Ireland Treasury Management Profile 2018 - Together we thrive - HSBC Group
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Ireland
Treasury Management
Profile 2018
Together we thrive
2 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 3
Contents Introduction and
Purpose
Introduction and Purpose 3 Ireland
This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a
Legal and Regulatory 6 snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make
informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to
Taxation8 be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the
information contained in this document without obtaining your own independent professional advice. The materials contained in this
Banking15
document were assembled in April 2017 (unless otherwise dated) and were based on the law enforceable and information available
Payment Instruments 16 at that time.
European Payments 19
Facts and Figures
Payment Systems 20
Capital/Other major cities: Dublin/Cork, Limerick, Galway Business hours: 09:00–17:00 (Mon–Fri)
Cash Management 23 Area: 70,273km 2 Banking hours: 10:00–16:00 (Mon–Wed, Fri),
10:00–17:00 (Thu)
Electronic Banking 24 Population: 4.74m
Stock exchange: Irish Stock Exchange
Trade Finance 26 Languages: English, Irish (Gaelic)
Leading share index: ISEQ® 20 Index
Currency: Euro (EUR)
Useful Websites 28 Sectoral distribution Agriculture 1.0%,
Country telephone code: 353 of GDP (% of GDP): Industry 39.3%,
Source: https://www.cia.gov/library/
Weekend: Saturday and Sunday Services 59.7%
publications/resources/the-world-
factbook/index.html. (2016 estimate)
National holidays: 2018 — 1 Jan, 19, 30 Mar, 2
Source: www.goodbusinessday.com. Apr, 7 May, 4 Jun, 6 Aug, 29
Oct, 25–27 Dec
Government Head of state
Legislature Michael D Higgins, president since 11 November 2011.
Parliamentary republic with a bicameral Parliament composed of
the House of Representatives (Dail) and the Senate (Seanad). ®® The president is directly elected every seven years. The next
presidential elections are scheduled for 2018.
®® House of Representatives: 166 members are elected to serve
five-year terms. Political leader
®® Senate: 60 members are elected to serve five‑year terms. Leo Varadkar, prime minister (taoiseach) since 14 June 2017.
The next general election is scheduled to be held in April 2021.
4 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 5
Country credit rating
Fitch Ratings rates Ireland for issuer default as:
Term Issuer Default Rating
Short F1
Long A
Long-term rating outlook Stable
Source: www.fitchratings.com, November 2017.
Exchange rate & Interest rate (%) Consumer inflation & GDP volume growth (%)
Economy
2016 2017
2011 2012 2013 2014 2015 1.2 1.2 30 30
Q4 Year Q1 Q2 Q3
Exchange rate* (EUR/USD) 0.7194 0.7783 0.7532 0.7537 0.9017 0.9272 0.9040 0.9392 0.9091 0.852 20 20
0.8 0.8
Interest rate (MMR) (%)
**
1.14 0.11 0.21 0.02 – 0.19 – 0.37 – 0.37 – 0.37 NA NA
10 10
Unemployment (%) 14.7 14.7 13.1 11.3 9.5 6.8 7.9 6.7 6.5 NA 0.4 0.4
Consumer inflation (%) + 2.6 + 1.7 + 0.5 + 0.2 – 0.3 – 0.1 0.0 + 0.5 + 0.2 + 0.1
0 0 0 0
GDP volume growth (%) + 2.6 – 1.1 + 1.1 + 8.5 + 26.3 + 7.2 + 5.2 + 5.6 + 5.8 NA
GDP (EUR bn) 174 176 180 193 256 - 266 – – – -0.4 -0.4 -10 -10
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
GDP (USD bn) 242 226 239 256 284 - 296 – – –
Exchange rate (EUR/USD) Consumer inflation %
GDP per capita (USD) 53,492 48,355 51,233 54,761 60,491 - 62,579 - - - Interest rate (MMR) GDP volume growth %
BoP (goods/services/income) as % GDP + 1.9 + 4.8 + 6.8 + 4.9 + 11.4 - + 5.9 – – –
* Period average. ** End period. Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook. Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook.6 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 7
Legal and
Regulatory
Central bank Reporting Anti-money laundering/counter-terrorist financing1 Under the Regulations, a beneficial owner means any natural
The Central Bank of Ireland is an autonomous institution Certain cross-border transactions are monitored for balance Ireland has enacted anti-money laundering legislation, including person who owns or controls a Relevant Entity, through direct or
operating in accordance with the 2010 Central Bank Reform Act. of payments purposes in compliance with the provisions of legislation implementing the Fourth EU Anti-Money Laundering indirect ownership of a sufficient percentage of the shares, voting
EC Council Regulation No 2533/98 of 23 November 1998, the Directive, and counter-terrorist financing legislation. Notable rights or ownership interest in the Relevant Entity. A shareholding
®® The Central Bank of Ireland is a member of the European European Central Bank (ECB) Guideline (ECB/2004/15) of 22 July legislation includes: interest of 25%, plus one share, will be evidence of ultimate
System of Central Banks (ESCB). 2004 and the ECB Recommendation (ECB/2004/16) of 22 July ownership or control. Indirect ownership will include ownership
2004. ®® The Criminal Justice (Money Laundering and Terrorist through other corporate entities.
Bank supervision Financing) Act 2010, as amended 2013.
