Are tech companies flocking to Ireland in search of leprechauns dancing around pots of gold? No, but the latest Bloomberg Businessweek highlights the real reason for the island nation’s success in attracting highly mobile capital.
Dublin’s Grand Canal Square, just south of the River Liffey, is known as Googletown. In 2011, Google (GOOG), which employs more than 2,500 people in Ireland, bought the neighborhood’s 15-story Montevetro building. Nearby is Facebook’s (FB) European headquarters, along with outposts for LinkedIn (LNKD), Yahoo! (YHOO), 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 (AAPL), PayPal (EBAY), Cisco Systems (CSCO), 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.
Yes, corporate tax rates make a difference to free-flowing capital.
