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by alephnerd·1mo ago·view on hn ↗
Ireland has been a data center hub for decades - especially thanks to the IDA successfully wooing Microsoft back in 2007 [0], and it helped played a role in helping Ireland partially recover from the AIB and housing collapse back in 2008 and become the tech hub it is today. Heck, it was the corneestone of the IDA's tech FDI policy back then [1].

Heck, Google itself only expanded in Ireland back in the 2000s in large part because they worked on acquiring Colt to build their European CoLo in Ireland, and data centers now represent around 18% of Ireland's total GVA [2].

[0] - https://www.datacenterknowledge.com/hyperscalers/microsoft-p...

[1] - https://www.siliconrepublic.com/science/ireland-has-the-pote...

[2] - https://www.iiea.com/blog/data-centres-in-ireland-the-state-...

1 comments
That and misappropriating a lot of the taxes of other countries in the process
It's not misappropriation. Other countries within the EU could be much more business incorporation and FDI friendly, and IDA Ireland tends to be one of the more competent trade promotion agencies within the EU.

Why should Ireland undermine 13% of it's GDP [0]?

Edit: can't reply

> Telling American multinationals you will have them pay 0 tax isn't exactly a "tax policy" as such

Ireland's corporate tax rate is 12.5% but drops to 6.25% if it's qualified R&D and IP income with an added 35% R&D tax credit.

It's attractive, but CEE states like Poland and Czechia can (and often do) match that.

The biggest attraction for Ireland is the fact that everyone speaks English in Ireland, and Irish tax and corporate legal firms have worked with American firms since the 1990s, which reduces the headache.

> Or to 0.005% if you're Apple

Which ended in 2014, yet Ireland still remains attractive for tech FDI.

At the end of the day, Ireland executed much better than it's developmental peers in the 1990s (Spain, Czechia, Russia, Ukraine, Cyprus, Greece, Argentine, and Libya in 1991 based on HDI) simply because it was much more business friendly.

[0] - https://www.trade.gov/country-commercial-guides/ireland-digi...

>Ireland's corporate tax rate is 12.5% but drops to 6.25% if it's qualified R&D and IP income with an added 35% R&D tax credit.

Or to 0.005% if you're Apple.

>The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.

> Why should Ireland undermine 13% of it's GDP

Undercutting other countries on tax policy tends to piss them off. So it comes down to whether the benefits of the policy outweigh the blowback.

The 13% of GDP figure can be a bit misleading as GDP from being a tax haven tends to help the average irish citizen a lot less than more traditional ecconomic activity.

> The 13% of GDP figure can be a bit misleading as GDP from being a tax haven tends to help the average irish citizen a lot less than more traditional ecconomic activity

As I pointed out, if Ireland didn't adopt it's tech FDI policy which it did in the 1990s, it would be a much poorer country today.

Going from Libyan, Soviet, and Greek to Finland level living standards in 30 years was not guaranteed, and it was Ireland's business friendly policies is what ensured it became a tech hub today and didn't fall into the middle income trap - especially in 2008-12 when Ireland was also in the midst of a Greece style economic meltdown (remember the PIGS?)

Ireland was a developing country in the 1990s, and if they executed better than then much richer Western European states like Germany, France, the UK, and Canada then so be it.

> GDP from being a tax haven tends to help the average irish citizen a lot less than more traditional ecconomic activity.

I've been using HDI which isn't severely impacted by GDP per capita.

And even then, Ireland's median household income [0] is now significantly higher than the UK [1] despite living standard in the UK having been significantly higher than Ireland's until the 2010s because of Ireland's FDI policy.

> Undercutting other countries on tax policy tends to piss them off

Other EU member states such as Poland and Czechia also match Ireland's incentives when asked, which has helped both Czechia and Poland now catch up to historically richer France, Italy, and the UK.

[0] - https://www.cso.ie/en/releasesandpublications/ep/p-silc/surv...

[1] - https://www.ons.gov.uk/peoplepopulationandcommunity/personal...

> As I pointed out, if Ireland didn't adopt it's tech FDI policy which it did in the 1990s, it would be a much poorer country today.

Perhaps, but if you want to measure the effect it had on ordinary Irish people you should be using GNI not GDP. I'm not saying it had no effect, just that GDP is a misleading measure.

Hence who I used both HDI and median household income.

And even with GNI my argument still holds. I'm surprised how so many HNers don't remember how poor Ireland used to be until 20-30 years ago, especially given how most HNers are in their 30s to 40s.

Ireland, South Korea, and Israel are the poster children of developing countries that successfully escaping the middle income trap and climbing up the economic value chain back in the 2010s.

eh, other countries can improve their offering. It's a good thing. We punish companies when they collude to keep salaries low. So too should countries compete with attractive tax packages.
> We punish companies when they collude to keep salaries low

No we fucking don't. I have no idea how you reached that position in the uber era.

https://www.justice.gov/atr/usdoj-antitrust-division-us-v-ad...
Ah ok, it has actually happened. Although that case was actually about a commission not to actively poach from each other. I also think that $75m to a tech giant is not much of a punishment.

I don't have a list of material evidence, so i don't expect to convince anyone else. Appreciate the reply.

> eh, other countries can improve their offering.

Or they could use coercive measures to punish the countries undercutting them. There is no world police after all to prevent them.

A big reason why capitalism works is 2 factors: its easy to start competitors and established players are not allowed to shoot up and coming companies. Neither apply to countries.

I'm not arguing about whether its a good thing or not, just that it is the way the world works. Whether or not Ireland's policies are a good idea depends on how much value they capture vs how much value they lose due to their consequences, chief among them being the strain such policies can put on foreign relations & trade.

The low corporate tax might be fair although questionable, however the entire Double Irish Dutch Sandwich mechanism was a way to take taxes of other countries citizens
The "Double Irish Dutch Sandwich" approach ended almost a decade ago as I mentioned, yet tech FDI remains strong and a hallmark of Ireland's economy.

We're still investing in Ireland because IDA and Enterprise Ireland are competent.

And at the end of the day, Luxembourg, Malta, Cyprus, Latvia, Slovenia, Estonia, Austria, Czechia, Hungary, Germany, Poland, Netherlands, and Croatia have all voted with or abstained in favor of Ireland when questions about Ireland's approach came up in the EU.

The primary countries complaining have been France, Italy, and Spain.

I thought that went on until 2020, in any case, sure after the corporate taxes of the entire world were funneled there and had created data centers and imported a workforce to Ireland, it is now a place worth investing in.

However that does not make this construct any more moral

Telling American multinationals you will have them pay 0 tax isn't exactly a "tax policy" as such.
A parking structure owned by a shopping center might offer free parking in order to drive business goals. That's as much a policy as it would be if they were to charge a fee.