The European Central Bank (ECB), via the Single Supervisory Information required for compiling balance of payments statistics Under amendments to the Fourth EU Anti-Money Laundering
Mechanism (SSM), is responsible for supervising the financial is gathered via Central Statistics Office (CSO) statutory surveys. The Department of Finance has also issued related Guidelines. Directive, the 25% ownership threshold is reduced to 10% in the
stability of banks operating within the eurozone. However, while case of entities that present a real risk of being used for money
the ECB has final supervisory authority over all banks operating Companies required to comply with the CSO survey must provide A Financial Action Task Force (FATF) member, Ireland observes laundering and tax evasion.
within the eurozone, it directly supervise only those banks information regarding the following: most of the FATF+49 standards. The Financial Intelligence Unit,
classified as ‘significant’ under the terms of the SSM (at present which is a member of the Egmont Group, is supported by the Financial institutions are required to record and report all
125 significant banking groups have been recognised). All other ®® Investments in the company or group; Money Laundering Investigation Unit. suspicious transactions to the FIU.
‘less significant’ banks will continue to be supervised by the ®® Assets and liabilities (by country) of the group or company;
national supervisory authority i.e. the Central Bank. The Financial Intelligence Unit (FIU) is housed within the Garda Financial institutions are required to maintain adequate records
®® Trading activities by the Irish resident entities of the group with
National Economic Crime Bureau (GNECB – formerly GBFI). The for a period of at least five years after the relationship has ended.
related and non-related entities; and
Resident/non-resident status FIU is supported by the Money Laundering Investigation Unit
®® Income receivable and payable (profits, dividends and interest). Individuals entering or exiting the EU must declare currency of
A company is considered resident in Ireland if it is incorporated in (MLIU).
or has its place of effective management located in Ireland. EUR 10,000 to the customs authorities.
Approximately 4,000 financial institutions and 500 non‑financial
Account opening procedures require formal identification of all
companies are surveyed each year.
Bank accounts account holder and beneficial owners. Financial institutions are
Resident Participant organisations complete surveys on either a quarterly required to conduct ongoing customer due diligence.
Foreign exchange accounts and domestic currency (EUR) or annual basis, depending on their size and CSO requirements,
accounts can be held by residents both domestically and abroad. Financial institutions are required to identify all customers making
taking into account the reporting burden imposed. Quarterly
Resident domestic currency accounts are convertible into a single transaction, or series of linked transactions, aggregating
surveys are completed by the country’s larger companies.
foreign currency. to or exceeding EUR 15,000. Individuals making wire transfers of
Exchange controls EUR 1,000 and above must be identified.
Non-resident Ireland is a member of the European Union (EU).
Non-resident bank accounts are permitted in both foreign and For corporate customers, the nature of the company’s business
domestic currency. Non-resident domestic currency accounts can The euro (EUR) is Ireland’s official currency. should be ascertained and the beneficial owners and controllers
be held abroad and are convertible into foreign currency. identified. From 15 November 2016, all Irish companies must
®® Ireland does not apply exchange controls. create and maintain a Beneficial Ownership Register. The
Although there are no legal restrictions, interest is not always requirement applies to all Irish entities with two exceptions:
offered on current accounts. Overdraft facilities are available to Non-resident investment from outside the EU in the airline, flour
residents and non‑residents. milling, fisheries and shipping industries is subject to controls. ®® Listed on a regulated market that is subject to disclosure
requirements consistent with the law of the EU; or
®® Subject to equivalent international standards which ensure
adequate transparency of ownership information. 1.
Data as at January 2017.8 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 9
Taxation A 12.5% corporation tax rate applies to
1
trading profits of active trading companies
and 25% for non-trading income. A special
12.5% rate applies to foreign dividends
repatriated from foreign trading income.
Resident/non-resident payable on 21 June is 50% of the preceding year’s liability or trade names, knowhow, copyrights and other intangibles. In capital expenditure incurred by companies after 7 May 2009 on
A company is considered resident when its place of central 50% of the current year’s liability, with the balance payable on 21 addition, certain acquisitions of customer lists also qualify for tax the provision or acquisition of intangible assets for the purposes
management and control is located in Ireland or, in certain November. To avoid interest charges arising, the amount paid by relief, provided they are not transferred directly or indirectly in of a trade. The relief applies to intangible assets, such as brands,
circumstances, if the company is incorporated in Ireland. 21 June must be either 50% of the preceding year or 45% of the connection with the transfer of a trade as a going concern. trade names, know‑how, copyrights and other intangibles. In
current year liability and the total amount paid by 21 November addition, certain acquisitions of customer lists also qualify for tax
Specifically, companies incorporated in Ireland after must be 90% of the total liability for the relevant year. The rate of corporation tax on passive income (non‑trading relief, provided they are not transferred directly or indirectly in
1 January 2015 are deemed to be tax resident in Ireland, while income) is 25%. connection with the transfer of a trade as a going concern.
companies incorporated before 1 January 2015 will be deemed Most companies must file and pay using the Irish Revenue’s
to be resident in Ireland from 1 January 2021. However, these online service system (in which case, an additional two days is Dividends received by an Irish-resident company from another From 1 January 2016, a knowledge development box (KDB)
incorporation-based residence rules will not apply to Irish- granted to meet the above obligations). Irish company are exempt from corporation tax. Dividends regime will be operated in Ireland. The KDB provides that profits
incorporated companies that are currently tax resident in a treaty received from a foreign company are subject to corporation tax in from patented inventions and copyrighted software (qualifying
country by virtue of management and control, nor will it apply to Consolidated returns are not permitted and each company is the period the dividends are payable, but a credit for underlying assets) earned by an Irish company, to the extent they relate to
non-Irish incorporated companies that are resident in Ireland by required to file a separate return. However, losses may be group corporate and withholding tax is generally available for foreign R&D undertaken by that company, may be effectively taxed at a
virtue of management and control. relieved between group members resident in the EU. Companies tax paid. Dividends received from a company resident in an EU rate of 6.25%.
are considered part of a group if one is a 75% subsidiary of member state may qualify for an enhanced credit up to the rate of
Tax authority another, or both are 75% subsidiaries of the same parent. tax on profits in that country. Carry forward losses
®® Office of the Revenue Commissioners. Trading losses may be carried back to the immediately preceding
Corporate taxation Expenditure on revenue items, royalties, certain buildings period of equal length or carried forward indefinitely.
