Tech Companies Love Dublin’s Tax Rates

U.S. firms help boost an Irish economy with few bright spots | Many jobs go to foreigners, but “these people are spending here”

Finbarr Flynn and Cormac Mullen

Dublin’s Grand Canal Square, just south of the River Liffey, is known as Google-town. In 2011, Google, which employs more than 2,500 people in Ireland, bought the neighborhood’s 15-story Montevetro building. Nearby is Facebook’s European headquarters, along with outposts for LinkedIn, Yahoo!, and other U.S. technology companies, some of them Dublin fixtures for over a decade. They’ve been drawn to expand there by the strapped government’s flat 12.5 percent corporate tax rate.

By comparison, corporate tax rates top out at 35 percent in the U.S., 33 percent in France, and 24 percent in the U.K. “The Irish government has obviously come up with a very, very, shall we say, positive tax scheme,” says Petter Made, co-founder of SumUp, a mobile-payments company founded in Berlin that’s now headquartered in Dublin and employs about 35 people there.

Last year, Apple, PayPal, Cisco Systems, Dropbox, and other foreign companies backed by the nation’s development agency, IDA Ireland, announced 12,722 new positions, while job losses at IDA-supported businesses fell to a decade low of 6,125. The agency offers grants and helps companies find real estate and meet regulators. Just two years after a €67.5 billion ($87.5 billion) bailout, tech helped drive goods and services exports to €170.6 billion in 2012, 9.1 percent higher than the 2007 level of €156.3 billion. The European Commission estimates Ireland’s 2013 growth rate will be 1.1 percent, the euro zone’s third-best. Ireland is setting the standard for bailed-out countries, International Monetary Fund Managing Director Christine Lagarde told reporters in Dublin on March 8, adding that it’s seeing the “first fruits of success.”

Ireland suffered a housing crash in 2007, and its unemployment rate still hovers at 14.1 percent, the euro zone’s fourth-highest. Outside Dublin, recovery has been less visible: The country has lost 170,000 jobs, about 8 percent of its 2007 workforce, in construction alone. Export gains haven’t helped Irish workers reverse the slide in their average weekly earnings, which fell to €695 in 2012’s fourth quarter from €720 in 2008, according to the country’s statistics office. Retail sales, commercial and residential construction, and home prices — now half their 2007 peak — continue to decline, while the government plans another two years of austerity.

Many of the new tech jobs are being filled by workers arriving from abroad. About 40 percent of the 1,000 employees PayPal plans to add in Ireland will likely be people from outside the country with specific language skills, says Louise Phelan, vice president of global operations. Still, she says, “These people are spending here. The knock-on ripple effect of them from housing, property, coffee, and lunch is massive for the greater area.”

PayPal’s recruits last year included enterprise account manager Thomas Maag, a German who’d worked for Google’s DoubleClick in Dublin before moving home in 2007. Housing is much more affordable these days, says Maag, 39, who’s looking to buy a home with his wife and three children: “Dublin is back within our reach.”

The bottom line Although most Irish workers are still struggling, low corporate taxes have helped bring thousands of tech jobs to Dublin.


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