Ireland tax system 4th best among European small countries

Deloitte European Tax Survey

9 December 2013 - Ireland is the fourth most favourable jurisdiction among smaller countries in Europe from a tax system perspective behind Luxembourg, Switzerland and Belgium, according the Deloitte European Tax Survey. In the poll of tax directors from over 900 companies across 28 jurisdictions, the Netherlands and the UK were voted the most favourable in the larger country category.

A majority of respondents cited ‘certainty’ in their tax position as the single most important factor that made a jurisdiction favourable for them. In polls taken on a country by country basis, more than 60% of respondents believed that there was a high degree of tax uncertainty in their country. Tax uncertainty was lowest in Ireland, where only 11% of respondents believed that there was a high degree of uncertainty in their country.

Commenting, Padraig Cronin, Head of Tax & Legal Services, Deloitte Ireland, said:

“From an inward investment perspective, the results provide interesting insight for Ireland Inc as it is feedback from a European perspective and not from our traditional source of inward investment in the US. Consequently, it is somewhat reassuring that tax directors across European counterparts cite Ireland as having an attractive tax system. The certainty of the Irish regime, with our long-standing commitment and public declarations to support the headline 12.5% corporation tax rate, has obviously helped position Ireland well in this regard.

“However, it is equally notable that Ireland Inc faces stiff competition from a tax perspective right across Europe from the likes of the Netherlands, Belgium and most recently from the UK as it lowers its corporation tax rates. Both the UK and the Netherlands, for example, have worked hard to become more attractive to multinational companies, and this seems to be working. The challenge for Ireland to continue to attract our share of global inward investment is an ongoing one and so while we need to play fair, we also need to continue to play to win.

“Although there may be a perception in some quarters abroad that Ireland has a generous tax system, it is clear from the survey that there are other European countries which are just as attractive and in some cases more attractive than Ireland from a tax perspective.”

Among the larger economies, the Netherlands was cited as having an easy and professional tax system which was predictable and one in which respondents continually referred to its simplicity. Russia and Italy were deemed among the most challenging places from a tax system perspective due to complexity and uncertainty, alongside Greece, Portugal, Poland and Hungary.

A principle finding of the survey is that heads of tax right across Europe wanted stable tax legislation. The biggest issue many cited was that already complex tax-systems were being further complicated by rafts of new laws.

Levels of public debate around tax were raised in some countries in western Europe – in particular Luxembourg, Switzerland, the UK and the Netherlands – were there has been media scrutiny, pressure from special interest groups and heated discussion around what constitutes a just and fair tax system.

Survey findings also found that respondents were more critical of their own than of foreign jurisdictions. A third of French respondents picked their own country as most challenging versus over 15% overall. Over a third (37%) of German respondents selected their own country versus 17% overall. When asked which of the smaller economies are challenging, just 2% of Irish-based respondents identified Ireland as the most challenging.

The biggest issue many cite is that already complex tax systems are being further complicated by rafts of new laws. Aside from the burden of keeping up with the changes and educating their teams, this is the main cause of tax uncertainty. Frequent change is also the thing that most would reduce in order to make their own countries more competitive.

65% of respondents in Ireland rate their relationship with the tax authorities as good, while a further 5% rate it as excellent. 65% also believe their relationship remains the same when compared to a year ago.


Notes to editors

*Heads of tax from 940 organisations from 28 jurisdictions across Europe were surveyed between June - July 2013.

Deloitte European Tax Survey
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