Tax year/filing Residents are taxed on worldwide profits; non‑residents are taxed and plant and machinery related to R&D may benefit from a
The shorter of 12 months or the period for which accounts are only on Irish-sourced income. Foreign-sourced income derived credit of 25% on a volume basis, which may be set off against Participation exemption
prepared. The tax accounting period may not exceed 12 months by residents is subject to corporation tax in the same way as a company’s corporate tax liability in the year in which the A participation exemption may apply to capital gains derived
in total. Irish‑sourced income. Foreign branch income is charged to tax as expenditure is incurred. Companies in receipt of this credit also by an Irish-resident holding company on the disposition of a
foreign investment income or trading income, as appropriate. have the option to use a portion of the credit to reward key substantial shareholding in a company located in Ireland, another
Ireland operates a self-assessment regime. A preliminary employees who have been involved in the development of R&D. EU member state or a country that has concluded a tax treaty
corporate tax payment is payable during the accounting period A corporation tax rate of 12.5% applies to trading profits of with Ireland. To qualify for the exemption, the Irish company must
amounting to 100% of the corporate tax liability. To avoid an active trading companies and 25% for non-trading income. A company may carry back any unused R&D tax credit against hold a participation of at least 5%, the trading group, and the
interest charge arising on underpayment, the amount to be paid Furthermore, a special rate of 12.5% applies to foreign dividends the corporation tax liability for the previous period of equal length. interest must have been held for a continuous 12-month period
as preliminary tax must be not less than 90%, with the balance repatriated from foreign trading income (with availability of credit If a company has not paid sufficient corporation tax in the current ending within the two years before the date of disposal.
payable on filing the return. The tax return, together with iXBRL- for foreign tax suffered), where certain conditions are satisfied. or previous year to use the credit fully, it may claim a payment
tagged financial statements, must be filed within nine months of There is no surtax or alternative minimum tax. from the Revenue Commissioners of the excess over a three-year Advance tax ruling availability
the accounting year‑end, but no later than within eight months period (on claims made within 12 months from the end of the Irish tax legislation includes a number of specific provisions for
and 21 days of the company’s year-end. For start-up companies, there is an exemption from corporation accounting period in which the qualifying expenditure is incurred) which advance statutory clearance may be sought. Also, under a
tax on income and gains up to specific limits where a new trade or may offset the excess credit against payroll taxes, subject to non-statutory clearance procedure, the Irish tax authorities’ view
Companies with a tax liability of more than EUR 200,000 in their commences in the years 2009–15. Tax relief is provided for capital certain limits. of the tax consequences of specific transactions can be sought,
previous accounting year must pay preliminary corporation tax in expenditure incurred by companies after 7 May 2009, on the on a named basis, with full disclosure, where there is both
two instalments (on 21 June and 21 November of the accounting provision or acquisition of intangible assets for the purposes of For start-up companies, there is an exemption from corporation commercial significance and material uncertainty.
period for companies with a calendar year-end). The amount a trade. The relief applies to intangible assets, such as brands, tax on income and gains up to specific limits where a new trade
commences in the years 2009 and 2018. Tax relief is provided for
1.
All tax information supplied by Deloitte Touche Tohmatsu (www.deloitte.com) and
Deloitte Highlight, 2017.10 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 11
Capital gains tax information annually relating to the global allocation of income
Withholding tax (subject to tax treaties)
Capital gains are taxed at 33% and 40%. Gains on the sale of and taxes paid, together with other indicators of the location of
substantial shareholdings in companies resident in EU member economic activity within the MNE group. The reports will also Payments to: Interest Dividends Royalties Other income Branch remittances
states or a tax treaty country are exempt if certain conditions are cover information about which entities do business in a particular
Resident companies 0%/20% None 0%/20% None NA
satisfied. jurisdiction and the business activities each entity engages in.
The information will be collected by the MNE group’s country Non-resident companies 0%/20% 0%/20% 0%/20% None None
Withholding tax (subject to tax treaties) of residence, and will be exchanged through exchange of
As a general rule, a withholding tax of 20% applies to interest information supported by such agreements as the MCAA. The
paid to a non-resident, unless the rate is reduced under a tax first exchanges under the MCAA will begin in 2017–18 based on
treaty or is exempt under the EU Parent-Subsidiary Directive or 2016 information.
under a specific exemption under domestic legislation.
Thin capitalisation The transfer pricing law is to be interpreted in accordance with Stamp duty
Dividends paid to another Irish company are exempt from There is no specific thin capitalisation legislation. Interest paid OECD guidelines on transfer pricing. Stamp duty at rates of 1% to 2% is levied on the transfer of
withholding tax. Dividends paid to a non-resident company or an by a non‑trading company to a non‑resident, non-treaty parent property including stocks and shares. The top rate of stamp duty
individual (whether resident or non-resident) are subject to a 20% company that owns at least 75% of the Irish payer is generally Obligations exist for companies to have available records that for non-residential property is 2%.
withholding tax, unless the rate is reduced under a tax treaty or reclassified as a dividend. would ‘reasonably be required’ for the purposes of determining
is exempt under the EU Parent-Subsidiary Directive or under a whether the trading income of the company is computed by Cash pooling
specific exemption under domestic legislation. Transfer pricing virtue of the arm’s‑length principle. Ireland has no specific tax rules for cash pooling arrangements.
