German report on Ireland’s tax ‘mystifying’, says Noonan

Minister for Finance Michael Noonan has said he is "mystified" at a report by German MPs critical of Government tax deals for multinationals and highlighting Ireland's reliance on the unregulated "shadow bank" sector.

The report, which followed a visit by the Bundestag's finance committee to Dublin last month, has caused diplomatic tensions in Dublin and Berlin, with Bundestag finance committee members also annoyed at its content.

“They must have been at different meetings, whoever filed the report, as I had a very good meeting with them,” Mr Noonan said yesterday ahead of a Eurogroup meeting in Brussels.

“We had a full and frank discussion about the Irish economy . . . and most of the ground was common ground. I was mystified when I read that report in the paper . . . If it represented the views of the committee, those views did not arise from any meeting I attended.” The group met Mr Noonan and officials from the Central Bank, the National Asset Management Agency and the International Monetary Fund between June 16th and June 18th.

Sensitive subject

The publication of the report is potentially very sensitive for Ireland, as the Bundestag will vote later this year on the European Stability Mechanism’s direct recapitalisation instrument, which includes a provision to include retroactivity, a principle believed to be opposed by Germany and some other euro zone states.

Delegation leader Dr Gerhard Schick, deputy head of the finance committee and an opposition Green Party MP, wrote the report with fellow Green Party committee member Lisa Paus. But its publication has stirred discontent in the Bundestag for repeating Mr Noonan's concerns over potential image problems in the debate over tax havens.

“Their report is a breach of protocol because they report from confidential meetings with Irish officials,” said a committee official. “When people agree to meet you for confidential talk, you can’t report on what they said in public a week later.”

Committee members said they were also annoyed at the MPs for not representing the views of the entire delegation.

Political bias

“We’re really annoyed at how the report was written by them,” said one delegation member. “There’s no problem with the content of the report if it represents your political views. But when you are representing the Bundestag you have to be a bit more careful.”

Dr Schick said yesterday his report represented his “political opinion” but conceded it had led to misunderstandings: “This is not the official report written by all members but by two opposition members.”

Ms Paus apologised for any irritation caused by the Report of the Finance Committee to Dublin/Ireland and distributed on Bundestag-headed paper. "If there was diplomatic irritation, I can understand that, but the report expressed our political views," she said.

The Green MPs stood by their view that, beyond tax breaks, Ireland had no growth plan.

They expressed concern at a lack of awareness in Ireland of the potential risk of hosting hundreds of brass-plate financial companies with no staff but a reported €1.7 trillion in assets.