Have you seen our Datacenter Infrastructure (Google, Amazon, Microsoft, etc)? have you seen our climate (mostly cold, perfect for said datacenters)? We have an educated workforce, are close to mainland Europe, and who doesn't want to work in the home of the Black Stuff (Guinness). Tax could be an incentive, but think of the rest we have also.
Why anywhere else? Ireland si the "India of Europe" (English fluency, low salaries, decent education) and it has the best tax arrangements among similar countries.
Microsoft, Facebook, IBM and the likes, they all basically serve the EU market from Dublin, and it's been like that for 20 years -- the "Celtic Tiger" phenomenon was based on this sort of activity: combining EU membership, low taxes, low salaries and cultural affinities to lure multinationals' HQs. Other EU members tolerated this because, when it started, Ireland was dirt poor. When the bubble burst, there was a lot of schadenfreude sweeping the continent...
I wouldn't say salaries are that low, Ireland has (or had until recently) one of the highest minimum wage and average industrial wages in the world. The recession has brought wages down somewhat, but you can't compare Ireland to India with regards to pay.
I said "India of Europe"... I was in Dublin last week. Compared to Milan, Paris, London or even Manchester, the Irish cost of living today is much lower. I know quite a few people who moved to Dublin to work in IT, then bounced off to England looking for higher wages.
Of course it's not India, it's still an European country with a noticeable welfare state, but I'd argue that you won't find better English speakers for the same amount of money anywhere in Europe.
"...but I'd argue that you won't find better English speakers for the same amount of money anywhere in Europe."
Wow, I must admit I've never heard this opinion expressed before. That was why I was surprised in my previous comment. All you hear in Ireland is that "wages are too high, we're not cost competitive" blah-blah-blah.
I've heard that you can get programmers in places like Germany, Scandinavia and parts of Eastern Europe (esp. countries like Estonia, Poland and Latvia) for relatively cheap and they nearly all speak good/great English too. Maybe that is for more contract work than for hiring on a more permanent basis though, I've never hired anyone myself.
Can I ask, what line of work are you in? You seem to have a broad perspective on this.
I do IT consulting, with a background in sysadmin, probably more customer-facing stuff than the average developer.
For this sort of relatively labour-intensive sectors, places like France, Germany and Nordic countries are way too expensive. Eastern Europe is a hit & miss, safest being Czechia, but they're also a few more hours away from the US (in terms of flight and timezone), and they're not as dirt-poor as in 1989 anymore, so prices have gone up. Southern Europe (Italy, Spain, Greece, Portugal) would be great, except their English is lousy, tax arrangements are byzantine, their salespeople will screw you at every turn, and their approach to customer-service can be borderline disgraceful (and I can say that, being one of them! lol).
I don't think Irish wages are too high -- they certainly went up in the last 20 years, as the country improved dramatically and sort-of aligned with other EU members, so the economy has to rebalance a bit, but that was to be expected. Overall, the Irish system still provides very good value for money, I'd say.
Anyone dismissing this as purely a tax-play doesn't do service to the thriving, vibrant and diversive tech community that Dublin has. Anyone based here for even a few weeks would know that.
Dublin's #1 strength over places like London and Berlin is it's geographic size, which makes meetups accessible, leaders and role models available, and creates a friendly and familiar feel, where we all fee like we are part of something bigger than the startups that are here.
Side note: To anyone here on HN visiting Dublin in the future, feel free to connect with us, you'd be very welcome -- @ me on Twitter... @EamonLeonard
I wonder why no they don't talk about it in EU Parliament? It's not like it's a big secret anymore, all the big companies are using it, same time EU bureaucrats are discussing about all kind of new taxes, raising taxes etc. Why not start by closing the loopholes?
The tax story in Ireland is incredible. The corporate tax rate is significantly lower than other nations, and often times, the government is willing to make special concessions, or give tax rebates for companies intending on making long term commitments (Amazon is best known for making these deals).
That and they probably just got a huge grant for putting their first translation in Irish...
But yes, the tax laws in Ireland are incredibly generous, if you're a corporation. I say this as a person just falling into the top tax bracket which means that while most of my wages are taxed at 21% or so (closer to 25%), any bonuses or future wage increases will be taxed at over 50% (once all the levies etc. have been counted in). And there's also the awareness that a significant percentage of that goes towards repaying bondholders in Anglo Irish bank or towards public services who refuse to restructure or update 50 year old work practices. (sorry, rant over)
There is also the fact that it's an English speaking country with a pool of relatively highly educated employees who are used to dealing with American businesses. Wages are relatively low compared to the US or England (well, London anyway) and you can have the best and brightest of Europe can relocate with no visa issues (once you can convince them to relocate to a rainy island in the North Atlantic)
Hey Eoin, couple of quick question for you if you don't mind. I know you're probably not a tax lawyer, but what's the personal capital gains situation like over there?
Also, just wondering what "morale" (for lack of a better word) is like now, given all the bailouts, budget crises, and even church scandals. All you hear about Ireland in the US media these days seems to be doom and gloom.
