't even have access to the cash.

So there can be those kind of considerations to work through.

No one has a crystal ball, but I suppose always with clients is to know the pros and cons and to have those conversations with them at the start.

Yeah, there's, there's, there's a bit in it.

And I think as well, you know, the challenge sometimes with tax, and I think you bring this for your clients, like fantastically to the table, is being able to understand the legislation, which of itself is, is, is complicated, you know, on a good day, and marry that with the commercial reality and the needs and desires of the individual that you're advising.

That's the challenge.

You know, there was a point you made and some of the notes we were looking through before we started recording, and it was about being able to marry the complexity with the people who are on the receiving end of the advice.

How do you manage that?

Do you find kind of trying to get people to be clear up front about what it is they want?

Do you find people generally know what it is they're trying to achieve at the start, or are they just looking for a crystal ball like the rest of us?

Well, it's for them, a lot of times it's for, like.

Because these people are really smart people.

Right.

But they have it.

Sometimes people have, you know, what they have heard is jargon.

Right.

So it's ensuring that they are very clear and understand it as much as you do.

Like, you can go into nuances of tax law, right.

That ultimately, if you really understand it, you should be able to get, that should get across to the client and they're as comfortable as you are on the issue.

And sometimes it's gray.

Like, you know, there's no, we don't know how a court will decide, but I give my best opinion based on my years of experience and other.

What peers, both what's in the market, which we may or may not disagree with.

Like the, the famous.

All these people are jumping off a cliff.

Would you jump off a cliff?

You know, things that you may not necessarily agree with from a tax perspective on whether they work.

But I like clients to know that this is.

People are doing this.

Right.

I may view it on the more aggressive side, but I do really believe that clients should be aware of all the options and what is in the market and try and understand it and understand the issue as much as I do.

Right.

And ultimately it's between, between us, kind of a joint decision as to, as to what route is taken.

But most of the time it's all.

It's the commercial.

It's the.

And I love working with clients where it's a commercial issue we have.

And then the tax is just.

Is a problem, you know, as in we're trying to.

Yes.

It's not letting the tax tail wag the dog, because sometimes you're running for an outcome that will never transpire and you may have a beautiful structure, but ultimately it's the business that generates the gain or the profit that gets taxed.

So it's a fine balance, isn't it?

It is a fine balance, but you see it as well.

And I know, I know people are going to be listening to this, not liking this, but the last thing I want is the client, a new client, to come to me and say, I'm paying too much, you know, as in I need to save tax.

You know, that's the one thing that they're coming to me for, which is you're just nearly starting from.

And there may be some easy wins, right.

They mightn't have got tax, Proper tax advice, but in, you know, someone who has a good accountant, right.

Generally it's, you know, it's.

You're starting from a difficult base in those cases.

Now, it may be that they just haven't, you know, there are cases where they haven't got, they haven't got advice in the past or haven't looked at it.

But there are some, some, some people who have been, who've been through the mill and are still thinking they're paying too much, you know, And I think.

As well, you know, something that comes up in the podcast a lot, to be honest, whoever we speak to.

But it's coming through in terms of what you're saying.

It's very easy.

I suppose it's good to sit down with somebody at the start of a journey.

You've alluded to talking to a founder as they start out.

You've alluded to talking to somebody who's setting up a company and who maybe, you know, is building a business.

Those are the easier conversations to have.

We can't rewrite history, you know, and that's.

That's ultimately what we generally try to convey is, you know, the value of having a conversation.

There may not be a magic solution, but there definitely won't be if we try and talk about things that happened three years ago.

Because that's done.

What's done is done, and we look forward.

So advice and planning are done proactively.

The value in having a discussion early on, you know, can reap dividends for many years to come.

Thanks for listening to Taxbytes for Expats.

Please do leave a rating or review wherever you listen to your podcast.

And as always, as always, remember to take professional tax advice specific to your personal circumstances before acting or refraining from action in connection with the matters dealt with in this series.

The material in this podcast is intended to give general guidance only.