Brexit cities: how Dublin compares

Across several metrics, from housing to taxes, prices did not diverge significantly

The cost of living in the Irish capital does not diverge significantly from cities such as Amsterdam, Brussels, Frankfurt, Luxembourg and Paris. Photograph: Bryan O’Brien / The Irish Times

The cost of living in the Irish capital does not diverge significantly from cities such as Amsterdam, Brussels, Frankfurt, Luxembourg and Paris. Photograph: Bryan O’Brien / The Irish Times

 

The notion that Dublin is more expensive than other European cities for workers and companies seeking to relocate staff is not necessarily borne out by the facts.

Across several key metrics, including house prices, rents and property taxes, the cost of living in the Irish capital does not diverge significantly from cities such as Amsterdam, Brussels, Frankfurt, Luxembourg and Paris.

One anomaly, however, is income tax. While Ireland’s top rate of 48 per cent is broadly comparable with other jurisdictions, the point at which different income earners start paying the top rate differs substantially.

A single employee in Ireland will pay 45 per cent on income over €33,800 and 48 per cent once they get to €70,044. In Germany, by comparison, a single employee will pay about 44.3 per cent on income over €54,057 and will only reach the top rate of around 47.5 per cent on income over €256,304. In the Netherlands, earners pay 40.8 per cent over €33,790 and 52 per cent over €67,072. Both Germany and the Netherlands also have relatively low thresholds above which no employee social security contributions are due, unlike Ireland where our 4 per cent rate, which brings the State’s marginal rate of taxation to 52 per cent, is uncapped.

“When you compare the top income tax rates in the European countries against which Ireland competes for talent and resources, you could form the misconception that we don’t fare too badly,” PwC’s Keith Connaughton said.

“However, when you look at the low entry point we have to those high rates, it paints a different picture as it ultimately means that Ireland collect more taxes. This is something that needs to be addressed if we’re to remain competitive in a post-Brexit Europe, ” he added.

Housing

On housing, perhaps the most contentious issue of the day, the average price of a property in Dublin last year was €366,000, according to property website MyHome.ie.

This is significantly cheaper than Paris where the average price per square metre was put at €8,450, equating to €591,500 for a typical 70 sq m apartment, but not out of kilter with cities like Brussels (€411,726), Amsterdam (€394,931), Luxembourg (€335,650) and Frankfurt (€182,200).

When it comes to rent, the average monthly outlay in Dublin is €1,969, according to the Expatistan website. While this is more expensive than Brussels (€1,211) and Frankfurt (€1,655), it is comparable with Amsterdam (€1,900) and cheaper than Luxembourg (€2,134) and Paris (€2,582).

Property tax

While property taxes, an established tariff in mainland Europe for decades but only recently introduced here, vary significantly, Dublin is not an outlier by any means.

The top rate of 0.25 per cent on properties valued at more than €1 million is significantly less than Brussels (2.25 per cent), Frankfurt (1.75 per cent) and Paris (0.6 per cent) but higher than those in Amsterdam (0.049 per cent) and Luxembourg (€70-€100).

Another anomaly, albeit in the business context, is corporation tax. Dublin stands out among its European peers with its headline rate of 12.5 per cent rate, which undershoots most other cities by a wide margin and has been the subject of controversy amid a global clampdown on multinational tax avoidance. In the other European cities, the company tax is significantly steeper, ranging from 25 per cent to 33 per cent.