Is there a chance, given the public's hostile reaction to the bank bailouts and economic crisis, that Ireland could tack left and start rolling back its advantageous tax rates?
"Is there a chance, given the public's hostile reaction to the bank bailouts and economic crisis, that Ireland could tack left and start rolling back its advantageous tax rates?"
It won't be the public's hostile reaction that will raise Irish taxes, but EU pressure.
The public loves the tax rates, because of announcements like this. Creating jobs is what stimulates the economy, and the tax lost from corporate tax shenanigans are more than made up for by the creation of thousands of jobs from US multi-nationals setting up shop in Dublin.
Morale wise, again I don't know. I'm currently out in India but when I left 6 months ago there was (I think) a sense of just shrugging the shoulders and getting on with life. At this point, more scandals, bailouts & controversies would just be adding to the pile. People will complain but there won't be any kind of mass movement in protest. We voted out the political party who were in power during the boom years and I see now that they're back to the second most popular party in the country.
I know a lot of young, very talented people don't see a future for themselves in the country, don't see the point in trying to fix a very conservative system and just leaving (this would be why we have a relatively low unemployment rate compared to say, Spain).
The only way we'll roll those rates back is if the EU forces the changes. The public aren't angry with companies or multinationals. They're angry with private banks, a government which made private debt public on the insistence of the EU and with the EU which is forcing extreme hardship to repay other EU banks. Please note, I'm not saying the people or the Irish government is not culpable for the current crisis - particularly the banking regulator - but rather just trying to outline what the public see as being the problem.
I posted this comment on Reddit a while back in response to another person's question, trying to sum up the whole situation with the Irish bank bailout (a bit wordy and a bit of a rant I'm afraid, but hopefully informative).
The former Irish Minister for Finance, Brian Lenihan (now deceased), was coerced into putting together a dodgy back-room deal on the night of September 29 2008 where all senior Irish bank debt was guaranteed. So the Irish state was on the hook for all the insane property development loans that went on during the boom years. This single, disastrous meeting is the reason Ireland is fucked. The country ran budget surpluses up til that point. A misleading report from Merrill Lynch London office and some bullshit from senior Irish bank chiefs ensured that the deal was done.
You can read the full story here: http://www.vanityfair.com/business/features/2011/03/michael-... There was a separate piece of legislation enacted so that depositor's funds would be guaranteed up to the value of €100,000. The bank debt write down and the depositor's guarantee could've easily been done separately, but the Minister's hand was forced.
There was an article about it a little while ago shich i cant dig up, but relatively, your obligations were HUGE
Absolutely staggering proportions. Before this nonsense started in 2008, our Government debt-to-GDP ratio was ~80% - high but sustainable, afterwards it skyrocketed to 120% (unsustainable). The only other economies in this territory were Iceland, who reneged on their obligations, and Greece, who will restructure as sure as night follows day. Also before 2008, the country ran budget surpluses, it's not like the country was fiscally irresponsible like Greece.
Is that still the case? Have things gotten angrier at all recently, or is this just a quiet resolution and no one is protesting much?
What happened was we booted out the political party who were responsible for the mess - they were in bed with property developers (got political donations etc) and so did nothing to keep the construction sector in check, resulting in an out of control property bubble. When the recession kicked in, we elected in another coalition of 2 different political parties - the MAIN promise of theirs in the run up to the election was to "burn the bondholders". They utterly failed in this regard. Irish politicians are little bitches who want to be seen as "good little Europeans" and get a pat on the head from the big boys in Brussels (EU seat of power). There's no sense of saying "fuck it, we're not taking this shit, the Irish people deserve better". The injustice of the way this mountain of debt is being heaped on the people, forced to bail out our retarded banks and getting austerity on top of that is unbelievably galling. I heard that a trader on the west coast of America made something like $700m on betting that the Irish government would 'honour' our debt. Ridiculous.
People are extremely angry underneath the surface. In Ireland, we tend to bottle up the rage instead of the riots you see in the southern European countries. What will happen is my generation (I'm 25) will largely emigrate to the UK, Australia and Canada. Some will eventually return, more won't. That is the traditional Irish "valve" to release the pressure - emigration, not riots.
The loss of sovereignty is a massive blow to the Irish psyche. There's an old cliche in Ireland - "700 years of oppression", i.e. alluding to the fact that we were under the thumb of British royalty for centuries. The first real taste of serious wealth that Ireland had in it's free history, and it was pissed away by our own corrupt politicians, and now Berlin and Brussels gets to dictate what we do.
Having said all that, many people are too comfortable and non-activist for anything crazy to happen, like forcing the government to write off the property gambling debts, riots, or leaving the Euro-area. I do think the Irish state will be...
Thanks for your post, appreciate it. One follow up question if you don't mind? If Ireland ditched its "debts" and left the EU, in addition to the negative credit rating impact, wouldn't it significantly lessen US companies' interest in investing and hiring in Ireland? My impression was that EU membership was one of the primary drivers of this phenomenon, in addition to the tax situation and great workforce.
