Why Ireland needs to stay ahead of the curve
Competition across Europe to become a hub for business relocation is huge
Brian Daly: “Significant additional work would need to be done by the Government and businesses in Ireland if the UK were to crash out of the EU without a deal.”
“If the UK Brexit offer is unacceptable to Ireland it will be unacceptable to Europe,” announces the Donald Tusk quote from December 2017 that placed Ireland at the heart of the EU’s negotiating policy.
Brexit, in whatever form it now takes after the new October 31st deadline, creates both strategic challenges and opportunities for Ireland. Previously, we would have been on the same side of the EU negotiating table, Mark Kennedy managing partner at Mazars says, that’s going to change somewhat now.
“In terms of the trade of goods, Ireland was never really at odds with the general EU direction, so I don’t see any particular challenge there. The trade of services is much more interesting and we would have collaborated and had a similar view to the UK. There is going to be a different dynamic around the discussion of rules for trade of services and taxation hence forth.
“My sense is, in Europe there are going to be new alignments and where we would have previously partnered up with the UK, we will now have different constellations of partners. Take technology services, we have a big footprint in the market because of our US FDI, and we probably have more in common with some of the Nordic economies or eastern Europeans than we do with the Germans and French, so you will start to see natural alliances there. In a similar way, with agriculture, we have more in common with the western economies than eastern,” he says.
Meanwhile, Ireland’s position as a gateway to accessing European markets, which was already extremely strong, will now be enhanced further.
“It’s an enormous opportunity for us to become a gateway into Europe. It won’t be in all areas but in certain sectors. I think you see that already in financial services. We will be a friendly gateway into Europe,” Kennedy says.
Brian Daly, head of Brexit, KPMG in Ireland says the Government’s response to Brexit negotiations, thus far, has been impressive.
“Getting our strategic issues on the table early, maintaining a stable domestic political environment, whilst at the same time providing additional resources to State agencies to reinforce the attractiveness of Ireland as a location for people to do business has been critically important,” he says.
“Significant additional work would need to be done by the Government and businesses in Ireland if the UK were to crash out of the EU without a deal. Such a scenario would create significant challenges across the economy, but it would also create opportunities. A lot of planning and preparations have already been done. Time will tell if it is sufficient for the unprecedented challenges that would arise if the UK were to leave without a deal.”
The key for Ireland is to ensure it invests ‘ahead of the curve’ to absorb increased business and talent considering moving to Ireland
Daly says that while Ireland has not taken any particular steps to make itself more attractive to companies having to relocate from the UK because of Brexit, we have to date been very successful in attracting quite a lot of businesses here as it is.
“The relative strength of our reputation as an attractive location with a strong track record of success for inward investors has been critically important.
“Our challenge will be to make sure that we continue to make the right strategic investments in areas such as talent, language skills, legal and tax framework, labour practices, track record and openness to inward investment, communications and transport access and cultural fit to allow whoever relocates to Ireland to be able to further develop their businesses here,” he says.
“The key for Ireland is to ensure it invests ‘ahead of the curve’ to absorb increased business and talent considering moving to Ireland,” Andrew O’Callaghan, PwC leader European asset management says.
Competition between Ireland and other European countries to become a hub for business relocation is huge but Ireland is strongly positioned.
“The offering differs by country and by industry. Ireland, Germany, Luxembourg and the Netherlands are strongly positioned in relation to high skilled and financial services moves. Manufacturing relocations have tended to focus on central and eastern Europe. The Common Travel Area between the UK and Ireland is an important consideration for firms that need a location that will require full access to both EU27 and UK talent / experience. A PwC study of European Asset Managers conducted in late 2018 concluded that Ireland was the preferred jurisdiction to relocate UK functions to post-Brexit,” O’Callaghan says.
In terms of job opportunities for those returning to Ireland from the UK, he is seeing significant opportunities in technology, digital, financial services, pharma and life sciences and professional services across all of the larger cities in Ireland, with strong interest among both Irish people returning to Ireland and among non-Irish people looking to work in an English-speaking environment.
Is it possible for Brexit employees to continue to participate in UK rewards schemes like a share option scheme or occupational pension scheme?
However, there are a wide range of issues that employees and their employers are having to deal with, Thalia O’Toole, head of global mobility services, KPMG in Ireland says.
“Beside the domestic challenges of schools and accommodation, there are also issues to be managed in relation to managing payroll tax obligations, which country has taxing rights, whether it is possible for Brexit employees to continue to participate in UK rewards schemes like a share option scheme or occupational pension scheme, how employee compensation packages may need to be designed to cover cost of living and tax/social security issues and what level of tax advisory/relocation support should be provided to the employee.
“A lot of our work involves assisting employers in handling and communicating with employees on these issues as well as the Irish tax rules in relation to foreign assignments, and the differences in the CGT and gift tax rules in Ireland. Employment law and immigration matters also need to be considered,” she says.