With Ireland coming under increasing pressure to raise corporate taxes, Swiss cantons are eyeing the opportunity of seizing a greater share of company relocations.
Parasites is probably too kind a word for them when the headline is:
Cantonal eyes smiling at Irish economic woes
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
well rightly said.It is really bad situation of Corporates at Ireland..
The US companies that have located their European headquarters in Ireland did so on the basis of an attractive tax regime. If the regime changes, their boards will have a duty of care to their shareholders to re-evaluate their operations there and Switzerland, which is already home to the European operations of a large number of US companies’ European headquarters will be viewed as the most “obvious” alternative location.
Richard
A few weeks ago you posted a story from Bloomberg to the effect that Google, although having a presence in Ireland, was not paying anywhere near 12.5% due to a structure involving overseas ownership of intellectual property. For them it wouldn’t make much difference what the rate of tax is if it is being avoided anyway.
Similarly the UK companies which have relocated to Ireland have done so, not for the lower rate, but because of the absence of CFC regulations, and again an uplift in the rate would not make any difference.
Robert Peston’s blog at the BBC is so far the only news source I have seen that has pointed this out, and carried a quote from WPP that it is the international structure that is attractive in Ireland and if this went, they would relocate, probably to Switzerland.
The EU should be pressing for these changes (as well as levelling the playing field on rates).
So, it looks like parasites also have parasites. 😀
@Iain
I sought to make this point to the Northern Ireland Affairs Committee this week and it is reflected in my NI report
@Million Dollar Babe
There is no such legal obligation for a UK company
@Million Dollar Babe
I also suspect it is wholly unenforceable in the US
Has anyone ever tried to enforce it?
US companies prefer to settle in Ireland (and the UK) because they feel at home with the legal system, political environment, and of course the English language.
The famous tax rate was a magnet, of course, specially in comparison to the UK, but just as important was the fact that Ireland a few years ago was a relatively inexpensive place to set up shop…..and the people were great….and they were both in the EU and in the eurozone.
So under pressure, the US companies would probably settle for a corporate tax rate just a little lower than the European average.
Would they go to German-Speaking Switzerland? It would certainly be expensive for them to do so….right now, the Swiss have a corporate tax that goes from 13 to 22% depending on the cantons, but with Switzerland, you have all these other regulations and costs to take into account.
And who can guarantee that the Swiss will not come under some type of political pressure in a few years? Let’s face it….no matter how much cash they have, the Swiss depend on the EU for their survival.
If they made a deal over UBS with the U.S ….a land way way across the ocean… because they needed access to the american market, why would they not make a deal with the EU over the corporate tax rate?
@Richard Murphy
A company’s board has the fiduciary duty to maximize the return to shareholders. That includes minimizing tax leakage in overseas jurisdictions.
I don’t know about a UK company’s board but I cannot imagine it is that different. In this case it is irrelevant anyway.
@Million Dollar Babe
Answer the question
Has any ever been sued for not doing so?
@Cesar Esteban
Thare are already a large number of US companies operating out of Switzerland, including many that have been there for decades (HP, Dupont, IBM) and some that have relocated there recently (McDonald’s, Yahoo). If anything, setting up in Ireland was unnatural to most US corporations.
As for the US – UBS deal, it resulted from the fact that UBS had engaged in criminal activities in the United States and was (quite justifiably) going to be stripped of its doemstic banking license if it failed to co-operate.
Offering low coporate tax rates is not, despite Murphy’s and others’ best efforts in characterizing them as such, a crime.
@Million Dollar Babe
I never said it was
It’s only you who misrepresents the truth
Which is why – together with your false email address – you’ll be taking a break here for a while