> If Ireland ditched its "debts" and left the EU, in addition to the negative credit rating impact, wouldn't it significantly lessen US companies' interest in investing and hiring in Ireland?
This is a complicated question. I'll try to answer it but it's very difficult as there's really no historical precedent for this kind of situation.
- Ireland ditching it's debts and leaving the EU are mutually exclusive. Ireland could technically renege on it's obligations and still remain an EU member (the EU has no formal mechanism for the exit of a member, believe it or not, so we couldn't be forced to leave. Hence some of the confusion over Greece's future EU status.) There is a 'troika' of institutions overseeing Ireland's bailout program - the ECB (european central bank), EC (european commission) and IMF - and they do not all speak with the same voice. The IMF was of the opinion that Ireland should be given more of a debt 'haircut' to make the debt more sustainable. That opinion was rejected by the Irish government strangely (I believe the government doesn't want to look bad to Germany, who are effectively paying the bills, hence "the Irish government being europe's little bitches" comment). I think action will be forced eventually, the debt is completely weighing down the economy and the situation can't continue. The Irish government actually has the power to unilaterally renege on the debt, but they're scared to do so. The phrase used by cowardly Irish government officials and Eurocrats is that "the economic bomb won't go off in Frankfurt, it will go off in Dublin" if Ireland suspends debt repayments.
- There is zero political will to actually leave the EU. There are some economists saying that Ireland's best option would be to leave the EU (http://www.independent.ie/opinion/columnists/david-mcwilliam...). The Irish business community is quite conservative and would be dead against leaving the EU. Any political party that suggested this would be committing political suicide.
- There is historical precedent for countries writing down sovereign debt and then growing quickly once feed from the shackles of debt - Argentina is one example. How much it would impact US companies' willingness to invest in Ireland if Ireland a) wrote off some/all bank debt b) left the EU or c) both, is very hard to say. On the one hand, leaving the EU would mean returning to the old Irish pound, meaning a currency devaluation is once again possible - making the country more competitive internationally, boosting exports. We wouldn't have to listen to the French Government moaning about Ireland's low tax status (France has an official corporation tax rate, then the effective rate which companies actually pay, which I believe is lower than Ireland's tax rate). A debt write down would mean no more idiotic wasting of tax revenue into the black hole of our banks. However on the other hand, for a small country to receive such a negative credit downgrade could make matters dramatically worse in the short-term, potentially leading to serious political upheaval. Transaction costs would be increased as companies have to convert Irish pounds into Euros when selling into Europe.
This is a long-winded way of saying it's complicated, no historical precent, so I'm just speculating at best.
What trouble? They just had to pay back taxes, and they even came out ahead since they didn't have to pay interest on those taxes. This lack of any meaningful punishment is why corporate shenanigans are so common.
It's as if a bunch of Americans wrote a bunch of ill-informed translations in an attempt to make this about translations, and not about tax avoidance. :)
That's a smaller target audience than for any of the other languages they've provided translations for so far, so it makes sense that they haven't done it until now.
When they say natively, I think they mean as a primary language. My impression is that there's only a small percentage of people on the West Coast who speak it daily, but Gaelic used to (and may still be) required in a lot of schools as sort of a token secondary language (kind of like Latin in US Catholic schools, or Hebrew schools for Jews), and a fair amount of official government business was/is done in Gaelic.
EDIT: "secure" talks about this further down the page. He says it's still taught in sort of a token way in the schools, but that he didn't run into any Gaelic in his dealings with the government.
Irish person here, I can't speak much Irish and I cannot think of a situation that would ever require me to, since leaving school (though since I live in San Francisco now, its even more unlikely).
We're required to learn Irish throughout school (all the way til we finish secondary school), and even need to pass Irish exams to get into university.
Government business can be done in Irish, but its very rare. When you see it at the top-level, like in parliament, its almost always done for effect.
Why is there a lack of interest in linguistic revival? Asserting independence from the UK has been a big theme in Ireland for a long time. Wouldn't re-embracing the Irish language be one prominent way of doing that?
There is an interest, which is why we are forced to learn it in school. Ironically, this forces a very large amount of the country to start to hate Irish (why are we learning this, this isn't useful, etc). IMO, making Irish optional would be a good step to making people actually want to learn it.
I think learning it as a foreign language makes it difficult to truly internalize it. I recall reading that in some countries, they teach STEM classes all in English, but liberal arts/social science classes in their native language. You get to use both on a daily basis in both the spoken and written form, rather than only in one class.
Funnily enough, its not taught as a foreign language. That would be much better, because most Irish people only care about being able to speak it. Its currently taught like Latin is - a lot of rote learning of tenses and conjugations, then literature and poetry study.
My grandaunt is a famous Irish poet - her work is part of the curriculum. When she tutored me she focussed on reading from newspapers and speaking out loud, because going straight to literature makes no sense.
Oh wow, that's even worse. Why would anybody be interested in that, especially children?
