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Is the EU about to turn on Ireland?

Ireland Taoiseach Leo Varadkar oversees the EU's weirdest economy. Credit: Getty

October 6, 2023 - 1:00pm

Ireland has Europe’s weirdest economy. Ever since 2016, when the Republic posted an annual growth rate of 26% (no, the decimal point isn’t missing) it’s been clear that something is up with Irish GDP.

That something is the outsized presence of multinational corporations, for which Ireland serves as a very convenient European base. An accommodating tax system means that if a multinational can contrive to move profits earned elsewhere, an awful lot of tax can be legally avoided.

But is this economic model under threat? To paraphrase HG Wells, “intellects vast and cool and unsympathetic are regarding Ireland’s success with envious eyes and slowly and surely they are drawing their plans against it.”

I speak, of course, of the European Commission — which is short of cash and looking around for places from which to grab it. The particular urgency is that the money the Commission borrowed during the pandemic needs to be repaid soon. 

According to a report for RTÉ, the Commission has a cunning plan. The proposal is for an indirect levy of 0.5% on the gross operating surplus (GOS) of each country’s corporate sector — i.e. on “the profit made by companies on the goods and services they produce after they have paid their workers and for raw materials, services and overheads”.

It’s indirect in this case because instead of being paid directly by the relevant corporations as a tax, the equivalent sum would be diverted from each country’s public funds and into the coffers of the European Commission. It’s a sneaky way of pretending that Brussels isn’t centrally imposing a tax on member states — when, in fact, that’s exactly what this amounts to.

With their disproportionately large corporate sector, the Irish would be hammered. According to the RTÉ report, Ireland’s total GOS was €25 billion in 1995 but nearly €300 billion in 2021. A levy of 0.5% would therefore add €1.5 billion to the €2.6 billion that Ireland currently contributes to the EU budget.

There are still months of wrangling to go on this scheme, but the message to the Irish is clear: life in the EU is about to get a whole lot harder for you.

Ireland’s economic model is obviously at the expense of its neighbours, but for years this was tolerated. That’s for two reasons: firstly as a quid pro quo for Irish good behaviour during the Eurozone crisis, and secondly as a gesture of solidarity against the villainous Brits.

On that last point, Ireland needs to remember what motivated the EU freakout over Brexit. It wasn’t the fear of other exits, which the single currency makes all but impossible. Rather, it was the idea of a low-tax, low-regulation competitor across the English Channel.

But now continentals are calming down over that, they’ve remembered that there’s another offshore tax haven across the Irish Sea. They’re unlikely to forget — especially if there’s money to be had.

Of course, from a British point of view, this all seems rather distant. But if we were still in the EU, this would cause a huge issue for us too. Presented with a multi-billion-pound demand for more cash, we’d have been sorry not to have got out when we had the chance.  


Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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Hugh Bryant
Hugh Bryant
9 months ago

Of course, from a British point of view, this all seems rather distant. 

No. It’s a huge opportunity for Britain. If it weren’t for Ireland’s tax regime most of those companies would be in London.

D Walsh
D Walsh
9 months ago

An EU curb on the Irish tax scam would be a good thing, having all the big US woke companies in Ireland is one of the reasons for our no borders madness

Martin Dunford
Martin Dunford
9 months ago
Reply to  D Walsh

Why is it a scam? Ireland – unlike rest of Europe – had no economic history until 1920s as an independent nation. No corporations, nothing. So no dependence on corporate revenue (unlike rest of Europe). The only card it had to attract investment was a low corporate tax rate. Why shouldn’t an independent nation decide it’s own tax rates?

Stevie K
Stevie K
9 months ago
Reply to  Martin Dunford

Except, in reality, it isn’t an independent nation any more.

D Walsh
D Walsh
9 months ago
Reply to  Martin Dunford

Its a scam because they jump through a few hoops, to pay a lower tax in Ireland, than they should have paid in another country, they generate the revenue in one country, dodge the higher tax, but pay a lower one in Ireland

John Riordan
John Riordan
9 months ago
Reply to  Martin Dunford

It’s not independent, it’s in the EU, and if a nation is in the EU – and the Eurozone especially – it cannot do things like decide it’s own taxrates without creating asymmetric tensions in the rest of the bloc. And this is exactly what has been a perennial problem for the Eurozone ever since the financial crisis – fiscal independence without monetary independence causes havoc with cross-border capital flows.

Last edited 9 months ago by John Riordan
John Riordan
John Riordan
9 months ago
Reply to  D Walsh

I’m not sure I follow: how do Ireland’s tax arrangements result in the UK having porous borders?

