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invest in ireland?

Wednesday 24 October, 2012

I attended this event Expand your Business Internationally through Ireland sponsored by the Industrial Development Agency (IDA) Ireland.  Presentations kicked off with Mary McEvoy, who heads up their emerging businesses unit based in Atlanta.  IDA Ireland is a government agency, & therefore doesn’t charge for it’s services.  There are main reasons companies set up operations in Ireland:

  1. track record
  2. talent
  3. taxes

Allen Peterson, CEO of Aasonn, next talked about why they opened operations in Cork, Ireland in 2010.  Part of the reason was speed.  They started on 26 March, & were incorporated by 6 May-the total process was completed remotely.  As a cloud-based firm, they started with a global approach.  Their solution was bundled with Successfactors.com, which was acquired by SAP, requiring a global approach.  They have also opened a branch in London & 1 in the Philippines.  Partners like Marketo & Dell Boomi support world-wide focus too.  1 reason they located in Cork was that the requirement for local resident directors can be avoided with a bond of 1800 €.  In their experience, it was easier to find well-qualified workers than in other places they tried.  Being based in the EU means they have access to a large & wealthy prospect base with 1/4 of the world’s GDP & responsible for 30% of the world’s consumption.

Aasonn’s decision-making criteria were

  • quick access to a highly-skilled labor pool
  • workers with a strong work ethic & who were well-educated
  • low tax rate
  • English & foreign language skills
  • technology infrastructure

Ireland’s unemployment rate is 14-15%, so workers are available there.  The depth of the labor pool has been an issue for Peterson in the past-a shortage of workers drove up wages 25% in 1 year in Argentina, but doesn’t appear to be in Ireland.  The future availability of labor seems assured with Ireland’s young population.

Ireland is rated #1 in skill levels by IMD’s world competitiveness yearbook, which validated Aasonn’s decision.  In terms of ease of doing business, Ireland is #8, the highest in the EU.  The Manpower Group ranked Ireland #1 in skills availability & as being the country where it’s least difficult to fill jobs. Ireland is #2 behind Norway in productivity ratings.  Additionally, Aasonn got a good line of credit from the Bank of Ireland.  To avoid double taxation, Aasonn leaves it’s profits in Ireland.

To close the evening, Daryl Hanberry, an Irishman based in the New York offices of Deloitte Touche, told us about taxes in Ireland.  The government is committed to attracting foreign direct investment (fdi).  There are non-tax as well as tax reasons to open up in Ireland, such as the labor pool, track record of previous companies, & cost competitive levels comparable to 2003. Ireland features a 12.5% corporate tax rate, withholding tax exemptions, 25% on passive income, & o% tax on capital gains.  Early planning is key for nonresident Irish companies to take advantage of intellectual property.  R&D tax credits with no success requirement of 25% create an effective credit of 37.5%, which can be carried back 1 year & forward 3 years.  Although Ireland is technically not a tax haven, basing holding companies there makes sense.  The TMT sector is highlighted in IBM’s Global Location Index.  In sum, Ireland charges 0 taxes on foreign dividends & has doubled it’s number of treaty networks.

Finally, in fine Irish tradition, lots of Irish whiskey was served as well.  Hope you can’t tell…hiccup…

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