Ireland's corporate tax rate said to be 'average'

AHEAD OF tomorrow’s EU summit in Brussels, an influential German newspaper has described Ireland’s corporate tax rate as “average” by European standards.

The conservative Frankfurter Allgemeinesaid that the tax burden for companies in France is much lower than in Ireland in a report headlined "The Green Isle is No Tax Haven".

Describing Ireland’s 12.5 per cent corporate tax rate as a “holy cow in Ireland’s green meadows”, the report challenges the standard German view that, after wooing companies with low taxes, Ireland is now seeking EU assistance with the problems this policy caused.

Quoting the “surprising results” of PricewaterhouseCoopers (PwC) study for the World Bank, the newspaper pointed out that France undercuts Ireland on overall corporate tax burden.

“The actual tax burden for companies in Ireland lies only in the European mid-field,” the paper notes. “In many other countries, including in France, firms get away with less than in Ireland.”

“The biggest cost benefit Ireland offers” is not even on tax, the newspaper pointed out, but on social contributions, “which are much lower than in Germany or France”.

With Ireland and its now notorious corporate tax rate on the agenda of tomorrow’s summit, opinion in some quarters in Germany is softening towards Ireland.

President Nicolas Sarkozy of France had no reason to be critical of Ireland, the FAZ said, pointing out that companies pay just €8.20 in tax for every €100 invested in France thanks to generous write-off possibilities on its tax base. This is despite an official corporate tax rate of up to 33 per cent and compares to €11.90 for Ireland. Germany demands €22.90.

“The tax rate is often not a gut indicator for the tax due,” said PwC’s Susan Symons, an author of the report, to the newspaper.

Despite the official hard line from Berlin, there is some understanding for the Irish position. “A tax harmonisation would eliminate competition in Europe and centralise Europe when the opposite is what’s necessary,” said Frank Schäffler, the Free Democrats’ finance spokesman.