Almost 1 trillion worth of intellectual property moved to Ireland over last decade

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joe sod

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An article in the Sunday business post have investigated how much intellectual property mainly from US multinationals has been moved to Ireland over the last decade. They estimate it was worth 947 billion euros. This has hugely inflated the taxation that the Irish government receives and they question the vulnerability of this taxation as a result of trump policies. His main financial guy Howard lutnick has explicitly referred to this as a magical way that Ireland receives all this taxation revenue based on the global operations of these multinationals without any work actually being done in Ireland.

This is a separate issue from the multinationals that do make things in Ireland.
While short term this was great for Irish government, in the long term it has put huge focus on Ireland as a tax haven and has put us very much in the cross hairs of both the US and EU. It has also made the Irish state sector too big and wasteful and they have used this money to buy into the small Irish domestic sector especially in housing thereby pushing up the prices for everyone else. So they have contributed to alot of the inflation in Irish economy.
The size of Irish state sector was only 70 billion in 2017, now it is 120 billion
 
Dr Strangelove said:
Apple employs 6,000 people in Cork.
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INTEL employs 4,900 people in Leixlip, Co Kildare and other locations in Ireland.

BD (formerly Becton Dickenson & Company) employs 1,200 people in Ireland, including staff at R&D hubs in Limerick and Enniscorthy, Co Wexford. They are currently advertising for R&D and other engineering positions.

Pfizer employs 3,900 people in Ireland

Microsoft employs 3,500 in Ireland (including Belfast) and plan to add another 550 jobs

Taking into account job losses up to late 2024, I suspect there are few if any thumb twiddlers left.
 
mathepac said:
Taking into account job losses up to late 2024, I suspect there are few if any thumb twiddlers left.
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Seamus Coffey (UCC and chair of the Fiscal Advisory Council) has estimated in the past that one third of income tax comes from people engaged in US MNCs in Ireland.

There are also non-exporting foreign MNCs like Tesco, Lidl, etc that employ further tens of thousands.
 
mathepac said:
Taking into account job losses up to late 2024, I suspect there are few if any thumb twiddlers left
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It's not about "thumb twiddlers" in Ireland, that wasn't the point, it is the fact that work done in China and elsewhere is booked in Ireland as revenue because the IP now "resides" here and the government benefits from the taxation.
Completely separate issue from products and services actually produced in Ireland, the two should not be conflated,
 
joe sod said:
Completely separate issue from products and services actually produced in Ireland, the two should not be conflated,
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I've tried to highlight organisations with R&D investments in Ireland - those that produce IP here rather than those that just ship boxes, or mix chemicals to recipes develop elsewhere.

Pfizer for example design and manufacture medical devices in Limerick as do a number of smaller but not insignificant firms in Galway, etc
 
joe sod said:
Completely separate issue from products and services actually produced in Ireland,
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Pray tell how is IP which is located in Ireland generating profits and taxes without associated production of goods or services in Ireland?
 
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Is more of the IP created outside of Ireland than is created here, yes. Where is it created though? Given the global nature of such companies the IP can never be in a location where all of it has been generated. As others have mentioned, these companies have a substantial presence in Ireland, which means there is legitimate justification for basing the IP here. Crucially, there's also a hurdle in it going elsewhere, as it would be subject to CGT.
 
Dr Strangelove said:
Pray tell how is IP which is located in Ireland generating profits and taxes without associated production of goods or services in Ireland?
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As I understand it, the IP is purchased by an Irish registered subsidiary from a related company elsewhere. If the IP relates to goods, the Irish company commissions a facility in a low cost company to manufacture products in conformity to the IP. The sale of these products is conducted via the Irish company (but not the actual products) and the profits booked in Ireland. The price paid to purchase the IP from its related company can be written off against tax on profits from the sale of these goods. No manufacturing need take place in Ireland.

Again as I understand it, a similar system can be used to enable the international profits from social media advertising to be booked by a company registered in Ireland - even though that company may have very few staff or direct engagements with those purchasing the ads. "Related companies" in other countries are the conduits for the direct engagement.

This is all distinct from the real world activities conducted in Ireland by companies closely related to the IP holding companies. So there may well be several different Apple (say) companies in Ireland.

I think the Irish argument is that this is not of their direct doing but is the result of US tax legislation that enables off-shoring of intellectual property (US companies usually being the ultimate holders or developers of this IP).
 
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nest egg said:
Where is it created though?
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R&D in many MNCs is carried out in large teams spread across the world. Just look at a random scientific or medical paper and you’ll see multiple authors on three continents.

When it comes to production companies spread it out globally for all sorts of business and regulatory reasons. The latest tariff drama proves the logic of this.
 
mathepac said:
Your allegation is that some or all of the firms who claim that R&D activities take place here do so only to fiddle taxes and /or grants? That being the case I hope you have evidence to back up the allegations.
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Am i going to court ? But maybe we are the greatest and most inventive country on the planet , seems a lot think we are.
 
Dr Strangelove said:
And why are they paying royalties if there’s no associated production?
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There is production, but it's in China.

A company in China makes (say) phones. But this involves using processes and designs that are patented, installing software that is copyrighted, etc. The Chinese company doesn't own the patents or copyrights ("intellectual property") , so it needs licences from the owners allowing it to make use of the processes, designs, software, etc in its phone manufacturing operations. A condition of the licences will be that they make payments to the owners of the intellectual property. These payments are royalties.

The owners of the intellectual property who get the royalties are other companies in the same multinational group, based in Ireland.

Although the Irish companies own the intellectual property, this is not because they did the research, design, coding etc that gave rise to it. It was mostly done by yet other companies in the same group, mostly in other countries, and then those companies transferred or sold their intellectual property to the Irish companies.

The point of all this is to locate much of the profit from selling the phones in Ireland, where it will be relatively lightly taxed.

That's not to say that the Irish companies do nothing themselves. They may do quite a lot, and they may employ a significant number of Irish people who are doing real, and valuable, work. But a large chunk of the companies' profits is not generated by the work done by their Irish workforce, but by the enormously valuable IP that they own, and that they licence to other companies.
 
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