If we have an EU directive it has to be made into English law for it to be enforceable, so to that extent it is not undermining our legal system, it still works. What grates with me is having to pass laws that we would not have chosen to, worse still, we find it makes life more difficult and more expensive without obtaining any perceived added value. To repeat what I've said before, the directives are to serve the interests of the EU, not the UK or me or my business.
Many Directives are highly technical so that few will understand the full implications or anticipate unintended consequences, least of all EU politicians. Classic is something called the AIFM Directive which was devised, in part, as a response to the perceived part played by hedge funds in collapsing markets in adverse conditions. In practice the Directive was not preceded by any thoughtful analysis of the risks but was simply the culmination of the desire of the EU (France and Germany) to impose stricter pan European regulation. It has not addressed the systemic risks, which hedge fund understand better than anyone else, and have an interests in managing anyway, and instead focusses on the investor protection aspects ignoring that hedge fund investors are mainly institutions and wealthy clients who don't need tax funded regulators to protect their interests. Nothing is in place that will have any impact on mitigating a future market crash and all that has been achieved is added unnecessary costs, time and effort and more jobs for regulators. I could go on and on....zzzzzzzzzzz.
Nor am I familiar with the idea that businesses routinely ignore regulations that could result in penalties in the £millions.
The problem is that the general public are unaware of these issues and why should they, it should be our politicians who should be aware and be allowed to act in the interests of the UK at large, but they can't. Bring on the referendum.
The idea that only the EU have the brains to come up with brilliant ideas we all want made into law doesn't wash with me. What's the EU ever done for us that we couldn't have done for ourselves - if the electorate had wanted it- and what can't we do that other non-EU counties have done on trade negotiations? Bring on the referendum.
When does the football start?
You comment exclusively from the point of view of financial products though.
What about if you were the manufacturer or importer of Prague's sodding kettle that everyone's become obsessed with? Are you saying there's zero "perceived value" to that business in having a uniform standard of safety across the whole EU allowing it to be sold freely across borders without any further testing, documentation or hindrance?
To expand on the point earlier if Nokia wants to start knocking out sandwich toasters it either manufactures to at least the same standard as everyone in the EU or access to that market is closed off. But it has zero influence on the development on the Directives development that it has to manufacture to. That is precisely the road UKIP want us to tread which in my view would be bad for both consumers and businesses.
I know people who have sat on technical committees drafting directives btw. They know their stuff inside out and upside down and if there are issues with them it is almost always in the interpretation of them into national law and not the fault of MEP's.
Not an expert on kettles but an exporter of kettles to the US or China presumably has to comply with different safety standards. There is clearly a value in having fewer standards to meet and if you only trade in Europe there is an efficiency gain. However, the days of global protectionism in the post war years and at the time Ted Heath joined us in the Common Market there was real value in having access to a large free trade area. The days of regional protectionism are past and the value of the single market as an oasis of free trade no longer holds exists.
You are making the points for me about interpreting Directives, I was going to say something similar. Why should it be impossible to interpret what our law makers are charged with implementing? As good honest members of the EU community we err on the side of prudence and make the extreme interpretation for fear of implementing lower standards than required. The rest of Europe familiar with the game of making rules up to suit yourself, exploit the imprecision to the maximum.
"What's the EU ever done for us that we couldn't have done for ourselves - if the electorate had wanted it- and what can't we do that other non-EU counties have done on trade negotiations?"
Right, I can answer that. However to do so, i have to assume that you - and most informed voters - agree with me that the following is laughably outrageous
1. You buy a book from Amazon. You pay in sterling, it is delivered from one of their many distrib centres in the UK, to your UK address. However Amazon send you an electronic invoice which appears to suggest you did business with a company in Luxembourg, and on that basis all profit related to that transaction is taxed in Luxembourg.
2. Google and Facebook are basically media owners (advertising sales companies). They sell advertising alongside their content, in just the same way as ITV does. In order to do big business with the big advertising agencies, they have teams of high powered sales people, living and working in London, whose job is to sell that space to the likes of Group M. Just like ITV have. The key difference is that Google and Facebook send their invoices to Group M from a computer based in Ireland and claim that they should pay tax on the -considerable -profit in Ireland, on the basis that "the deal was closed" in Ireland.
The Reasonable Man, whom you and I well know, would, when presented with these facts conclude that this is the biggest tall story he has heard since Arthur Daley tried to sell him a car with 5k on the clock. But has the Reasonable Man been given the chance? In other words has the Inland revenue taken those three companies to task, let alone to court, for shielding billions of pounds from UK tax on the basis of this scam scheme? Have they ****. But the European Commission is doing so. And they have a good chance of winning, just as they have won against Microsoft and Intel; and that is quite simply because only Europe as a bloc is big enough to take on these companies. And the more I find out about those companies the more I think it is urgent to take them on.