Christopher Barclay
Christopher Barclay
9 months ago

The EU won’t touch Ireland until the existential battle with Britain is resolved.

Charles Stanhope
Charles Stanhope
9 months ago

Despite ‘bailing out’ the ungrateful toads to the tune of millions a few years ago, the Irish Republic is now whinging about the recent passing of the UK’s ‘Legacy & Reconciliation Bill’.
How spiteful can you get?

Last edited 9 months ago by Charles Stanhope
Wesley Dolan
Wesley Dolan
9 months ago

Do you expect us to be deferential when your government is writing yourselves a blank cheque for murdering Irish Catholics? Such contemptuous attitudes explains Irish enthusiasm for the E.U.

David Walters
David Walters
9 months ago
Reply to  Wesley Dolan

Who’s expecting deference and why is it relevant to this discussion about the effects if Ireland’s relationship with the EU? More importantly, to what does your ‘murdering Irish catholics’ comment refer?

Ian Barton
Ian Barton
9 months ago

Some truth in that. However, it is almost certain that the EU Commision are running down the clock on their “useful idiots”.

Andrew Vanbarner
Andrew Vanbarner
9 months ago

Luxembourg has a per capita GDP of USD $135,000, as it’s basically a tax haven masquerading as a country. Monaco and Lichtenstein, though not in the EU, have per capita GDPs that are considerably higher, for much the same reasons.
Ireland does have a higher population than those two countries, though, and an educated workforce, that could be taxed, regulated, and subsidized like mainland Europe’s.
But if the EU insisted on Ireland adopting,say, France’s style of government, you’d likely see an Irish goodbye. The Irish aren’t fond of paternalism, and certainly not of authoritarianism, for obvious reasons.

Steve Walker
Steve Walker
9 months ago

“The Irish aren’t fond of paternalism, and certainly not of authoritarianism”

I dunno, they seem to have positively revelled in it the last few years.

Last edited 9 months ago by Steve Walker
Lennon Ó Náraigh
Lennon Ó Náraigh
9 months ago
Reply to  Steve Walker

Harshest form of Catholic social control in Europe, 1922-yesterday

One of the longest lockdowns in Europe, 2020-2021

Draft hate-speech law 2023 criminalizing gender-critical feminists
Compelled speech in universities in 2023 – just ask Colette Colfer.

We have just exchanged one set of abusive authoritarians for another.

Last edited 9 months ago by Lennon Ó Náraigh
D Walsh
D Walsh
9 months ago

With some differences, the old Catholic establishment would admit that they were, in fact, the establishment. The woke go crazy if you point out that they are the establishment now

Last edited 9 months ago by D Walsh
Charles Stanhope
Charles Stanhope
9 months ago

‘Heaven be praised’.
For once its isn’t OUR fault!

Martin Dunford
Martin Dunford
9 months ago

I could not agree more. It cannot be said enough!

Ian Barton
Ian Barton
9 months ago

Maybe there isn’t an Irish equivalent of “Once bitten – twice shy”. I was thinking there must be something relevant to “
 until the cows come home” but I remembered that the new masters are instructing you to get rid of them. The final cliche might sensibly be “as ye sow, so shall ye reap”.

Last edited 9 months ago by Ian Barton
Frank McCusker
Frank McCusker
9 months ago

EU has been targeting this for many years, and it has to level out. Won’t make much difference though, thanks to Brexit (cheers lads!), despite the spitefully hopeful tone of this article. Had Britain been in the EU, it would of course have been more difficult for Ireland. I’ve been involved in international businesses for over 30 years, and tax rates are never at the top of the agenda when doing new market entry. The US cos value Ireland as an English-speaking, common law (cheers again lads!) EU launch pad. They’ll swallow a bit more tax for that.  

Jeff Dudgeon
Jeff Dudgeon
9 months ago

This won’t happen, ever.
You are ignoring the iron law of the Irish exception. It was applied by the United Kingdom since partition and in turn by the EU. It can’t be breached.

John Riordan
John Riordan
9 months ago

The article above is a little unfair to Brussels (and as a Brexit voter you won’t often hear me say that) because no matter what problems the EU Commission might have with its internal finances, it has to sort out the presently-broken currency union anyway.

There are not really any ways to do this without equalising fiscal policy across the various Eurozone member states, so Ireland can’t keep its low corporation tax rate in the long run and stay in the Eurozone. But I am of course persuaded that there’s a fair whack of greed and corruption at work too of course, it’s the Brussels swamp we’re talking about here.

It’s a matter of when, not if. Ireland does at least have pretty good fiscal fundamentals though, so if there is some multinational exodus in the future, it hopefully won’t do too much damage.

Last edited 9 months ago by John Riordan