The Irish transfer pricing provisions apply to both domestic and The general rules in relation to taxation of interest, domestic
The withholding tax is 20% on patent royalties. All other royalties cross-border trading transactions between associated parties, The Irish Revenue regards it as best practice that documentation withholding tax exemptions, thin capitalisation and transfer
are exempt. The rate may be reduced under a tax treaty or the subject to grandfathering provisions for arrangements where the is prepared at the time the terms of the transaction are agreed. pricing (further details in respect of these are set out above) may
payment may be exempt under the EU Interest and Royalties terms were agreed before 1 July 2010. If documentation is not prepared at that time, documentation apply.
Directive. should be available by the tax return filing deadline.
The objective of the transfer pricing law is to ensure that an arm’s- Short interest (less than a year) paid will be deductible to the
Tax treaties/tax information exchange agreements (TIEAs) length price is charged in arrangements involving the supply Disclosure requirements extent that the recipient country levies a tax on such interest
Ireland has exchange of information relationships with 98 or acquisition of goods, services, money or intangible assets Certain tax arrangements that result in an Irish tax advantage and (where the tax is less than 12.5%, a proportionate discount in the
jurisdictions through 73 double tax treaties and 26 TIEAs. between connected persons when the profits or losses of either fall within certain limited prescribed hallmarks, must be disclosed deduction will apply).
company are chargeable to Irish tax as trading profits or losses. to the Irish tax authorities, and the user must note the use of such
Ireland, as part of the OECD/G20 Base Erosion and Profit arrangements on the tax return. Property taxes
Shift (BEPS) initiative, has signed a multilateral cooperation The transfer pricing regime should not apply to financing activities The municipal authorities levy a real estate tax, known as rates,
agreement with 30 other countries (the Multilateral Competent that do not form part of the company’s trade, e.g. in the case of From 1 January 2016, country-by-country reporting will be on the occupation of commercial real property. Residential real
Authority Agreement (MCAA)). Under this multilateral agreement, an isolated interest‑free loan. introduced in Ireland and companies with global revenues in estate is subject to an annual tax at 0.18% on values up to
information will be exchanged between tax administrations, excess of EUR 750 million will be required to file a country-by- EUR 1 million and at 0.25% on values over EUR 1 million. In
giving them a single, global picture on some key indicators of No tax deduction is available for any amount paid or payable by a country report for accounting periods commencing on or after certain situations, reduced rates will apply. (See Stamp duty
economic activity within multinational enterprises (MNE). person to a connected person in another territory for adjustments 1 January 2016. section.)
made to the profits of that connected person for which relief is
With country-by-country reporting, the tax authorities of available under the provisions of a tax treaty with Ireland, or for a There is a statutory general anti-avoidance rule.
jurisdictions where a company operates will have aggregate similar adjustment made to the profits of a connected company
resident in a non-treaty country.12 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 13
Sales taxes/VAT (incl. financial services) There is also a statistical report that suppliers of services from
VAT is levied on the sale of most goods and services, and on one EU member state to business customers in another EU
most goods imported into Ireland from outside the EU. The member state must complete on a periodic basis. The onus is on
standard rate of VAT is 23%. the supplier to seek to register for this reporting regime and to
complete and file the report.
Two reduced rates apply for specific goods and services: 13.5%
for buildings, household fuels, entertainment etc., and a second Irish businesses are entitled to a deduction of the VAT incurred on
reduced rate of 9% mainly related to tourism. A 4.8% rate of VAT their costs in proportion to their VAT deductible activities.
is applicable for livestock. A zero rate exists for some food and
drink, exports, books, etc. Supplies of certain services are deemed exempt activities (e.g.
banking and insurance), meaning that no VAT is charged on
VAT is calculated on the EUR value of the consideration (which is the income stream, but in general, the supplier is not entitled to
usually monetary, but can also be non‑monetary) and is declared deduct any of the VAT on costs that support that activity.
to the Irish Revenue in periodic returns.
Financial transactions/banking services tax
A liability on an Irish recipient to register for Irish VAT (if not There are no financial services/banking services taxes in Ireland.
already VAT‑registered) and to self-assess for Irish VAT occurs on
the receipt of certain services rendered from a supplier abroad Payroll and social security taxes
(whether EU or non-EU). The general rule is that all services There is no payroll tax on employers in Ireland. Income tax, pay-
supplied from overseas are potentially liable to the self-assessed related social insurance (PRSI) contributions, and the Universal
VAT charge by the Irish business recipient, bar some specific Social Charge are due and payable through a withholding
exceptions and exemptions. Banking, financial services and mechanism in the payroll of employers.
insurance fall within the exemptions, and no self‑assessment
VAT liability arises, but care needs to be taken to ensure that the Employers pay PRSI at a rate of 10.75% on each employee’s
particular service is regarded as falling within these categories. remuneration without a ceiling. Employee’s and employer’s PRSI
and the Universal Social Charge are due on gross remuneration,
For supplies to private consumers, the applicable VAT regime before employee pension contributions.
remains that of the supplier, except for certain electronically
supplied services that may require the supplier to either register Non-pecuniary remuneration is subject to social insurance
for VAT in the customer’s country or to account for VAT at the contributions. The contributions are deductible for corporation tax
rate applicable in the customer’s country. purposes.