The real issues for me are around housing, jobs, the NHS, schools etc.
For example, will my sons ever be able to "move out" and buy their own place ?
Will they still be living "at home", when they are 50 and I am 80 ?
I know that the lack of property is driving prices ever higher and I understand supply and demand. I also know the lack of property isn't solely down to us being in the EU. Furthermore, if we can build more properties than are required for people coming into the country and of course depending upon birth levels, then perhaps prices would level out or even fall.
However, this has not happened in the past and I can't see it happening in the future.
NB renting is also astronomical.
A 1 bed flat in Bromley now costs £200K minimum. If my sons could save £20K, they would need to borrow £180K minimum, without fees, so would possibly need to earn £45K pa. This doesn't look like happening anytime soon and all the time prices are going up and up. 10% last year in Bromley. Please take these figures as a guide and let's not quibble over minor figures.
Now I'm not saying this is all down to immigration levels, because obviously it isn't. But it is definitely being exacerbated by high levels of immigration. The majority of people moving into my road are every nationality except British. Now I'm not saying that is a bad thing and I am on very good terms with ALL my neighbours. I don't care what nationality they are, as long as they are decent folk (which they are). But I am simply pointing out, that the more people come to the UK, the higher property prices are likely to rise. This is not racist in any way shape or form (and I know no one has said that I am making racist comments).
We would have similar issues if all the Brits decided to return to Britain and I would be saying the same thing. It is about the amount of people and available resources, not their colour, creed or religion.
These are the sort of things that concern me. Not 1 or 2 year guarantees on electrical items.
I understand your concerns CE, but ending immigration wouldn't solve that problem. People are getting married later and divorced more often, so even if the population remained entirely static, there would still be an increased demand for accommodation. The increase in population since the 1950s that's been bandied about several times in this thread has mainly been due to increased life expectancy, with bulges in the number of births when the baby boomers had kids and when their kids had kids. The pressure due to immigration is just the icing on the cake (particularly if we're just talking about EU immigration, as it's largely balanced out by those Brits like Prague and Algarve working in the EU, and all those pensioners who've retired to Spain).
In terms of house prices, it also doesn't help that first time buyers are being priced out by people with buy to let portfolios. We've also lost huge amounts of social housing due to right to buy, and regeneration projects that have turned estates into half social half luxury development, in order to get funding. So instead those people are having to go into the private rented sector, which pushes up rents for everyone and increases the housing benefit bill. What we really need to do is stop selling off social housing, build a load more of it, as well as shared ownership and 1st time buyer schemes, and have incentives to get empty properties back into use. Personally I'd love to see restrictions on buy to let, but I suspect that's a forlorn hope, given the reaction to the Mortgage Credit Directive.
"What's the EU ever done for us that we couldn't have done for ourselves - if the electorate had wanted it- and what can't we do that other non-EU counties have done on trade negotiations?"
Right, I can answer that. However to do so, i have to assume that you - and most informed voters - agree with me that the following is laughably outrageous
1. You buy a book from Amazon. You pay in sterling, it is delivered from one of their many distrib centres in the UK, to your UK address. However Amazon send you an electronic invoice which appears to suggest you did business with a company in Luxembourg, and on that basis all profit related to that transaction is taxed in Luxembourg.
2. Google and Facebook are basically media owners (advertising sales companies). They sell advertising alongside their content, in just the same way as ITV does. In order to do big business with the big advertising agencies, they have teams of high powered sales people, living and working in London, whose job is to sell that space to the likes of Group M. Just like ITV have. The key difference is that Google and Facebook send their invoices to Group M from a computer based in Ireland and claim that they should pay tax on the -considerable -profit in Ireland, on the basis that "the deal was closed" in Ireland.
The Reasonable Man, whom you and I well know, would, when presented with these facts conclude that this is the biggest tall story he has heard since Arthur Daley tried to sell him a car with 5k on the clock. But has the Reasonable Man been given the chance? In other words has the Inland revenue taken those three companies to task, let alone to court, for shielding billions of pounds from UK tax on the basis of this scam scheme? Have they ****. But the European Commission is doing so. And they have a good chance of winning, just as they have won against Microsoft and Intel; and that is quite simply because only Europe as a bloc is big enough to take on these companies. And the more I find out about those companies the more I think it is urgent to take them on.