I learned Japanese as a foreign language in college, and very little time in class was spent on grammar, and not much time was spent on reading/writing. We spent the vast majority of our time on the spoken language, which we learned in the context of simulated real-world conversations. The result was that while we were weak in the written language, our pronunciation and grammar was top-notch.
We had no trouble subsequently teaching ourselves the written language (though children might not have the initiative to do that). But if we had not properly learned the spoken language in class and the grammar outside of class at the same time, we might not have had the foundation necessary to progress with the written language. It's much more difficult to teach yourself the spoken language than reading/writing/grammar.
Ah, the numbers in my head we 90k Chinese speakers and 60k Irish speakers, but I couldn't figure it out from the reports on the census. Do you have a reference I can look at?
In actual census (2011) numbers, it's 15,000 Chinese speakers (presumably as a grouping) and 1.7 million Irish speakers, 110,000 of whom speak it on a weekly basis outside of education.
The number of Polish speakers just about beats Irish with almost 120,000.
AFAIK (did an internship in Dublin), irish children still learn Gaelic in school, but not in a way that’d make them able to talk to each other in it, much like Germans in some schools chose to learn latin. You can use the language to decipher old pieces of history, but not to talk about how your day was.
I’ve never heard about dealings with the government that could only be done in Gaelic. Everything I did was in English.
Gaelic is compulsory for both primary and secondary school which means that almost everyone will study it between the ages of 5 and 16 (minimum school leaving age). It says something about our approach that all but a very small minority of school leavers are effectively unable to hold a conversation in the language.
It's been compulsory since the formation of the Irish state during that time the percentage of actual spoken Irish (as well as general Irish comprehension) has continually dropped. Given that the actual aim of this was to promote the language I think it's safe to say it's been an unmitigated disaster.
My personal take on this (I went to an all Irish primary school so I was fluent) is that there's two factors here:
1 - The way it's taught is absolutely terrible. There's a focus on the grammar and structure of the language rather than actually speaking it. This means that students associate it with memorizing genitive and dative cases which is pretty boring. This means the student don't like it. Some of those students grow up to be the teachers, and they've got a negative attitude to the language. Wash, rinse repeat for 90 years and you get to where we are now.
2 - There's no economic incentive to learn the language. Unless you're living in a gaeltacht (nearly all in very rural areas) you're almost never actually going to be able to use it. It's not present in any other country and apart from having conversations which foreigners can't understand, isn't useful. There are reasons to learn it but they're cultural or academic rather than practical.
There are signs of regrowth with more and more all Irish schools popping up but my impression is that it's become a middle class status symbol to be able to speak the language so we'll see what happens there. There's also been discussion about reforming the syllabus to split it into conversational Irish (compulsory) and 'academic' Irish (optional)
As for dealing with the government, you're permitted (not obligated) to conduct all of your business with officials through Irish and demand that they do the same with you. We have two versions of our constitution, one in Irish and one in English. In the case of any discrepancies, the Irish one takes precedence.
I heard somewhere that if you give your name in Irish to a Garda (Irish police) and the case goes to court (say you are pulled over for speeding or something), the court case must be conducted through Irish (the Irish state has two official languages - English and Gaeilge/Irish).
This could be a hilariously clever way to run down the statute of limitations as barely anyone in the country speaks Irish, and that includes judges and barristers. I think the Gardai have to pass a certain minimum level of Irish to get into the Garda training college. This could be just an urban myth though, so take it with a pinch of salt.
Wow, Gaelic has to be one of the most unintuitive languages in the world to pronounce.
I've read that word probably a hundred times in various news articles, and always pronounced it in my head as Tao-Seech, which I'm assuming is ridiculous to Irish ears.
I'm a bit interested in Irish culture so I've informally learned some pronunciations here and there to see if I could start to get a handle on Gaelic words: the only pattern seems to be that I'm always wrong :)
The H on the end confuses people because it's usually not really a H, it's a modernisation of the séimhiú.
I can't find any decent articles on it, but basically it used to be represented by a dot over the letter it was affecting. Unfortunately I'm not good on the recent history of the language, but the change was made some time in the last 40 years (between my parents attending school and me attending school).
The reason we have so many vowels is to match broad vowels (A, O, and U) and slender vowels (I and E) across consonants. I'm fairly sure this was a change introduced in recent history too.
So basically, dropbox makes a public announcement to tell the world (and the shareholders) they're now engaging in tax evasion in Europe to make better profit.
I'm guessing he's actually referring to tax avoidance. Not sure how long it will last though as the UK is going be clamping down on this http://www.bbc.co.uk/news/business-20559791
technically it's not illegal, but completely immoral. Imagine if I channelled all my PAYE taxes through an offshore company, who would pay for our health system, infrastructure etc.
I'm not suggesting that is why Dropbox are moving to Ireland. I'm saying that if that was the reason as brought up by the OP then they should be aware of current events in the UK where companies like Amazon are making billions of pounds in the UK and paying virtually no tax - even though they use our roads and infrastructure to conduct their business.
