At Harris Bricken, we keep close tabs on what is happening around the world, and we know that our friends and clients do, as well. We are happy to provide this podcast series: Global Law and Business, hosted by international attorneys Fred Rocafort and Jonathan Bench, where we look at the world by talking with business leaders, innovators, service providers, manufacturers, and government leaders around the world.
- Brexit’s impact on Ireland, including efforts by companies to diversify from the large UK market.
- What makes Ireland attractive to companies setting up HQ or R&D facilities.
- Which US industries are heading to Ireland.
- An Irish counterpoint to US-led efforts to establish a global minimum tax rate.
- Why Ireland is heading into another Celtic Tiger era.
- How the Emerald Isle has weathered the COVID storm.
- Listening, and watching recommendations from:
We’ll see you next week for another exciting and informative episode when we sit down with Hector Correa to talk about Mexico.
This podcast audio was transcribed by an automatic transcriber.
Fred Rocafort 0:07
Global law and global business go hand in hand, but never seem to keep pace with each other. The importance on the global stage of developing and developed nations waxes and wanes, while consumption and interconnectedness steadily increase all the while laws and regulations change incessantly requiring businesses to stay nimble. But how do we make sense of it all? Welcome to Global Law and Business hosted by Harris Bricken International Business attorneys. I’m Fred Rocafort.
Jonathan Bench 0:37
And I’m Jonathan Bench. Every week, we take a targeted look at legal and economic developments in locales around the world as we try to decipher global trends in law and business with the help of international experts. We cover continents, countries, regimes, governance, finance, legal developments, and whatever is trending on Twitter. We cover the important, the seemingly unimportant, the relatively simple and the complex.
Fred Rocafort 1:02
We hope you enjoy today’s podcast. Please connect with us on social media to comment and suggest future topics and guests.
Joe McCall qualified as a CPA in 1989. And a few years after that, he took over the firm that he worked for Byrne and Company, which here renamed Byrne and McCall. He has been in business now for almost 30 years. Byrne and McCall are a full service accounting firm offering audit, tax compliance and advisory services 50% of their businesses local and 50% is advising overseas clients who have a presence in Ireland. They have two locations, one in Dublin and another in Newbridge and County Kildare. Joe is married to Katherine and they have three sons and one daughter, Joe. Welcome to Harris Bricken’s Global Law and Business.
Joe McCall 2:03
Hi, Fred. Thanks for asking me to join you today.
Fred Rocafort 2:07
Our pleasure. We like to start off our podcasts by placing our listeners generally in the particular area that we’re talking about, whether that’s geographical or whether that’s the Matic. So let’s talk a little bit about Ireland and what’s happening, what’s happening there. Now, obviously, Brexit is still a news story. There’s also there are also some some troubling signs north of the border in Northern Ireland. We’d love to hear your perspective as a local regarding those topics. But feel free to tell us a little bit more if you want about what’s happening. Generally in Ireland, we know that there are sometimes news stories that are of quite some importance locally, but don’t quite make it to the international news wires. So we’d love to hear your thoughts on all of that.
Joe McCall 2:57
Sure, sure. Well, certainly before COVID, it was all about Brexit. And Brexit is a big challenge for Irish companies. And the main reason was because most of their supplies come from the UK. Then once the UK, left Europe, there was a problem with customs and duties on goods coming into Ireland. So Irish companies had to go looking for their supplies of stock and raw materials in other places around the world. So they had to go to Asia, and the US and mainland Europe to better supplies raw materials, that they wouldn’t have to pay custom charges on their goods. And of course, one of our big markets was the UK and still is, but at the moment if we are exporting goods to the UK. Now because of Brexit there are certain customs and taxes on both goods. So all this has been a big, big challenge to Irish businesses. But of course, there have been certain opportunities as well, because it has forced Irish companies to go looking for new markets and many of them have been successful in that. Overall, I suppose you could say there have been difficulties and challenges but lots of opportunities as well. So Fred, you were just asking me there just to comment on on Brexit and and Northern Ireland and perhaps in the US, you have been seeing some TV images of of people out protesting on the streets. So what’s happening there really is that before Brexit could be good could come from the UK directly into Northern Ireland without having any customs checks at the border. But since Brexit and in accordance with what they call the Northern Ireland protocol, some goods are being stopped at the factory at a border coming into Northern Ireland, and are being subject to customs and duty charges. And I suppose the local people up there, at least some of them are not happy about this, because, indeed, they see it as goods coming from one part of their own country to another. And we are now subject to some, some type of customs and border control, and are not happy about that.
