Despite the potential impacts of Brexit, protectionist trade policies in the United States and changes within the international tax environment, Ireland is—and will continue to be—an attractive location for American companies to conduct business.
Along with its high upward potential, Ireland’s common law jurisdiction allows U.S. employers to easily conduct business in the Irish marketplace, and its location makes it a gateway to additional opportunities for American companies in the European Union. The low corporate tax rate coupled with research and development incentives has greatly contributed to Ireland being an ideal place for American and other multinational companies to find success.
Yet, the Irish economy “is being tested with social and economic challenges domestically and the landscape is challenging and changing. The economy is also contending with tough Brexit negotiations and a changing international tax environment expedited by US tax reform, EU tax policy changes and OECD tax developments,” according to a recent report by Deloitte.
The report suggests ways “to Brexit-proof Ireland to protect its competitive climate, attract international talent and large-scale FDI and support Irish businesses and entrepreneurs to grow and scale.”
As Ireland “Brexit-proofs” itself and the world marketplace evolves, those American and multinational companies that can be nimble and prepared to pivot in anticipation of economic and political changes will reap the benefits of Brexit, protectionist trade policies and changes to the international tax environment.
Although it is not completely clear how Brexit will impact foreign direct investment in Ireland, there is the potential for the challenges that come along with Brexit to instead be opportunities for American and other multinational companies—and opportunities for Ireland as well.
Many of the potential impacts, or “shocks,” of Brexit are not necessarily specific to Brexit, and it is good business management for companies to diversify their supply chains and look to expand operations as the world marketplace evolves. With the right business models, American and other international companies can continue to achieve success here.
Many American companies are optimistic that there will be a sizable migration of highly skilled personnel and large companies coming from the United Kingdom to Ireland, where there already exists a highly skilled and educated workforce contributing to Ireland’s attractive business climate.
In addition, post-Brexit Ireland is poised to play a leading role as the key common law jurisdiction remaining within the EU. Being the largest EU nation with a full common law system, opportunities will develop within the Irish legal system related to a variety of multinational business matters, including cases involving insolvency, dispute resolution, litigation and others.
The 2018 Tax Cuts & Jobs Act in the United States enacted significant changes relevant to American companies and other multinationals with operations in Ireland, and the possibility that the EU may switch to a common consolidated corporate tax base—which continues to lack consensus among EU member nations—may elicit palpitations.
Yet, despite increasing protectionist approaches from the United States, such as tariffs in the international marketplace, as well as significant tax reform around the world, it is not a foregone conclusion that Ireland’s ability to attract future foreign direct investment is at risk.
There will be a continued interest and even a requirement in some cases that many companies maintain operations outside the U.S. to service other markets, including Ireland. This will be most evident with regards to intellectual property, which is due to Ireland’s favourable IP tax regime.
Businesses abroad and at home will continue to succeed when accompanied by the right planning, and a good business plan, thoroughly researched and with room for flexibility, will allow American businesses—and Ireland—opportunities in nearly any economic or political environment.
Mathew B. Tully is the founding partner of Tully Rinckey Ireland and a well-known and respected American litigator who founded what is now a 75-plus-attorney American law firm, Tully Rinckey PLLC.