Most services supplied by Irish suppliers to VAT-registered
customers in other EU member states will be free from Irish VAT,
but with an expectation that the EU business customer will self-
assess for local VAT on the value of that service. Most supplies
to non-EU business customers will be free from VAT. However, a
limited number of services supplied from Ireland will continue to
be subject to Irish VAT.14 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 15
Banking
Overview
Major banks
There are 58 credit institutions (banks and building societies)
operating in Ireland, including 33 branches of foreign credit Total assets (EUR millions)
Bank
institutions. There are also 313 credit unions. 30 June 2017
Three of Ireland’s top five banks have some government Bank of Ireland 122,019
ownership – Bank of Ireland (13.95%), AIB Group (99.83%) and AIB Group 92,923
Permanent TSB (74.9% government-owned). The government
plans to sell 25% of its shares in AIB in the first half of 2017. Ulster Bank Ireland 28,200*
Permanent TSB 23,187
Ireland was hit hard by the global financial crisis of 2008–09 (19
banks have since ceased operating), and the country’s banking UniCredit Bank Ireland 19,419
sector has undergone some reform as a consequence, most
* Data as of 31 December 2016. Source: www.accuity.com, November 2017.
notably the restructuring of the sector around two core universal
pillar banks – Bank of Ireland and AIB Group.
The development of the International Financial Services Centre
(IFSC) boosted the number of foreign banks operating in Ireland.
Most focus primarily on IFSC-based activities or merchant
banking, rather than the retail or small to medium-sized business
sectors.
The leading foreign-owned banks with a wider presence include
the UK-owned Ulster Bank, Belgium’s KBC Bank, Italy’s UniCredit
and Intesa Sanpaolo, and the Netherlands’ Rabobank.
Given the changing dynamic of banking and the move by
consumers to online and mobile banking, the larger banks in
Ireland are increasing their spend on digitalising the services they
offer. As a consequence, the number of branches across the
country is falling. Ulster Bank, for example, will close one in five
of its branches in 2017.
The implications of Brexit and the results of the UK’s negotiations
with the EU are as yet uncertain. However, it is likely that
there will be long-term consequences for those Irish banks
with a significant presence in the UK, if the UK does not retain
passporting rights. It is also expected that a number of financial
services will relocate to Dublin inorder to maintain their access to
EU markets.16 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 17
Payment
Instruments
1
Cheques are no Cash
Cash is an important payment medium in Ireland, particularly for
Payment statistics
low-value transactions. Millions of transactions % change Traffic (EUR billions) % change
longer permitted to Credit transfers 2014 2015 2015/2014 2014 2015 2015/2014
Credit transfers in Ireland can be paper based or automated.
be used when dealing
Cheques 42.9 26.85 – 37.4 145.5 65.9 – 54.7
Electronic credit transfers accounted for 90% of the volume of all
credit transfers in 2015. Electronic credit transfers 149.2 199.9 34.0 543.1 1,247.7 129.7
with government ®® High-value and urgent credit transfers are cleared and settled
via TARGET2-IE in real time.
Paper-based credit transfers
Direct debits
17.4
91.2
21.1
115.1
20.8
26.3
186.4
69.1
134.54
99.0
– 27.8
43.2
departments, state ®® Low-value and non-urgent SEPA credit transfers are processed
on a same-day basis via STEP2, the pan‑European ACH
Debit card payments 355.3 503.5 41.7 17.7 25.4 0.4
for bulk retail payments operated by the Euro Banking Credit card payments 72.9 92.2 26.4 6.9 8.91 28.4
agencies and local Association. Low-value credit transfers include payroll, supplier
and third‑party payments.
E-money payments 0.82 1.5 82.9 0.0 0.3 575.0
authorities.
Total 737.2 967.0 31.2 969.0 1,581.7 63.2
Approximately 194 banks in Ireland currently participate in the
Source: ECB Payment Statistics, September 2016.
SEPA Credit Transfer Scheme. (For more information on SEPA
credit transfers, see European Payments.)
In November 2017, the European Payment Council’s SCT Inst Direct debits accounted for 11.9% of the volume of all cashless Card payments
scheme (a pan-European 24/7 instant payment scheme for SEPA payments in 2015, and 6.3% of the value. Payment cards, particularly debit cards, are a popular method
credit transfers) went live. The scheme enables the transfer of of payment in Ireland. They accounted for 61.6% (debit cards
funds (the maximum threshold value for SCT Insts is Cheques accounted for 52%) of the volume of all cashless payments in
EUR 15,000) to another account in any of the 34 SEPA countries Cheque use is in terminal decline due to an increasing preference 2015, but just 2.2% (debit cards accounted for 1.6%) of the value.
in less than ten seconds. At present, such a transaction can take for electronic payments for both high-value and low‑value
up to one day to complete. Participation in the SCT Inst scheme is transactions. Cheques are also no longer permitted to be used There were 1.8 million credit cards and 4.5 million debit cards
optional for Payment Service Providers (PSPs). when dealing with government departments, state agencies and in circulation at the end of 2015. There are over three million
local authorities. Visa-branded contactless cards in circulation and more than
Credit transfers accounted for 87.4% of the value of all cashless 50% of debit and credit card holders use contactless payments
payments in 2015, and 22.8% of the volume. Cheques are typically used for high-value, one-off and supplier when purchasing goods. Contactless payments can be used for
payments. purchases of EUR 30 and under.