They're not expanding to Ireland. That's the point. Now they route all transactions from non-US customers through the Irish subsidiary and keep their money over there. They pay up 15% or whatever the tax rate is instead of the 35% over here. They keep the profits there waiting for a tax holiday, then move the money back when that happens. They can probably even claim the 15% as a foreign tax credit during the tax holiday.
Pretty simple. :)
While not illegal, it's a little bit dodgy. But it's what everyone does these days, so why not?
"better profit" but only in the eyes of accountants, for a while.
The money you've paid less tax on is still offshore. If you want to bring it back to your country then you have to pay tax on it (minus what you've paid already overseas) so it's not just a simple scheme to minimise tax. If you need the money to maintain cash flow then you've got no real choice but to pay full whack on it to get it back into the US.
What many US companies are doing is hoarding huge piles of it overseas in the hope that the US will have another tax amnesty (like 2004) and they can bring it back in to the US without paying as much tax as they would have had they just paid it in the US in the first place.
Here's a simplified example based roughly on real figures.
Take a US company that makes a $1bn profit in a year. They would have to pay 35% tax on that if they kept it in the US.
Using a Double Irish Agreement and paying a $1bn fee to those foreign entities in Ireland/Cayman Islands they make $0 profit in the US and pay $0 corporation tax. In Ireland they pay 12.5% tax on that money, so Ireland get $125m.
Meanwhile the cash sits overseas and the US company can't use it. If they wanted to bring it back to the UK they'd need to pay a $225m tax bill (35% tax on $1bn minus what is paid overseas); it's unsurprisingly more complicated than that but we'll leave it simple. It's also earning interest overseas but we'll ignore that for this example.
What they can do is bung this $225m on the balance sheet as a future tax liability, since if the worst happens and they run in to cash flow problems they'd have to bring all of the original money back into the US and pay remaining tax on it. Ironically, this means they can offset even more profits against this liability.
Anyway, they wait until the US has a tax amnesty for bringing back money from overseas (last one in 2004) and then pay a fraction of the tax they would have originally. The current campaign is for an amnesty rate of just 5.25%
tax evasion is illegal. Tax avoidance on the scale of Amazon, Google, Starbucks and Facebook is imoral.
It's pretty obvious that these companies have been strategically set up in Ireland as a way of paying less tax.
You think it's acceptable that Amazon sold billions of pounds of items in the UK and pay virtually no tax, but still use our roads to facilitate those sales. They basically use our infrastructure for free.
Would Amazon let me use a few EC2 instances for nothing, by increasing the hosting cost of everyone one else by a few cents, to host my multi-million dollar website?
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[ 0.14 ms ] story [ 182 ms ] threadhttp://www.nytimes.com/interactive/2012/04/28/business/Doubl...
Microsoft, Facebook, IBM and the likes, they all basically serve the EU market from Dublin, and it's been like that for 20 years -- the "Celtic Tiger" phenomenon was based on this sort of activity: combining EU membership, low taxes, low salaries and cultural affinities to lure multinationals' HQs. Other EU members tolerated this because, when it started, Ireland was dirt poor. When the bubble burst, there was a lot of schadenfreude sweeping the continent...
Of course it's not India, it's still an European country with a noticeable welfare state, but I'd argue that you won't find better English speakers for the same amount of money anywhere in Europe.
Wow, I must admit I've never heard this opinion expressed before. That was why I was surprised in my previous comment. All you hear in Ireland is that "wages are too high, we're not cost competitive" blah-blah-blah.
I've heard that you can get programmers in places like Germany, Scandinavia and parts of Eastern Europe (esp. countries like Estonia, Poland and Latvia) for relatively cheap and they nearly all speak good/great English too. Maybe that is for more contract work than for hiring on a more permanent basis though, I've never hired anyone myself.
Can I ask, what line of work are you in? You seem to have a broad perspective on this.
For this sort of relatively labour-intensive sectors, places like France, Germany and Nordic countries are way too expensive. Eastern Europe is a hit & miss, safest being Czechia, but they're also a few more hours away from the US (in terms of flight and timezone), and they're not as dirt-poor as in 1989 anymore, so prices have gone up. Southern Europe (Italy, Spain, Greece, Portugal) would be great, except their English is lousy, tax arrangements are byzantine, their salespeople will screw you at every turn, and their approach to customer-service can be borderline disgraceful (and I can say that, being one of them! lol).
I don't think Irish wages are too high -- they certainly went up in the last 20 years, as the country improved dramatically and sort-of aligned with other EU members, so the economy has to rebalance a bit, but that was to be expected. Overall, the Irish system still provides very good value for money, I'd say.
Maybe I should stay in Ireland to do my startup rather than trying to get the visa in the US!
Dublin's #1 strength over places like London and Berlin is it's geographic size, which makes meetups accessible, leaders and role models available, and creates a friendly and familiar feel, where we all fee like we are part of something bigger than the startups that are here.
