Ireland and the New Economy

When I lived in London I could already tell, but it wasn’t until living in Dublin that I really noticed I’m paying more taxes. I’m paying as well the demanding ones from other countries where I have commercial, personal, or corporate activity, but in Ireland all kinds of personal taxes are higher. Apart from the tax code, what matters is how the country and its rulers decide to stimulate the economy or change the economic growth model. Ireland did both a few years ago and now they are seeing the results.
Just dealing with the tax issue alone won’t shed light on the whole story. In Ireland, new and extraordinary things are transpiring which means a significant jump is taking place in the perception that the rest of the world has of Dublin, as well as of the rest of Ireland, which is becoming a technology industry hub with massive potential. Whether this started as a tax issue or not is now irrelevant, because the truth is that the large companies of the world in the technological vanguard are already here, and not just with a minor trade office, or a legal representative. We’re talking about more than a hundred thousand people working for Google, Apple, Ebay, Amazon, Cisco, Crompton Greaves, GSK, IBM, Intel, Merck, Microsoft, Siemens and IDODI (allow me to take the liberty). Moreover, we are not just talking about one city, but a whole national ecosystem adapting itself to all things digital. Galway, Cork, Limerick and Sligo, as well as Dublin, make up a format similar to California’s Silicon Valley. It has nothing to do with other places that try to label themselves as such. Every time a geographical area wants to “modernize” its economy, it tries to associate itself with that Californian image, but calling yourself Caesar doesn’t make you Emperor.

It’s true that the European bailout of the Irish economy will bring unpleasant consequences in coming years. Public investment will drop, there will be enormous pressure on the management of government aid, and attacks on their taxation system will be planned. Nevertheless, the journey has already started and it’s important for other places to take into account how and what they decided to change to get to their economic standards to attract technological talent. In Ireland, everybody is getting ready. Far from opposing the changes, many of the main corporations have decided to adapt. For example, the Facebook’s Dublin office is also its international headquarters and it has acted for many years as the monitor for the entire community of Facebook users outside of the United States. In fact, it is within the very heart of this Dublin office where the social network has created the Data Protection and Privacy Council, which is precisely in charge of assuring the privacy and security of the people using Facebook in the European Union. It’s known that in coming months there will be changes and the exceptional tax policy currently in place will be modified which will put Ireland in a less than ideal spot, but I doubt that all that has been created and built to date can be undone magically.

There are stereotypes that need to be revised. Currently it’s easier to set up a new company in Spain than in Ireland. The island has a lot of complications and many defects in their legal procedures which demand surprising analogical verifications (whoever says the opposite hasn’t tried starting anything here). But it offers a fiscal framework that promotes a certain business model. Ireland’s corporate tax rate stands at 12,50% of profits, they have a tax policy that grants a credit of 20% on the increase in expenditure on R & D incurred by a business which is independent of the deductions to which they are entitled for this expenditure. It was imposed nearly three decades ago and it has already been a few years that it represents an important factor in the GDP of the country. It’s not a new thing and isn’t anecdotal; it is structural and survives over time.

The opening up to technological intelligence is brutal and can be noted in the day to day. Tremendous tests of selection, with engineers monitoring on a screen what is happening on yours while you try to find out a system password in a quarter of an hour, or while you try to incorporate improvements into a code to simplify a process—these are just examples of what is happening. Now it isn’t so much the search for entrepreneurs as the certainty that the talent generated by the greatest will attract the first ones. I know Spanish university professors that have not been able to pass the tests of large companies there. The search for talent is to levels that I had only seen in Silicon Valley a few years ago. It’s fascinating and very competitive.

Ireland is a small country definitively focused on promoting the development of its technology industry and approaching it from many fields and modes. To give an example, there are currently more than six thousand jobs available in this industry, and a huge interest in promoting the immigration of highly qualified workers. This is the way to condition and prepare a country for a competitive future in the framework of the New Economy. It’s normal for criticism to intensify when one looks at their taxation system, but it’s a mistake to stop there because it doesn’t allow you to view where they are going with “modernizing the economy” or “changing the growth model”. Let’s take into account what other countries such as Spain are doing and what you get with that. It’s not that difficult, you only have to put yourself to it. Creating jobs isn’t either, but there is no other way. My team and I, we stay in Dublin.

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