Fred Rocafort 5:31
That’s why some people have taken to the streets to protest about this. Joe, this is a good segue into our next question. We’ve been hearing about Ireland as a destination for international companies to set up their European headquarters or perhaps to, to set up research and development facilities in Ireland. I wonder if Brexit is having an impact in that regard? Obviously, let’s say for a company from the United States, or from a place like Canada, because of the the common language and strong cultural ties, I would imagine that Ireland is a logical choice for them to make necessary adjustments if they have to, perhaps relocate out of the UK to service other European countries. So wondering if you could talk to that. And just more generally, perhaps you could, you could tell us a bit about how easy or not it is to just set up a company in Ireland, just to compare to other jurisdictions, what are the minimum requirements in terms of registered capital in terms of corporate officers? You do you need a Registered Agent in Ireland, that that sort of stuff?
Joe McCall 6:51
Yeah. So first of all, there are many reasons why a US company would establish itself in Ireland. And it’s not just about the tax, obviously, the tax rate of 12 and a half percent is is quite important. Because the other reasons are is, is that the country is English speaking. And this is very important to us companies. So it’s easier to do business in an English speaking country. And there’s a very, very well educated workforce here, well educated, well trained. And of course, we’re very close to Europe. And we are the only English speaking country in the Eurozone. Now, these add up to being Ireland being a very good location for US companies and Asian companies to set up in Ireland. As regards setting up a company, and minimum capital, it’s quite easy set up a company, there’s no particular minimum capital, you could set up a company with 100 euros, you just have to have one director. Now that director has to be resident in an EEA country, which is basically a European country. It must have a company secretary and a Registered Office. But these are all pretty easy obligations to comply with. It’s important that the company wouldn’t be seen to be a brass plate company or a letterbox company. So it’s important that there is substance to the company in Ireland, that it is carrying out real business. And if it is carrying out real business, it won’t have any problem in you know, qualifying for the 12 and a half percent rate of cooperation tax. And of course, another reason why companies might establish in Ireland, it has a very generous research and development tax credit. So you can get 25% tax credit, on the expenditure on on r&d. And this is very useful, even for companies that are losing money. So if you’re losing money, you’re not, you know, paying corporation tax or what good is a tax credit. But in in Ireland, you can actually get a cash refund from the government from the revenue based on on the expenditure. This is very useful for companies in the startup stage when they’re not actually making profits. So I suppose there there are some of the reasons that make Ireland very attractive.
Fred Rocafort 9:28
No, that certainly would be a very important incentive. I’m curious, specifically the the foreign companies that you work with, I’d be interested in hearing about that. Related to that, too. To what extent is the mix of companies that you are working with, to what extent are these companies representative of the types of foreign companies that are that are doing business in Ireland? Sure. Yeah.
Joe McCall 9:51
Well, that at the moment, the most common type of company, our business coming from the US, or is the country He’s involved in direct marketing, or online sellers. So as you know, since COVID, on the internet has been a big marketplace for companies. So these are the companies that are looking to get into Europe now. And better to establish your your company, but in Ireland, because you have that close proximity to basically a 500 million consumer marketers in Europe, and many US companies, many of these direct marketing companies are establishing their corporate structure in Ireland so that they can be close to that European market and to take advantage of us. And, of course, European market is 50% larger than the US market. And I think the US companies now, I suppose, wakening up to see, to see the opportunities that are out there is in Europe, and we’re hoping many of those companies to be set up here in Ireland. Earlier,
Fred Rocafort 11:05
You mentioned the tax rates in Ireland of 12.5%. That’s a good starting point, perhaps to talk about the importance of tax planning to international companies. I I think that most businesses here in the US they’re familiar with with taxes, they have to pay them but in many cases, it’s just a it’s just a matter of dealing with with with US tax that especially smaller companies might might not be aware of the potential at least for companies for certain companies to structure to take advantage right of the of the differences in in tax rates in different jurisdictions to set up more more favorable tax structures. Um, in addition to generally addressing this, this idea, perhaps you could offer some some basic examples of how that might work, for example, for a company based elsewhere in Europe that might be able to take advantage of that favorable tax rate in Ireland.