Side note: To anyone here on HN visiting Dublin in the future, feel free to connect with us, you'd be very welcome -- @ me on Twitter... @EamonLeonard
But yes, the tax laws in Ireland are incredibly generous, if you're a corporation. I say this as a person just falling into the top tax bracket which means that while most of my wages are taxed at 21% or so (closer to 25%), any bonuses or future wage increases will be taxed at over 50% (once all the levies etc. have been counted in). And there's also the awareness that a significant percentage of that goes towards repaying bondholders in Anglo Irish bank or towards public services who refuse to restructure or update 50 year old work practices. (sorry, rant over)
There is also the fact that it's an English speaking country with a pool of relatively highly educated employees who are used to dealing with American businesses. Wages are relatively low compared to the US or England (well, London anyway) and you can have the best and brightest of Europe can relocate with no visa issues (once you can convince them to relocate to a rainy island in the North Atlantic)
Also, just wondering what "morale" (for lack of a better word) is like now, given all the bailouts, budget crises, and even church scandals. All you hear about Ireland in the US media these days seems to be doom and gloom.
Is there a chance, given the public's hostile reaction to the bank bailouts and economic crisis, that Ireland could tack left and start rolling back its advantageous tax rates?
Thanks in advance.
It won't be the public's hostile reaction that will raise Irish taxes, but EU pressure.
Morale wise, again I don't know. I'm currently out in India but when I left 6 months ago there was (I think) a sense of just shrugging the shoulders and getting on with life. At this point, more scandals, bailouts & controversies would just be adding to the pile. People will complain but there won't be any kind of mass movement in protest. We voted out the political party who were in power during the boom years and I see now that they're back to the second most popular party in the country.
I know a lot of young, very talented people don't see a future for themselves in the country, don't see the point in trying to fix a very conservative system and just leaving (this would be why we have a relatively low unemployment rate compared to say, Spain).
The only way we'll roll those rates back is if the EU forces the changes. The public aren't angry with companies or multinationals. They're angry with private banks, a government which made private debt public on the insistence of the EU and with the EU which is forcing extreme hardship to repay other EU banks. Please note, I'm not saying the people or the Irish government is not culpable for the current crisis - particularly the banking regulator - but rather just trying to outline what the public see as being the problem.
The former Irish Minister for Finance, Brian Lenihan (now deceased), was coerced into putting together a dodgy back-room deal on the night of September 29 2008 where all senior Irish bank debt was guaranteed. So the Irish state was on the hook for all the insane property development loans that went on during the boom years. This single, disastrous meeting is the reason Ireland is fucked. The country ran budget surpluses up til that point. A misleading report from Merrill Lynch London office and some bullshit from senior Irish bank chiefs ensured that the deal was done.
You can read the full story here: http://www.vanityfair.com/business/features/2011/03/michael-... There was a separate piece of legislation enacted so that depositor's funds would be guaranteed up to the value of €100,000. The bank debt write down and the depositor's guarantee could've easily been done separately, but the Minister's hand was forced.
There was an article about it a little while ago shich i cant dig up, but relatively, your obligations were HUGE
Absolutely staggering proportions. Before this nonsense started in 2008, our Government debt-to-GDP ratio was ~80% - high but sustainable, afterwards it skyrocketed to 120% (unsustainable). The only other economies in this territory were Iceland, who reneged on their obligations, and Greece, who will restructure as sure as night follows day. Also before 2008, the country ran budget surpluses, it's not like the country was fiscally irresponsible like Greece.
Is that still the case? Have things gotten angrier at all recently, or is this just a quiet resolution and no one is protesting much?
What happened was we booted out the political party who were responsible for the mess - they were in bed with property developers (got political donations etc) and so did nothing to keep the construction sector in check, resulting in an out of control property bubble. When the recession kicked in, we elected in another coalition of 2 different political parties - the MAIN promise of theirs in the run up to the election was to "burn the bondholders". They utterly failed in this regard. Irish politicians are little bitches who want to be seen as "good little Europeans" and get a pat on the head from the big boys in Brussels (EU seat of power). There's no sense of saying "fuck it, we're not taking this shit, the Irish people deserve better". The injustice of the way this mountain of debt is being heaped on the people, forced to bail out our retarded banks and getting austerity on top of that is unbelievably galling. I heard that a trader on the west coast of America made something like $700m on betting that the Irish government would 'honour' our debt. Ridiculous. People are extremely angry underneath the surface. In Ireland, we tend to bottle up the rage instead of the riots you see in the southern European countries. What will happen is my generation (I'm 25) will largely emigrate to the UK, Australia and Canada. Some will eventually return, more won't. That is the traditional Irish "valve" to release the pressure - emigration, not riots.
The loss of sovereignty is a massive blow to the Irish psyche. There's an old cliche in Ireland - "700 years of oppression", i.e. alluding to the fact that we were under the thumb of British royalty for centuries. The first real taste of serious wealth that Ireland had in it's free history, and it was pissed away by our own corrupt politicians, and now Berlin and Brussels gets to dictate what we do.