Direct debits
Direct debits are available in Ireland for low-value recurring Cheques are cleared via the IPCC. Final settlement is via Visa and MasterCard are the principal payment card brands
payments such as utility bills. TARGET2-IE. All cheque transactions are subject to a EUR 0.50 issued. Four banks – Ulster Bank, AIB, Permanent TSB and Bank
stamp duty. of Ireland – issue Visa debit cards, while MasterCard debit cards
SEPA direct debits are cleared on a same-day basis via
are issued by EBS and KBC Bank. American Express and Diners
STEP2. (For more information on SEPA direct debits, see Cheques accounted for 2.8% of the volume of all cashless Club credit cards are also available. Irish residents are subject to
European Payments.) payments in 2015, and 4.2% of the value. stamp duty on credit cards of EUR 30 per account.18 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 19
European
Payments
All payment cards issued are SEPA-compliant EMV chip cards. SEPA initiative The EC’s Payment Services Directive regulates payment services
(For more information on SEPA‑compliant payment cards, see
% volume of all cashless
The Single Euro Payments Area (SEPA) is an initiative of the and their providers throughout the European Economic Area
payments 2015
European Payments.) European Payments Council, with the support of the European (EEA), comprising all 28 EU member states, plus Norway, Iceland
Commission (EC) and European Central Bank, to create an and Liechtenstein. As a result, all cross-border credit transfers,
Each bank in Ireland establishes its own individual clearing and integrated payment infrastructure across Europe. The SEPA direct debits and card payments below EUR 50,000 within the
settlement arrangements with the card users. initiative requires common payments instruments, infrastructures, EEA have the same charges as their domestic equivalents.
Credit Transfers 22.8% procedures and technical standards. All electronic, EUR-
There were 2,640 ATMs and approximately 38,680 POS terminals Direct Debits 11.9% denominated retail payments within SEPA are treated as High-value/urgent cross-border payments in EUR can be made
in Ireland at the end of 2015. ATMs provided by the major retail Debit Cards 52% domestic payments. The SEPA initiative does not apply to urgent, through TARGET2’s Single Shared Platform, which is used by
banks are interlinked. All ATMs and POS terminals are EMV- Credit Cards 9.6% high-priority payments or to cheques. 24 participant countries and operated by the Banca d’Italia, the
compliant. ATM withdrawals are subject to a fee of EUR 0.12 for Cheques 2.8% Banque de France and the Deutsche Bundesbank on behalf of
each withdrawal. SEPA scheme countries include the 28 European Union (EU) the European System of Central Banks. Cut-off times for same-
member states and the four European Free Trade Association day settlement are 17:00 CET for customer payments and 18:00
Electronic wallets member states (Iceland, Liechtenstein, Norway and Switzerland). CET for interbank payments. High-value/urgent cross-border
Electronic money schemes are available in the form of reloadable % value of all cashless
payments 2015 payments in EUR can also be effected through the EBA’s EURO1
pre-paid cards such as the MasterCard Swirl. SEPA payment instruments system. Cut‑off time for same-day settlement is 16:00 CET.
Migration to SEPA credit transfers (SCTs) and SEPA direct debits
Mobile payment apps, including MasterPass, Apple Pay and (SDDs) was completed within the eurozone on 1 August 2014. TARGET2, EURO1 and STEP1 are all based on SWIFT payment
Google Wallet, are all available in Ireland. Adoption rates for National niche payment instruments were phased out by 1 messages. International payments can also be routed via SWIFT
mobile payments are high. Credit Transfers 87.4% February 2016. Full SEPA migration outside the eurozone was through correspondent banking arrangements.
Direct Debits 6.3% finalised on 31 October 2016.
It is expected that changes to the payments landscape as a result PSD2
Debit Cards 1.6%
of the Revised Payment Services Directive (PSD2), will enable Systems for euro-denominated payments In January 2016, the PSD2 entered into force (the Directive
Credit Cards 0.6%
mobile payments to be made more easily. (For more information The Euro Banking Association’s (EBA’s) STEP1 or STEP2 systems requires that all member states implement these rules as
Cheques 4.2%
on PSD2, see European Payments.) can be used to effect individual and bulk retail payments in EUR. national law by 13 January 2018). PSD2 sets out a common legal
STEP1 cut-off time for same-day settlement is 14:30 CET. framework for making and receiving payments both within the
Source: ECB Payment Statistics, September 2016. EEA, and outside the EEA.
STEP2 is the only pan-European ACH for SEPA payments (there
are 50 countries within the jurisdictional scope of the SEPA According to the EC, one of the advantages of PSD2 is that it will
scheme). Cut-off times for same-day settlement, overnight help stimulate competition in the electronic payments market by
settlement and next-day settlement of SCTs are 16:00 CET, 21:00 providing the necessary legal certainty for companies to enter,
CET and 01:00 CET respectively. Cut‑off times for the same-day or continue, in the market. Consumers will benefit from having a
settlement of Core SDDs and B2B SDDs are 11:00 CET and greater choice between different types of payment services and
12:00 CET respectively. Bilateral arrangements are also in place service providers. In addition, with the introduction of Account
between a number of SEPA-compliant Clearing and Settlement Information Service Providers, PSD2 will provide companies and
Mechanisms (CSMs) enabling cross-border retail payments in consumers with the ability to view multiple bank accounts across
EUR. a number of banks via one portal.
Crucially, PSD2 introduces enhanced security measures to be
Bank for International Settlements, CPSS – Red Book statistical update,
1. implemented by all payment service providers, to make electronic
December 2016. payments, such as mobile payments, safer and more secure.20 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 21
Payment It is possible to obtain same-day value
for cheques of exceptionally high value
Systems using a ‘special presentation’ method;
this is only available in a few Dublin
branches of leading banks.
