Dublin ready to benefit from UK’s Texit

Dublin's commissioner for startups, Niamh Bushnell, reacted to the UK's shock decision to exit the European Union by issuing a press release with "Thanks to Brexit" as a headline. Her point was that after last week's vote, question marks hang over almost all the key ingredients that make London so attractive for technology companies.

As the sole remaining English-speaking capital in the EU, already Alphabet's Google and Facebook I's home-away-from-home in Europe, Dublin will have a chance to be a winner in London's messy divorce from Brussels.

So should Dublin get ready for a fresh influx of entrepreneurs and founders?

Who chose Dublin as a base already?

Twitter, Airbnb, Slack and other notable tech companies have their European headquarters in Dublin, close to the city’s so-called Silicon Docks, which lies near a neighbourhood dubbed “Googletown” because of Google’s vast campus there.

Apple employs about 5,500 people in Ireland, Google about 6,000, Microsoft about 2,000, and Dell about 2,500. Technology companies collectively employ more than 80,000 people in Ireland, according to IDA Ireland, which has responsibility for attracting overseas investment.

What’s the attraction to Dublin for tech companies?

Dublin has a number of soon-to-be-unique attractions within the EU. A young, native English-speaking, tech-savvy population of 4.6 million people, an openness to overseas talent and a government largely in thrall to tech companies. But perhaps most notably, Ireland offers the lowest corporate tax in Western Europe: 12.5 per cent.

It also offers an attractive place for licensing intellectual property rights, with patent and copyright income subject to just 6.25 percent tax in many circumstances, and 25 percent tax credits available for research and development spending. That’s why many US tech companies use Ireland as the base for licensing their technology to all their European subsidiaries.

It’s not clear yet what deal the UK will reach with the EU throughout its exit negotiations. But as limits to immigration was a core component to the Leave campaign, there’s every chance talks will seek to enforce stronger rules than exist today in the UK. But that doesn’t apply to Ireland. While tech companies based in the UK may be forced to navigate a labyrinthine work permit system, Ireland will continue to allow European talent to base itself there, and bring colleagues.

Coincidentally or not, the Irish government this week laid out a plan to spend about €2 million in a bid to attract about 3,000 additional technology workers to Ireland, with the target markets including central and southern Europe.

Is Dublin the obvious choice then?

It’s not quite that simple. Sterling’s plunge makes London that bit cheaper for big tech companies. Plus, with the UK departing the EU, Ireland will lose a valuable ally in the fight to keep its 12.5 per cent tax rate, long targeted by the likes of France.

Other tech hubs in EU countries are also fighting to attract tech talent. Berlin in particular has a thriving startup scene and has also attracted large numbers of founders and engineers from throughout the EU and beyond.

Isn’t the EU fighting its own battle over tax in Ireland?

Yes. The European Commission is probing Apple’s tax dealings in Ireland. With a decision expected as soon as next month, both Ireland and Apple are bracing for a loss. But the EU is probing a very specific so-called “sweetheart deal” Apple allegedly received from Ireland – there’s no broader threat to the nation’s tax system.