Ireland is often considered a tax haven due to its business-friendly fiscal policies. The country offers a very low corporate tax rate of 12.5%, one of the most competitive in Europe. This rate attracts numerous multinational companies, particularly in the technology and pharmaceutical sectors, incen&vizing them to relocate from their countries of origin. Groups like Google, Apple, Meta, Microsoft, Pfizer and Johnson & Johnson have one thing in common: their regional headquarters are in Ireland.
While with today’s international rules on taxation and transparency, aggressive tax planning has become less common, these large multinationals took advantage of certain favorable tax treatments that they could enjoy in the past.
As an example, the Irish tax system has enabled companies to employ various tax planning strategies in the past, to reduce their global tax liabilities, including the controversial “Double Irish” scheme. This method, used in the past by some large corporations, involved utilizing a combination of Irish and Dutch subsidiaries to shift profits to low or no-tax jurisdictions. This technique has allowed some multinational groups to significantly lower their overall corporate tax rates. The use of this technique contributed to making Ireland an appealing hub for international businesses aiming to minimize taxes and maximize profits.
Discussions about the allocation of the surplus money, generated by foreign companies established in Ireland, has sparked within the country, becoming fascinating. Ireland has made plans to establish a sovereign fund. Estimates indicate that by 2035, Ireland could have a fund of €140 billion, more than half of the current public debt, with an annual investment projected at around €12 billion. If managed correctly, this fund could not only yield returns, but also foster domestic investments otherwise overlooked by the market, perhaps due to excessively long-term returns.
Often “tax haven” tax systems generate a phenomenon of social dumping, to the detriment of other EU countries. Some argue that the Irish state is efficient and can therefore afford to adopt such low taxation. Conversely, others suggest that the country has deliberately structured its tax system to attract multinational corporations, allowing them to avoid paying taxes. To avoid double taxation, international tax principles dictate that multinational corporations only pay taxes in one country, sometimes corresponding to where their holding companies are based. In those cases, it is sufficient
to choose a country with low taxation to secure benefits for both the company and the host country: with Ireland often being the preferred choice in this case.
The Irish economy remains very welcoming to all businesses and particularly to those investing in research, development and innovation; in fact, Ireland is also very attractive for high R&D- intensive start-ups, which can apply for tax refunds.