Perhaps a different UK government could and would take them on (at least in the UK).
The only good thing about the success and profit these companies have made so far is that they may now rely on the UK markets they trade in which gives us some leverage.
Aren't high house prices in the south east and London just driven by demand though? Perhaps if the country was organised better the prices would be lower. You can buy a house in Wales for about 40p, but people don't want to. Doing away with immigration is unlikely to have much effect
Aliwibble, thanks for your excellent response, which I totally agree with, apart from one point.
You say that :-
"The pressure due to immigration is just the icing on the cake (particularly if we're just talking about EU immigration, as it's largely balanced out by those Brits like Prague and Algarve working in the EU, and all those pensioners who've retired to Spain). "
How can that be, when net long term migration to the UK was 212,000 in the year ending December 2013.
This figure is reasonably reflective of the previous 10 years as well.
So we have an extra 212,000 people to house every year.
Problem is all these public school idiots like Cameron, Clegg and Milliband live in a world far removed from the realities of the working man. And they are all now surprised to find that people are saying "we've had enough of this".
How true this is. I was astonished to hear this morning that over 55's are going to be allowed to dip into their pension fund to spend as they wish. What a bonanza for Bookies, Holiday companies, Pubs etc, but what a disaster when 5 to 10 years later they are skint and looking for help. Being at this end of my life is becoming a gift.
Much as I can't abide Miliband he did not attend public school, Farage did.
"What's the EU ever done for us that we couldn't have done for ourselves - if the electorate had wanted it- and what can't we do that other non-EU counties have done on trade negotiations?"
Right, I can answer that. However to do so, i have to assume that you - and most informed voters - agree with me that the following is laughably outrageous
1. You buy a book from Amazon. You pay in sterling, it is delivered from one of their many distrib centres in the UK, to your UK address. However Amazon send you an electronic invoice which appears to suggest you did business with a company in Luxembourg, and on that basis all profit related to that transaction is taxed in Luxembourg.
2. Google and Facebook are basically media owners (advertising sales companies). They sell advertising alongside their content, in just the same way as ITV does. In order to do big business with the big advertising agencies, they have teams of high powered sales people, living and working in London, whose job is to sell that space to the likes of Group M. Just like ITV have. The key difference is that Google and Facebook send their invoices to Group M from a computer based in Ireland and claim that they should pay tax on the -considerable -profit in Ireland, on the basis that "the deal was closed" in Ireland.
The Reasonable Man, whom you and I well know, would, when presented with these facts conclude that this is the biggest tall story he has heard since Arthur Daley tried to sell him a car with 5k on the clock. But has the Reasonable Man been given the chance? In other words has the Inland revenue taken those three companies to task, let alone to court, for shielding billions of pounds from UK tax on the basis of this scam scheme? Have they ****. But the European Commission is doing so. And they have a good chance of winning, just as they have won against Microsoft and Intel; and that is quite simply because only Europe as a bloc is big enough to take on these companies. And the more I find out about those companies the more I think it is urgent to take them on.
Perhaps a different UK government could and would take them on (at least in the UK).
The only good thing about the success and profit these companies have made so far is that they may now rely on the UK markets they trade in which gives us some leverage.
Well such a government would get my vote. Once they have actually started doing it.
However regarding your second point, it's important to be aware that they play this game right across Europe, and Amazon Germany is, I think bigger than Amazon UK. The Germans are bloody furious about it, as they are about Amazon's games with their employee's contracts. More chance of winning with the Germans on our side, wouldn't you agree on that?
"What's the EU ever done for us that we couldn't have done for ourselves - if the electorate had wanted it- and what can't we do that other non-EU counties have done on trade negotiations?"
Right, I can answer that. However to do so, i have to assume that you - and most informed voters - agree with me that the following is laughably outrageous
1. You buy a book from Amazon. You pay in sterling, it is delivered from one of their many distrib centres in the UK, to your UK address. However Amazon send you an electronic invoice which appears to suggest you did business with a company in Luxembourg, and on that basis all profit related to that transaction is taxed in Luxembourg.
2. Google and Facebook are basically media owners (advertising sales companies). They sell advertising alongside their content, in just the same way as ITV does. In order to do big business with the big advertising agencies, they have teams of high powered sales people, living and working in London, whose job is to sell that space to the likes of Group M. Just like ITV have. The key difference is that Google and Facebook send their invoices to Group M from a computer based in Ireland and claim that they should pay tax on the -considerable -profit in Ireland, on the basis that "the deal was closed" in Ireland.