Having said all that, many people are too comfortable and non-activist for anything crazy to happen, like forcing the government to write off the property gambling debts, riots, or leaving the Euro-area. I do think the Irish state will be...
This is a complicated question. I'll try to answer it but it's very difficult as there's really no historical precedent for this kind of situation.
- Ireland ditching it's debts and leaving the EU are mutually exclusive. Ireland could technically renege on it's obligations and still remain an EU member (the EU has no formal mechanism for the exit of a member, believe it or not, so we couldn't be forced to leave. Hence some of the confusion over Greece's future EU status.) There is a 'troika' of institutions overseeing Ireland's bailout program - the ECB (european central bank), EC (european commission) and IMF - and they do not all speak with the same voice. The IMF was of the opinion that Ireland should be given more of a debt 'haircut' to make the debt more sustainable. That opinion was rejected by the Irish government strangely (I believe the government doesn't want to look bad to Germany, who are effectively paying the bills, hence "the Irish government being europe's little bitches" comment). I think action will be forced eventually, the debt is completely weighing down the economy and the situation can't continue. The Irish government actually has the power to unilaterally renege on the debt, but they're scared to do so. The phrase used by cowardly Irish government officials and Eurocrats is that "the economic bomb won't go off in Frankfurt, it will go off in Dublin" if Ireland suspends debt repayments.
- There is zero political will to actually leave the EU. There are some economists saying that Ireland's best option would be to leave the EU (http://www.independent.ie/opinion/columnists/david-mcwilliam...). The Irish business community is quite conservative and would be dead against leaving the EU. Any political party that suggested this would be committing political suicide.
- There is historical precedent for countries writing down sovereign debt and then growing quickly once feed from the shackles of debt - Argentina is one example. How much it would impact US companies' willingness to invest in Ireland if Ireland a) wrote off some/all bank debt b) left the EU or c) both, is very hard to say. On the one hand, leaving the EU would mean returning to the old Irish pound, meaning a currency devaluation is once again possible - making the country more competitive internationally, boosting exports. We wouldn't have to listen to the French Government moaning about Ireland's low tax status (France has an official corporation tax rate, then the effective rate which companies actually pay, which I believe is lower than Ireland's tax rate). A debt write down would mean no more idiotic wasting of tax revenue into the black hole of our banks. However on the other hand, for a small country to receive such a negative credit downgrade could make matters dramatically worse in the short-term, potentially leading to serious political upheaval. Transaction costs would be increased as companies have to convert Irish pounds into Euros when selling into Europe.
This is a long-winded way of saying it's complicated, no historical precent, so I'm just speculating at best.
The 12.5% in Ireland is a tax on profits, a corporation would typically pay other taxes (VAT - PRSI) etc
http://m.smh.com.au/business/tax-office-takes-285m-bite-out-...
(Besides the corporate tax and probably very welcoming environment for outside investors)
Somehow 25 countries got lost while that sentence was translated into German.
EDIT: "secure" talks about this further down the page. He says it's still taught in sort of a token way in the schools, but that he didn't run into any Gaelic in his dealings with the government.
We're required to learn Irish throughout school (all the way til we finish secondary school), and even need to pass Irish exams to get into university.
Government business can be done in Irish, but its very rare. When you see it at the top-level, like in parliament, its almost always done for effect.
My grandaunt is a famous Irish poet - her work is part of the curriculum. When she tutored me she focussed on reading from newspapers and speaking out loud, because going straight to literature makes no sense.
I learned Japanese as a foreign language in college, and very little time in class was spent on grammar, and not much time was spent on reading/writing. We spent the vast majority of our time on the spoken language, which we learned in the context of simulated real-world conversations. The result was that while we were weak in the written language, our pronunciation and grammar was top-notch.
We had no trouble subsequently teaching ourselves the written language (though children might not have the initiative to do that). But if we had not properly learned the spoken language in class and the grammar outside of class at the same time, we might not have had the foundation necessary to progress with the written language. It's much more difficult to teach yourself the spoken language than reading/writing/grammar.
The number of Polish speakers just about beats Irish with almost 120,000.
- Actually, I just sat on my keyboard cuz I wanted to fit in :)
Just curious - is Gaelic still required in schools and in some dealings w/ government?
I’ve never heard about dealings with the government that could only be done in Gaelic. Everything I did was in English.
It's been compulsory since the formation of the Irish state during that time the percentage of actual spoken Irish (as well as general Irish comprehension) has continually dropped. Given that the actual aim of this was to promote the language I think it's safe to say it's been an unmitigated disaster.
My personal take on this (I went to an all Irish primary school so I was fluent) is that there's two factors here:
1 - The way it's taught is absolutely terrible. There's a focus on the grammar and structure of the language rather than actually speaking it. This means that students associate it with memorizing genitive and dative cases which is pretty boring. This means the student don't like it. Some of those students grow up to be the teachers, and they've got a negative attitude to the language. Wash, rinse repeat for 90 years and you get to where we are now.