Joe McCall 12:04
Sure, yeah, look, basically any company that’s established in Ireland, that is carrying out a trade, so it must be regarded as a trading activity. And if so they’re entitled to this 12 and a half percent rate of corporation tax. Now, there is another rate of 25%, which is for, like other types of businesses who are not engaged in a trade. So companies earning like passive income would have to pay 25%. But there’s trading activity is quite broad. And most companies do do qualify for this and the management of of IP, and IP rights that does qualify as a trade and as such, would be taxable profits would be taxed at 12 and a half percent. And when you, I suppose couple this with a company who is carrying out research and development as well, and that company is entitled to 25% tax credit, it really drives this rate of corporation tax well below 12 and a half percent and perhaps in some cases down to 2%. When you take all matters into consideration, and companies who have IP in Ireland and who purchase IP, they’re entitled to, to get a tax write off for this purchased IP or purchase goodwill. And these are all good reasons to establish your company in Ireland and to get a better return a better rate after tax return. Now, I suppose there is some pressure on this rate, this low rate that we have, and especially coming from the US as they’re looking to introduce a new global minimum tax rate. And I understand that the Biden administration has proposed a rate of 21%. Now it’s highly unlikely that the Irish rate will go from 12 and a half to 21%. But expected will it be so movement over the coming years, they also expect that the Irish rate will be the lowest in the world, when everything pans out?
Fred Rocafort 14:22
You know, certainly this idea of global minimum rate is worth probably worth addressing in an episode of its own, but perhaps hopefully, I’m not not putting you on the spot too much. But let’s talk about that a little bit. I mean, for me, at least it’s an idea that that I find objectionable right part of that has to do with with some of my own background working for financial service companies in Hong Kong that helped clients set up more and more efficient tax structures. Right. And I appreciate the the role that low tax jurisdictions play so so it seems To me that it’s almost in a way you can I look at some of these efforts as a way to bring down other economies that haven’t been as bold, for example, Ireland in terms of opting for growth strategies that rely on low tax rate. So it’s it’s a way of saying, well, we don’t like that, you know, we think everyone should follow our model, which, you know, is arguable whether it’s, it’s better or not. So I wonder if you had any any sort of big picture thoughts regarding that prospect?
Joe McCall 15:34
Well, I suppose, here in Ireland, we have always defended our 12 and a half percent rate with with great vigor. And every government, every successful government has done the same. And we would be inclined to say to these other countries, who want us to put up our rate, that they should bring down their rate to something close to ours, then there wouldn’t be this disadvantage that they appear to have. So I think the Irish government will defend their rate as much as possible. But because of I suppose the new new global taxation, discussion, I certainly think there will be movement on our side. But at the end of the day, I think we’ll still have a very attractive ratio.
Fred Rocafort 16:32
Perhaps this is also a good moment to talk more broadly about Ireland’s economic miracle. I don’t know how often the phrase to use but we hear about the Celtic Tiger and things of that sort. And I know that the tax rate is a part of that perhaps you could tell us a little bit about some of the other factors that have contributed to Ireland’s economic success in the past few decades.
Joe McCall 16:56
Yeah, well, I guess the Celtic Tiger has been some time ago now at this stage. And we’ve gone through quite a recession since then. And now quite a bit, we’ve lost quite a few banks because of poor lending practices. And we had a property bubble. And I suppose we just had all those behind us when COVID hit. So certainly, the Irish economy, like every other economy is struggling now, because of COVID. And the effect that it’s having on lots of different industries, most retail is closed. Tourism and entertainment is closed hospitality. But I think we’re turning our corner there. And these industries, and business sectors will bounce back. And only only for the COVID I’d say we were probably heading into another Celtic Tiger era be like good or bad. But I think we’re at a turning point now, and this time next year, I think it will be quite positive.
