Ireland is in quite a sweet spot, both geographically and politically, when it comes to attracting US firms. Europe is the key overseas market for US businesses but the choice of where to set up is about far more than market access.
The State ticks a lot of boxes even before the fact that it has signiicant experience hosting US multinationals is taken into consideration. This means that, while the tax environment is obviously attractive, Ireland’s gateway role has evolved into something much more substantial.
“While not the sole determining factor,” says Mick Murray, head of foreign direct investment at AIB, “Ireland’s position as an English-speaking, common-law jurisdiction within the EU remains a significant advantage for US companies.”
This view is echoed by Deloitte, which has found the practical benefits are quite appealing to companies when choosing an international base.
RM Block
“Experience tells us that English-speaking and common-law jurisdiction are certainly relevant considerations when it comes to selecting an international base,” says Anthony O’Halloran, international tax partner & FDI tax lead for Deloitte Ireland.
That familiarity counts when it comes to matters such as contracts, intellectual property and the regulatory environment.
“The alignment with EU, US and UK legal frameworks provides familiarity, particularly for sectors such as technology, pharmaceuticals and financial services, where legal certainty and intellectual property protections are critical,” says Murray.
All of this presents Ireland as a place where there is less friction for US legal teams to work their way through.
“There’s operational familiarity. US companies face lower friction in Ireland versus civil-law EU jurisdictions such as France, Germany or Spain. This provides greater certainty for in-house legal teams,” says O’Halloran.
These practical benefits have grown in importance as the advantage Ireland held in terms of corporation tax isn’t as clear cut as it once was.
“Historically, the Irish tax rate may have been a key pull factor, but that advantage is certainly eroded as a result of the OECD Pillar Two project and the imposition of a 15 per cent minimum rate for those in scope,” says O’Halloran.
Murray says the real edge for Ireland now is something more difficult to replicate, namely the array of advantages the State has working together.
“It is the combination of multiple factors, such as English speaking, common law, track record, skilled workforce and pro-business environment that combine to make Ireland a preferred location when choosing to expand into Europe,” he says. “Ireland’s appeal as a gateway to Europe has not diminished; in fact, it has strengthened and is ever more compelling.”
Those seeking to invest also take comfort in seeing a stable political climate broadly open to maintaining the Republic’s gateway status.
“I think Ireland’s appeal as a gateway has evolved and will continue to evolve, driven by a number of factors. The certainty provided locally has actually been a differentiating factor, [as has] the pro-business support across political parties,” says O’Halloran.
For Murray, that all combines into what he calls the three Cs: “capability in terms of talent and expertise; capacity to scale operations; and the certainty of a stable, predictable business environment”.
That combination enables Ireland to present itself as the logical location to use to go after the real target – the broader EU market.
“Market access and trade benefits immediately spring to mind. The EU single market gateway offers access to 500 million EU consumers – that provides access to a significant revenue opportunity for US firms outside of North America,” says O’Halloran.
But that access only has value if the operational capability is there to deliver on the promise. This is where access to talent is important.
“Ireland has a highly skilled and internationally mobile workforce, which remains a key differentiator, particularly in knowledge-intensive sectors,” says Murray.
Of course, it’s not just the talent developed within the State that Ireland can draw upon.
“The critical advantage that US firms gain from using Ireland as their European base is access to a young and highly skilled workforce with the ability to attract talent to Ireland from across the EU,” says O’Halloran.
Yet while Ireland holds an enormous amount of appeal and many obvious advantages, simply setting up shop here isn’t enough; using Ireland as a base reduces the risk of an entry into the EU market but the challenge remains complex.
“Many companies underestimate the operational complexity of managing multiple jurisdictions across Europe, particularly from a regulatory and organisational standpoint,” says Murray.
That’s relevant because what works in Germany, for example, is often different from what’s needed in Greece.
“Success requires treating each European country as a distinct market with its own regulatory, cultural and operational requirements, not as an immediate extension of Ireland,” says O’Halloran.
There is, fortunately, an awful lot of help on hand in Ireland for US companies looking to use it as a base to enter the wider EU market. From the support offered by IDA Ireland, through the broad range of advisers, banking experience, and the depth of talent, the building blocks for success are there.
Added to this are the decades of FDI experience in the Ireland, with sectoral clusters ensuring there is access to knowledge for US firms that set up here.
“Ultimately the Irish FDI ecosystem effect provides confidence and is a major derisking factor for US corporates looking to expand into Europe,” says Murray.