2 - There's no economic incentive to learn the language. Unless you're living in a gaeltacht (nearly all in very rural areas) you're almost never actually going to be able to use it. It's not present in any other country and apart from having conversations which foreigners can't understand, isn't useful. There are reasons to learn it but they're cultural or academic rather than practical.
There are signs of regrowth with more and more all Irish schools popping up but my impression is that it's become a middle class status symbol to be able to speak the language so we'll see what happens there. There's also been discussion about reforming the syllabus to split it into conversational Irish (compulsory) and 'academic' Irish (optional)
As for dealing with the government, you're permitted (not obligated) to conduct all of your business with officials through Irish and demand that they do the same with you. We have two versions of our constitution, one in Irish and one in English. In the case of any discrepancies, the Irish one takes precedence.
This could be a hilariously clever way to run down the statute of limitations as barely anyone in the country speaks Irish, and that includes judges and barristers. I think the Gardai have to pass a certain minimum level of Irish to get into the Garda training college. This could be just an urban myth though, so take it with a pinch of salt.
Case in point, the Taoiseach (prime minister) is pronounced something like "Teshar" (with a kind of 'gutural' r at the end)
Try tee-shock and you will be pretty close to the standard.
I've read that word probably a hundred times in various news articles, and always pronounced it in my head as Tao-Seech, which I'm assuming is ridiculous to Irish ears.
I'm a bit interested in Irish culture so I've informally learned some pronunciations here and there to see if I could start to get a handle on Gaelic words: the only pattern seems to be that I'm always wrong :)
You could try http://www.forvo.com/languages/ga/
I can't find any decent articles on it, but basically it used to be represented by a dot over the letter it was affecting. Unfortunately I'm not good on the recent history of the language, but the change was made some time in the last 40 years (between my parents attending school and me attending school).
The reason we have so many vowels is to match broad vowels (A, O, and U) and slender vowels (I and E) across consonants. I'm fairly sure this was a change introduced in recent history too.
"Mar yea" would be a dismissive description meaning something like "..as if" or ".. not!"
Hopefully they'll have a better story for the european authorities later on, not like starbucks, amazon or google: http://www.taxresearch.org.uk/Blog/2012/11/13/starbucks-goog...
> (and the shareholders)
Well of course they are telling their shareholders: they must be rejoicing with the news!
Makes you wonder why we don't lower our corporate tax rate in the U.S. Hell, both presidential candidates this election cycle agreed on that.
I'm not suggesting that is why Dropbox are moving to Ireland. I'm saying that if that was the reason as brought up by the OP then they should be aware of current events in the UK where companies like Amazon are making billions of pounds in the UK and paying virtually no tax - even though they use our roads and infrastructure to conduct their business.
Pretty simple. :)
While not illegal, it's a little bit dodgy. But it's what everyone does these days, so why not?
The money you've paid less tax on is still offshore. If you want to bring it back to your country then you have to pay tax on it (minus what you've paid already overseas) so it's not just a simple scheme to minimise tax. If you need the money to maintain cash flow then you've got no real choice but to pay full whack on it to get it back into the US.
What many US companies are doing is hoarding huge piles of it overseas in the hope that the US will have another tax amnesty (like 2004) and they can bring it back in to the US without paying as much tax as they would have had they just paid it in the US in the first place.
Here's a simplified example based roughly on real figures.
Take a US company that makes a $1bn profit in a year. They would have to pay 35% tax on that if they kept it in the US.
Using a Double Irish Agreement and paying a $1bn fee to those foreign entities in Ireland/Cayman Islands they make $0 profit in the US and pay $0 corporation tax. In Ireland they pay 12.5% tax on that money, so Ireland get $125m.
Meanwhile the cash sits overseas and the US company can't use it. If they wanted to bring it back to the UK they'd need to pay a $225m tax bill (35% tax on $1bn minus what is paid overseas); it's unsurprisingly more complicated than that but we'll leave it simple. It's also earning interest overseas but we'll ignore that for this example.
What they can do is bung this $225m on the balance sheet as a future tax liability, since if the worst happens and they run in to cash flow problems they'd have to bring all of the original money back into the US and pay remaining tax on it. Ironically, this means they can offset even more profits against this liability.
Anyway, they wait until the US has a tax amnesty for bringing back money from overseas (last one in 2004) and then pay a fraction of the tax they would have originally. The current campaign is for an amnesty rate of just 5.25%
How much is this used, and on what scale?
If you believe the numbers in this article: http://news.yahoo.com/apples-phantom-taxes-hide-billions-pro... then Apple has $74bn in cash accounts overseas.
It's pretty obvious that these companies have been strategically set up in Ireland as a way of paying less tax.
You think it's acceptable that Amazon sold billions of pounds of items in the UK and pay virtually no tax, but still use our roads to facilitate those sales. They basically use our infrastructure for free.
Would Amazon let me use a few EC2 instances for nothing, by increasing the hosting cost of everyone one else by a few cents, to host my multi-million dollar website?