News & Events

Ireland has received widespread coverage in the international media in recent weeks. The commercial and residential property crash that began in 2007 has precipitated a crisis in the Irish domestic banking sector prompting unprecedented focus on the Irish economy.
 

A comprehensive two-tiered response has been proposed to deal with Ireland’s domestic economic difficulties. First, the provision of a loan facility to Ireland by the International Monetary Fund and the European Union will help allay fears about the ability of Ireland to meet its on-going domestic funding needs and provide much needed capital for Ireland’s domestic banks. Secondly, the Irish government has announced a 4 year recovery programme to reduce the country’s budget deficit significantly by 2014. The details of both measures are well reported elsewhere.
 

The Full Story

Unfortunately, however, the extensive media coverage within Ireland and internationally has not revealed the full story about the Irish economy. For the most part, it has ignored the bigger picture regarding those parts of the Irish economy which have performed extremely well throughout the world-wide recession and will continue to thrive in 2011, namely its ability to attract foreign direct investment (FDI) and to provide a world class location for International Financial Services.
 

We outline below some undisputed facts about the Irish economy and summarise the reasons why Ireland remains a very attractive location for FDI and for International Financial Services.

Some Facts About Foreign Direct Investment (FDI) and the Irish Economy

Foreign direct investment into Ireland has been an unqualified success story. This success has been in no small part attributable to Ireland’s 12.5% corporation tax rate which will remain a cornerstone of Ireland’s economic infrastructure. We highlight
below some facts about FDI in Ireland:

• FDI in Ireland in 2010 will be the highest it has been in seven years;
• Exports of goods and services from Ireland grew by almost 7% in 2010;
• Ireland remains home to:

1.  8 of the world’s top 10 pharmaceutical companies;
2.  9 of the world’s top 10 global technology companies;
3.  15 of the world’s top 25 medical technology companies;
4.  Over 50% of the world’s top financial services companies;

• Ireland accounts for more international investment from the United States than Brazil, Russia, India and China combined.

Some facts about the International Financial Services Industry in Ireland

It is essential to distinguish between Ireland’s domestic banking sector and Ireland’s International Financial Services sector which services external financial services clients. Ireland’s International Financial Services sector has retained competitive advantages. Briefly, these are as follows:

• Ireland is an internationally recognised, open and tax efficient jurisdiction with a very broad network of global tax treaties;
• The infrastructure around the IFSC, which includes all major global financial institutions as well as globally recognised service providers, continues to make Ireland a “best in class” jurisdiction for International Financial Services;
• There has been a marked improvement in the cost base of Ireland in recent years creating the opportunity to employ top quality staff at competitive rates, along with a significant reduction in office rents and the cost of ancillary services; and
• Ireland still has a young, highly educated and motivated workforce with a broad range of skills and experience.

Investment Funds

Ireland continues to be the location of choice for investment funds with total assets of Irish domiciled funds now exceeding €900bn, a record high. There are nearly 11,000 funds (and sub-funds) located in Ireland and 850 promoters with funds serviced  in Ireland. The Irish funds industry is supported by an excellent infrastructure which includes 47 administration companies and 19 trustee/custodian banks. Ireland is the leader in cross-border fund distribution accounting for over 30% of the European cross-border market. Recent legislative changes complement the existing infrastructure for the establishment of funds in Ireland – they include laws geared towards the introduction of the AIFM Directive, simplifying the process for re-domiciliation of funds to Ireland and the improved facilitation of structures for Islamic Finance.

Structured Products and Capital Markets

Ireland has been and continues to be a favoured location for SPVs that are used to facilitate structured products and securitisation transactions. It is estimated that well over 1,000 SPVs are administered in Ireland. Specific legislation (“Section 110”) exists in Ireland to provide special tax treatment in relation to qualifying SPVs. Section 110 has been refined continuously since its introduction as the market has evolved. Even throughout the recession in this sector since 2008, the Irish structured finance industry has performed well as it adapted to market trends. In addition, the Irish Stock Exchange remains the forum of choice for debt listings even for issuers established outside of Ireland.

Aircraft Financing and Leasing

In addition, Ireland is also recognised as a leading centre for aircraft financing and leasing. Seven of the world’s top ten aircraft leasing companies are head quartered or have a significant presence in Ireland and provide aircraft leasing, financing and asset management solutions to aircraft operators globally. Indeed it is estimated that 50% of the world’s leased aircraft are managed from Ireland. Also, Ireland is a signatory to the Cape Town Convention thereby facilitating, where appropriate, registration of international interests in aircraft objects. Again the success in this sector is in no small part attributable to Ireland’s favourable taxation regime, including its tax treaty network, eight year tax depreciation for aircraft and favourable