Type Cross-border payments can be routed via SWIFT and settled The IPCC operates on the basis of bilateral arrangements, It is possible to obtain same-day value for cheques of
TARGET2-IE is Ireland’s national component of the pan- through accounts held with correspondent banks abroad. and operating hours differ from bank to bank. However, all exceptionally high value using a ‘special presentation’ method
European TARGET2 real-time gross settlement system. Three transactions need to be finalised in time to allow final settlement (truncation and clearing as an electronic item via TARGET2-IE),
Eurosystem central banks – the Banca d’Italia, the Banque de In January 2016, a Revised Directive on Payment Services (PSD2) in TARGET2-IE. but this is only available in a few Dublin branches of leading
France and the Deutsche Bundesbank – jointly provide the single entered into force. The overall objective of the PSD2 is to increase banks.
technical infrastructure, the Single Shared Platform (SSP), of competition in the EU’s payment market, facilitate innovative Clearing cycle details
TARGET2 and operate it on behalf of the ESCB. payment services and ensure that payment services are safe and TARGET2-IE Participants’ net positions are sent to TARGET2-IE for
offer complete consumer protection. The revised PSD2 will apply TARGET2-IE settles transactions on a same-day basis and with final settlement once payment data has been exchanged
®® Target2-IE processed 890,000 transactions in 2015, with a as of 13 January 2018, the date by which all EU countries are immediate finality. All transactions are processed electronically and processed.
value of EUR 3,754 billion, a decrease of 3.3% and 13.9% required to have incorporated PSD2 into national law. via SWIFT.
respectively on 2014 figures. ®® 10:00 WET: final net settlement via TARGET2-IE. Settlement
Participants ®® 16:00 WET: cut-off time for customer payments. usually takes three days, with accounts credited on day two
STEP2, the pan-European ACH for bulk retail payments, is a TARGET2-IE has 14 direct participants and eight indirect ®® 17:00 WET: cut-off time for interbank payments. and debited on day three.
multilateral net settlement system operated by the Euro Banking participants.
Association (EBA). Final settlement takes place across participant banks’
STEP2 has four direct participants: AIB Group, Bank of Ireland, correspondent accounts held on the SSP.
The IPCC (Irish Paper Clearing Company Ltd) is operated by Elavon Financial Services, and the Dublin branch of BNP Paribas. Currency centre holidays
Banking & Payments Federation Ireland and supervised by the STEP2
2018 1 Jan, 30 Mar, 2 Apr, 1 May, 25, 26 Dec
Central Bank. The IPCC has seven direct participants and six indirect Payments are processed in batches, with participants’ balances
participants. The Dublin branch of BNP Paribas acts as clearing settled in TARGET2-IE between 12:45 and 13:30 CET and Source: www.goodbusinessday.com.
®® The IPCC processed 28 million transactions in 2015, with agent for a further seven banks. between 06:00 and 07:00 WET.
a value of EUR 63.4 billion, a decrease of 12.2% and 8.6%
respectively in 2014 figures. Transaction types processed ®® 15:00 WET: cut-off time for same-day settlement of SCTs.
TARGET2-IE processes high-value and urgent EUR-denominated ®® 20:00 WET: cut-off time for overnight settlement of SCTs.
Cross-border payments in EUR can be made through the EBA’s domestic and cross-border credit transfers. In addition, TARGET2- ®® 00:00 WET: cut-off time for next-day settlement of SCTs.
EURO1 (two banks in Ireland participate in EURO1), STEP1 or IE effects the final settlement of participants’ net balances
®® 10:00 WET: cut-off time for same-day settlement of Consumer
STEP2 payments systems. (For more information, see European originating from the IPCC and STEP2.
(CORE) SDDs.
Payments.)
STEP2 processes low-value, non-urgent and high‑volume EUR- ®® 11:00 WET: cut-off time for same-day settlement of B2B SDDs.
®® On 21 November 2017, EBA Clearing (operator of EURO1, denominated domestic and cross‑border SEPA credit transfers
IPCC
STEP1 and STEP2) and Italy’s SIA Group (a technical operator and direct debits. There is no maximum value threshold.
Paper items are exchanged bilaterally on a daily basis between
for STEP2) launched a pan-European platform for instant EUR-
The IPCC clears all paper-based payment instruments. participant banks.
denominated payments. The instant payment system, RT1,
supports the European Payment Council’s SCT Inst scheme (a
Operating hours Banks electronically process MICR-encoded payments daily.
pan-European 24/7 instant payment scheme for SEPA credit
TARGET2-IE operates from 06:00 to 17:00 WET, Monday to Collecting banks generate an electronic file that contains the data
transfers), which launched on the same day.
Friday. of all payments received over the course of that working day.
These are then grouped according to the other participant banks
STEP2 operates 24 hours a day, Monday to Friday. that are involved.22 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 23
Cash
Management
Domestic Short-term investments
Notional pooling ®® Current accounts can be (but are not usually) interest bearing.
Notional pooling is permitted between resident and non-resident ®® Time deposits are available in EUR or major foreign currencies.
accounts. One or more legal entities may be included. Interest rates vary and are calculated daily in accordance with
the amount.
Cash concentration
®® Certificates of deposit are offered by commercial banks, with
Cash concentration is permitted between resident and non-
maturities ranging from seven days to one year.
resident accounts with zero balancing the most widely used
®® Commercial paper is offered by companies and government
cash concentration technique. One or more legal entities may be
bodies, with maturities ranging from seven days to one year.
included.
The minimum investment amount is EUR 125,000. The Irish
Collections government has both EUR and USD-denominated commercial
Automated collection methods are used by the majority of paper programmes. EUR‑denominated paper is issued for
medium-sized and large businesses, although practices between maturities of between one and six months.
companies and sectors can differ. Companies that collect large ®® The National Treasury Management Agency manages the Irish
volumes of recurring bill payments hold accounts with a number government’s public borrowing programme and issues:
of banks to enable their customers to authorise their banks to • Zero-coupon Irish Treasury bills: issued at a discount via
debit their account via the issuance of a direct debit. auction, with maturities of one, three, six, nine and
12 months. The minimum investment amount is
Lockbox-type arrangements are permitted, but not commonly EUR 1 million; and
used. Lockbox arrangements are run by credit card companies • Exchequer notes: issued at a discount, with maturities
affiliated to banks. ranging from one day to one year. The minimum investment
amount is EUR 250,000.
