The scale and significance of US investment in the State is perhaps best summed up by the employment statistics. The 970 US multinational firms located here directly employ more than 210,000 people and around 170,000 indirectly. “That’s equal to about 7.5 per cent of the Irish population,” says AmCham chief executive Paul Sweetman. “Those are phenomenally large numbers and speak to the importance of US FDI to Irish society and the economy.”
They also speak to an enduring relationship that goes back more than 60 years, as PwC tax partner Harry Harrison points out.
“How we got where we are didn’t happen overnight,” says Harrison. “It developed as a result of our industrial and economic policies that supported FDI and put the infrastructure in place to attract it.”
He points to a number of key aspects of those policies: “The ease of doing business here for non-Irish companies is very much more straightforward than in many other jurisdictions. The tax environment is also very attractive. The certainty around tax and business policies is another important factor.”
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The effort put into nurturing the relationship with the United States also plays a part, says Harrison. “Government ministers regularly fly out to the US on trade missions and the IDA and Enterprise Ireland a have strong presence there,” he adds.
Harrison cites other factors that are less tangible but nonetheless critically important, which he says “go down really well with Americans”.
“One of our unique selling points is the Irish work culture and work ethic,” he explains. “Our skilled workforce and the fact that Irish people tend to be easy to work with is very attractive to US companies. When they come here they tend to stay for a long time and expand.
“Another source of attraction is the number of big US companies already here. When US pharma and tech companies are considering overseas expansion, they look at what the AbbVies and Pfizers and Googles and Metas are doing, and they are all here.”
Anna Scally, partner and head of technology and media with KPMG in Ireland, agrees.
“A winning combination of an exceptional track record, attractive business taxes, a commitment to the EU, global connectivity and a high quality of life sets Ireland apart,” she says. “As the only English-speaking common-law trade and investment gateway to the EU, we are attractive as a nation to US businesses, with consistent, pro-business, transparent and long-established tax policies.”
She also points to the talent element of the equation: “Our young, highly educated, workforce is also a differentiator which sets us apart from other countries, providing the necessary talent for US businesses seeking to grow their European footprint. Ireland is also a very welcoming place for international workers, meaning our domestic workforce can be supplemented with additional talent from outside our own borders.”
However, there are threats to that happy position. “I’ve been working in this industry for the past 25 years and things are changing all the time,” says Harrison. “A number of things are on the horizon at the moment. There is the US presidential election; that could influence US tax policy and how they view the world. Will America take an insular or global view? That will be key. If there is a trade war, that will have an impact.”
That point is echoed by Scally: “Many countries, including the US, have elections this year. Ireland will need to keep a close eye on the outcome of those elections and the policy decisions that may be taken as a consequence and be prepared to react if appropriate in order to ensure we remain competitive.”
Ireland is also facing new competition from other countries, Harrison adds. “They see what Ireland has done and are looking to do the same. We are fortunate that US companies have significant assets here and a presence in Europe. It’s not easy to leave. We need to ensure that we continue to get a flow of new investments and that we don’t miss out on the next Google or Meta. We need to continue to do what we are doing to remain competitive.”
One particular area where he sees room for improvement is the tax system. “It has become incredibly complicated in comparison to 10 years ago,” he says. “It is extremely burdensome administratively. Change is needed purely to simplify it, not in any way to reduce taxes. We need to make it easier for businesses.”
Scally also sees some risks on the horizon. “We are witnessing a significant period of global unrest, which is having a knock-on effect, with increases in energy and other costs,” she says. “Global unrest also means uncertainty and companies can be reluctant to invest in uncertain times.”
There are issues on the home front as well. “Domestically, we are seeing escalating operating costs for businesses, which is proving challenging,” Scally points out. “We, like many other countries, are also suffering from a shortage of affordable housing.
“It’s crucial that Ireland remains a business-friendly environment and continues to invest in both physical and digital infrastructure in order to ensure we remain attractive to existing and prospective investors.”
On the tax front, she believes the effectiveness of the R&D Tax Credit needs constant monitoring.
“Ireland has done a fantastic job in attracting and retaining high value R&D opportunities, and our R&D Tax Credit continues to be very competitive, particularly in light of some of the changes made in last year’s budget,” she says.
“Following the introduction of the Pillar 2, Global Minimum Effective Tax rate provisions across the globe, many countries are looking at the subsidies and incentives packages they offer international investors. It is important that as the landscape changes across the globe and in the EU in particular, Ireland remains vigilant and ready to act, if necessary, to ensure we remain attractive for R&D and other high-value-added activities.”
Harrison concludes by reiterating the value of certainty in an uncertain world: “We shouldn’t underestimate its importance. Knowing that policy is consistent and that there will be consultation in advance of any changes is very valuable.”