Fred Rocafort 18:10
So on that note, how has Ireland weathered COVID? I mean, obviously from from an economic perspective, countries around the world are being impacted. But in terms of the management of the public health, I’d be very interested in hearing your thoughts on on how Ireland has has been has been managing things. I mean, would you say the government has has done a pretty good job compared to other peers, or perhaps the opposite? Perhaps it has underperformed? I really have no idea about how it’s been in Ireland. Yeah,
Joe McCall 18:47
Well, I suppose, you know, lots of challenges for the government, like any government and public health, of course, is number one. And then I suppose secondly, is the, you know, the business community, how they supported, bore to death. And in general, I think people are quite happy how they’ve supported the business community. And there are lots of government grants, and support for employees who have been laid off, and also for the businesses themselves. So they’re all getting government support, to keep them ticking over until they can reopen. And I think most businesses are happy enough with that. And they would like to see the government continue with those supports, even after they opened up because it is going to take some time for business to get back to where they were before COVID. As regards the public health, the main issue that the government has, is the supply of the vaccine. So we just simply have been not been getting enough vaccine to roll out to the public in general. And we’re certainly behind the US. When it comes to the percentage of people who have a vaccine at this stage. Probably we’re on the European average, I’d say that we’re not close to half the population yet, having vaccine perhaps a third. But things are improving as we as we speak every every day. And every week, those numbers are improving. And I think by the end of the summer, most of the adult population will have received a vaccine. And hopefully, things will be getting back normal again. And in fact, back from next month, many businesses are going to be allowed to reopen.
Fred Rocafort 20:51
Has there been any manufacturing of vaccines in Ireland? I know Ireland has a biotech sector. So I’m just I’m just curious as to as to whether there’s been any any local production,
Joe McCall 21:02
As far as I’m aware, now, there’s no vaccine manufactured in Ireland, it’s all imported from the UK, or Europe. And that’s, that’s, that’s our problem. I suppose we don’t have a manufacturing base ourselves, are relying on the likes of Pfizer, Madonna, and, and AstraZeneca and other companies to to suppliers, and there has been big issues with supply in Europe. Generally speaking, we’re not the only country that who is, is waiting for the supply to come in. It’s quite, it’s quite a common problem.
Fred Rocafort 21:45
Now, that certainly has been one of the other big storylines, right? There’s a lot of room for improvement, certainly in the way we have done things here in the US. And then just overall in terms of what our manufacturing strategies overall or our policies are, but at the end of the day, right, that’s been a something of a success story, right? The fact that we’ve managed to produce at least a good number of vaccines, and there’s been pretty good, pretty good progress on that front than I and for me, at least, that that just highlights right, the importance of retaining some of that manufacturing base and not outsourcing everything. Right. I mean, there’s there’s a place for that, certainly. But yeah, ultimately, you need to be able to to produce at least critical goods, right?
Joe McCall 22:31
Oh yeah, yeah. Well, that’s an excellent situation to be in to have your own vaccine been manufactured in your own country. It’s much better than that.
Fred Rocafort 22:43
Well, Joe, this has been a great conversation, really glad to have someone from Ireland on the podcast. Finally, it’s a country that I’ve enjoyed visiting in the past and certainly like to read about about it and talk about it. So great to have you join us. before we let you go, I’d like to ask you for any recommendations you might have for us. Anything you’ve read recently, anything you’ve watched recently that you think is worth passing on.
Joe McCall 23:10
Sure. Well, if anybody is interested in to read about Ireland’s and its position in the world, and in the economy, post Brexit there’s a good book, entitled, Ireland and EU post Brexit by a guy called Ray Bassett. Oh, I think that’s something you might have a look at. And as a guard, as regards Brexit, there is a film called Brexit the movie, it’s a UK film, and it’s quite entertaining.
Fred Rocafort 23:38
Both sound like excellent recommendations. Thank you very much for that. My own recommendation today is a newspaper article that I read on not long ago called bridging the Gulf why Greece is making new friends in the Middle East. And it titles a little bit misleading because it actually talks about quite a few countries and the new alliances that are being formed in the Middle East, between Greece and the UAE and Israel. I thought that was very interesting. And it talks about what a post American future might look like in at least in the Middle East and in Europe. We’ll be providing a link to that as well as Joe’s recommendations. With that, Joe, I’d like to thank you once again for joining us. It was a real pleasure, and we look forward to having you on at another time.
Joe McCall 24:34
Sure. Thanks very much, Fred, and I hope we can meet in person sometime soon.
Jonathan Bench 24:41
We hope you enjoyed this week’s episode, we look forward to connecting with you on social media to continue discussing developments in global law in business. This podcast was produced by Harris Bricken with executive producer Madeline Williams music composed by Stephen Schmid. Tune in next week for another episode. We’ll see you then.
Transcribed by https://otter.ai