Monday, June 18, 2018

Who shifts profits to Ireland?

Eurostat’s structural business statistics give a range of measures of the business economy broken down by the controlling country of the enterprises.  Here is the Gross Operating Surplus generated in Ireland in 2015 for the countries with figures reported by Eurostat.

Ireland Business Economy by Controlling Country - Profits 2

In total companies reported around €125 billion of Gross Operating Surplus in Ireland in 2015.  Of this 90 per cent arose in companies controlled from just two countries.  These were companies “controlled by the reporting country” (i.e. Ireland) and companies controlled from the United States.  Much smaller amounts of profits are reported for companies controlled from all other countries.

Although there are problems with it we can get some insight into the profitability of companies by comparing their gross operating surplus to their personnel costs.

Ireland Business Economy by Controlling Country - Profitability 2

Again, there is one stand-out figure – that for the United States.  There are other countries which do seem to have companies in Ireland with “excess” profits (Australia, Japan, Italy and Belgium) but as shown in the first chart the amounts in question are relatively small and some of the high rates are one-offs rather than showing up consistently in the data.

Do these charts show:

  1. Profits being shifted out of large market countries such as France and Germany, etc. or
  2. Profits being shifted out of their source in the United States?

And if it is #1 why is it only US companies that seem to be able to do it?  Why don’t French or German companies shift their profits to Ireland?  Of course, the answer is that the charts actually show #2 to be key issue but that seems unlikely to get a foothold in the debate anytime soon.

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  27. Hello Everybody,
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  28. Private Lender Bentex Funding Group Ltd.
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