Ireland and the US have had a strong bond – for a long time the relationship went almost entirely one way, with Irish people emigrating to the US in hopes of a better life. In more recent times, however, the tide has turned and the influx of US companies into the country has been a key indicator of the success of the country and its economy.
While recent events over the past few years have had a negative effect on the economy globally, with the world opening up again things are looking up again. “The economic relationship has never been stronger for the simple reason that Ireland delivers for the US businesses that choose to locate here and it works across every metric – from tax and talent to political stability,” says Anna Scally, head of technology and fintech lead at KPMG.
Sonya Manzor, partner and head of tax at William Fry, says Ireland has an outstanding track record for global inward investment. “One-third of multinationals in Ireland have operations in Ireland for over 20 years, illustrating their commitment to Ireland. Ireland has been chosen as the base for EU HQs or significant operations by nine of the top 10 US technology companies, nine of the top 10 pharmaceutical companies, the top five global software companies, 14 of the top 15 medical technology companies, eight of the top 10 industrial automation companies, and 20 of the top 25 global financial services companies.
“These companies have chosen Ireland for a variety of reasons, including its young and highly educated workforce, its competitive tax regime, the stable political climate and strong pro-business environment. Ireland is also in a unique position being the only English-speaking common-law jurisdiction in the EU, and has a beneficial geographic location between time zones in the US, Europe and the Far East.”
Coming to Ireland
Mark Redmond, chief executive at the American Chamber of Commerce Ireland, says Ireland’s stable pro-enterprise policy environment, membership of the EU, research and development ecosystem, talented workforce and reputation as a great place to live and do business has meant that US multinationals have continued to expand their operations in Ireland despite the current geopolitical challenges, as well as the challenges of Covid-19 and Brexit in recent years.
“Ireland has proven itself to be a strong and safe location for US investment, making it the ideal transatlantic gateway from which US companies can access the European, Middle Eastern and African markets.”
In the past our 12.5 per cent corporation tax rate played an important role in attracting US investment into Ireland, says Manzor. “Although the corporation tax rate is due to increase to 15 per cent for companies with a turnover exceeding €750 million under the proposed global tax changes, Ireland is set to remain competitive and attractive for inward investment for many reasons.
“Ireland has a clear and transparent tax system that is legislative-based. We have a highly educated young workforce and access to talent across Europe. Ireland also has a strong legal and regulatory landscape that is attractive to US companies.”
There is a wide range of factors that give Ireland a competitive advantage when attracting US multinationals to Ireland, says Redmond. “US multinationals prefer to invest in markets and economies that are healthy and growing. Ireland is second in Europe and seventh in the world for the most competitive economy.
“Ireland’s economic rebound in 2021 amid the Covid-19 pandemic was among the strongest in the world, with the economy expanding by 15 per cent. The OECD expects the economy to increase by 5.4 per cent this year, well above the EU and the euro area average of 2.7 per cent.”
Lynda Boylan, head of strategic partnerships at Skillnet Ireland, agrees that talent is a key attractor. “We are seeing US multinationals putting talent development at the top of their agenda as they appreciate how important talent is to support their growth in Ireland.
“For multinational companies the value of attracting and retaining talent cannot be understated. More and more are investing in reskilling and upskilling programmes to develop this talent and help them deliver on their business strategies.”
Feargal De Freine, EY Ireland assurance partner and head of FDI, says that US-headquartered companies employ nearly 200,000 people or two-thirds of the numbers employed in the multinational sector. “Overall employment in the sector is at a record high level, notwithstanding the travails of the last two years. Those jobs are typically highly skilled and well remunerated. And there are many more indirect jobs supported and sustained by US companies and their operations here.
“These jobs not only provide economic resilience but also contribute to the depth and breadth of the Irish workforce’s skills base, and provide the jobholders themselves with valuable experience and confidence. It’s notable, for example, how many start-ups we’re seeing in sectors like medical technology that are founded by alumni of US companies.
Not a one-way relationship
While it may seem that the relationship is weighted more on one side, Ireland is pulling its weight in the US. “Importantly and sometimes overlooked is that Ireland is also a significant investor in the US, and Irish companies account for over 100,000 direct jobs in the US and covering almost every state,” says Scally.
Redmond agrees, saying the US-Ireland relationship is very much a two-way one. “Ireland is the ninth biggest investor in the US, with over 700 Irish firms having a base in the US.”
“The world has become more unpredictable and in many ways that’s why we need to stay absolutely predictable – on tax, on people, on political stability and continuing our ‘no surprises’ approach,” says Scally. “The more certainty we offer inward investment the more certain we can be of the continued benefits it provides.”
“Global investors tell us that they expect future investment to be driven by digital, cleantech, and life sciences,” says De Freine. “Ireland has strong digital and life sciences credentials. And our research shows that perceptions of Ireland’s sustainability credentials are overwhelmingly positive. The opportunity now is to translate those perceptions into investment intentions and actions.