Cross-border
®® Ireland has a lively interbank repurchase agreement market.
Cross-border notional pooling and sweeping is permitted and
offered by major international banks. ®® Money market funds are available. Many international banks
and fund managers operate their money market fund activity
Lifting fees in Dublin.
Lifting fees are not applied on funds transfers between resident
and non‑resident accounts. However, Ireland’s leading banks do Custody and securities settlement1
apply transaction‑based charges. Depository
®® Euroclear UK & Ireland.
Additional comments
Ireland is a popular location for companies to set up their Central counterparty
regional/global cash pool structures and treasury activities due to ®® Eurex Clearing AG.
its relatively low corporate tax rate (12.5%) and beneficial taxation
BIS Model
policies.
®® Model 1: EUR and GBP settlement.
®® Model 3: USD settlement.
Settlement cycle
®® T+2.
1.
Data as at February 2017.24 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 25
Electronic
Banking
A full suite of Electronic banking is commonplace in Ireland and offered
by all of the country’s banks. There is no bank-independent
electronic banking; each bank offers its own proprietary system
e-banking and mobile for corporate banking purposes. Large companies can also use
SWIFT for Corporates.
services are available Internet and mobile banking is offered by all of Ireland’s banks for
both corporate and retail purposes. A full suite of e-banking and
and adoption rates are
mobile services are available and adoption rates are high.
®® Online banking services were used by 64% of individuals in
high. In 2016, online 20161.
®® Mobile banking services were used by an estimated 78% of
smartphone users in 20162.
and mobile banking Ireland’s postal service, An Post, offers the mybills.ie service, a
free, one-stop-shop for paying bills online.
services were used Internet penetration is approximately 87%3; smartphone
by an estimated 64%
penetration is approximately 86%4.
and 78% of individuals
respectively.
1.
Europe’s Digital Progress Report (EDPR) 2017.
2.
VISA 2016 Digital Payments Study.
3.
Central Statistics Office.
4.
Deloitte Mobile Consumer Survey: There’s no place like phone.26 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 27
Trade
Finance
A negative list (of Key import partners Imports
Documents
Exports
Documents
No documentation is required for imports from another EU No documentation is required for exporting items to another
products that may UK 32.5%
country, although it is good practice to send a commercial
invoice.
EU country, although it is good practice to send a commercial
invoice.
not be imported) is in USA
France
14.0%
10.2%
In order to import goods into Ireland from outside the EU, a
customs import declaration, commercial invoice (including a full
In order to export goods from Ireland outside the EU, a customs
export declaration, commercial invoice, bill of lading, packing list
Germany 9.3%
operation, although
description of the imported goods), bill of lading, packing list and, and, in certain cases, certificate of origin are required.
Netherlands 4.9% in certain cases, certificate of origin are required.
China 4.1% Licences
the list of prohibited Licences
Licences with quotas are required for importing textile products,
Licences are required for exporting military items (i.e. weaponry
and strategic items) and dual-use goods subject to international
shoes, ceramics, steel and certain agricultural products (in line export control regimes.
imports is small. Key export partners with the Common Agricultural Policy) from outside the EU.
Taxes/tariffs and other fees
Special licences are required for certain imports such as No taxes are charged on exports from Ireland.
armaments, ammunition, explosives and specific drugs.
Prohibited exports
USA 23.7% Taxes/tariffs and other fees A negative list (of products that may not be exported) is in
UK 13.8% Ireland applies the EU customs code and all associated operation.
Belgium 13.2% regulations and commercial policies on all items entering the
country from outside the EU. Exporting certain items is prohibited in accordance with EU
Germany 6.6%
regulations and UN Security Council resolutions.
Switzerland 5.5% Imports into Ireland are subject to a variety of tariffs. Tariffs are
Netherlands 4.4% higher for agricultural imports than for non-agricultural imports. Financing imports and exports
France 4.4% Imports
There are currently two free zones (Ringaskiddy Free Port and There are no financing requirements for imports.
Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2017 Shannon Free Zone) operating in Ireland.
(https://www.cia.gov/library/publications/resources/the-world-factbook/index.html). Exports
Prohibited imports There are no financing requirements for exports.
A negative list (of products that may not be imported) is in
operation, although the list of prohibited imports is small.
In accordance with EU regulations and UN Security Council
resolutions, it is prohibited to import certain items into Ireland,
in order to protect fauna and flora, and for national security and
moral reasons.28 HSBC Treasury Management Profile 2018 | Ireland HSBC Treasury Management Profile 2018 | Ireland 29
Useful
Websites
Central Bank of Ireland www.centralbank.ie
Leading banks: AIB Group www.aib.ie
Bank of Ireland www.bankofireland.com
Permanent TSB www.permanenttsb.ie
Ulster Bank Ireland www.ulsterbank.ie
UniCredit Bank Ireland www.unicreditbank.ie
Banking & Payments Federation Ireland (BPFI) www.bpfi.ie
National Treasury Management Agency www.ntma.ie
National Asset Management Agency www.nama.ie
Irish Association of Corporate Treasurers www.treasurers.ie
Disclaimer
Department of Finance www.finance.gov.ie
This document has been produced by HSBC Bank plc and members of the HSBC Group (“HSBC”), together with their third-party contributor, WWCP Limited. We make no
Department of Foreign Affairs and Trade www.dfa.ie
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arising under or in connection with the use of, or any reliance on, this document or the information contained within it. It is not intended as an offer or solicitation for business
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legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The
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