The Reasonable Man, whom you and I well know, would, when presented with these facts conclude that this is the biggest tall story he has heard since Arthur Daley tried to sell him a car with 5k on the clock. But has the Reasonable Man been given the chance? In other words has the Inland revenue taken those three companies to task, let alone to court, for shielding billions of pounds from UK tax on the basis of this scam scheme? Have they ****. But the European Commission is doing so. And they have a good chance of winning, just as they have won against Microsoft and Intel; and that is quite simply because only Europe as a bloc is big enough to take on these companies. And the more I find out about those companies the more I think it is urgent to take them on.
Perhaps a different UK government could and would take them on (at least in the UK).
The only good thing about the success and profit these companies have made so far is that they may now rely on the UK markets they trade in which gives us some leverage.
Well such a government would get my vote. Once they have actually started doing it.
However regarding your second point, it's important to be aware that they play this game right across Europe, and Amazon Germany is, I think bigger than Amazon UK. The Germans are bloody furious about it, as they are about Amazon's games with their employee's contracts. More chance of winning with the Germans on our side, wouldn't you agree on that?
But the definition of "long term migrant" means they stay at least year, not necessarily that they stay permanently. Without knowing the degree of churn involved, you can't say what the cumulative effect would be. A lot of the Poles who would have been considered long term migrants at the time the controls were relaxed have reportedly now gone back as the Polish economy has improved, so while the figures may be correct at the time, they also give a misleading impression.
Oh, and are they including students in those figures?
"What's the EU ever done for us that we couldn't have done for ourselves - if the electorate had wanted it- and what can't we do that other non-EU counties have done on trade negotiations?"
Right, I can answer that. However to do so, i have to assume that you - and most informed voters - agree with me that the following is laughably outrageous
1. You buy a book from Amazon. You pay in sterling, it is delivered from one of their many distrib centres in the UK, to your UK address. However Amazon send you an electronic invoice which appears to suggest you did business with a company in Luxembourg, and on that basis all profit related to that transaction is taxed in Luxembourg.
2. Google and Facebook are basically media owners (advertising sales companies). They sell advertising alongside their content, in just the same way as ITV does. In order to do big business with the big advertising agencies, they have teams of high powered sales people, living and working in London, whose job is to sell that space to the likes of Group M. Just like ITV have. The key difference is that Google and Facebook send their invoices to Group M from a computer based in Ireland and claim that they should pay tax on the -considerable -profit in Ireland, on the basis that "the deal was closed" in Ireland.
The Reasonable Man, whom you and I well know, would, when presented with these facts conclude that this is the biggest tall story he has heard since Arthur Daley tried to sell him a car with 5k on the clock. But has the Reasonable Man been given the chance? In other words has the Inland revenue taken those three companies to task, let alone to court, for shielding billions of pounds from UK tax on the basis of this scam scheme? Have they ****. But the European Commission is doing so. And they have a good chance of winning, just as they have won against Microsoft and Intel; and that is quite simply because only Europe as a bloc is big enough to take on these companies. And the more I find out about those companies the more I think it is urgent to take them on.
Perhaps a different UK government could and would take them on (at least in the UK).
The only good thing about the success and profit these companies have made so far is that they may now rely on the UK markets they trade in which gives us some leverage.
That's the whole point, a single nation state cannot (unless you are China) cannot take on Google, Amazon et al - they don't have the size and, more importantly, those companies can simply bypass the UK and do business via Ireland.
However, a political collective like the EU does have the muscle to take these people on and, more importantly, can pressure member states like Ireland to stop allowing these companies to manipulate the European tax system.
No surprise at all that in recent days the Irish have announced that they will be normalising their taxation system - albeit incrementally - to being it into line with EU norms.
This is because, quite simply, the EU told them they could not expect bail outs from them whilst undermining fellow member states with this sort of unfair taxation.
aliwibble, I totally disagree that the figures are misleading. It matters not, whether people leave again. If they leave, surely they are included in the emmigration figure ?
These figures quoted (admittedly not just from EU) are net figures.
Obviously as an intelligent person, you understand what a net increase is.
If 200,000 people net (immigration less emigration) is the yearly figure, then of course we will have an extra 1,000,000 people living in the UK every 5 years.
201,000 EU citizens immigrated in the year ending December 2013, a statistically significant increase from 158,000 the previous year.
125,000 EU citizens immigrated for work in the year ending December 2013, a statistically significant increase from 95,000 the previous year.
The population of the UK grew to 64.1 million in mid-2013, representing a gain of 400,600 (0.63%) over the previous year mid-2012. This growth is slightly below the average since 2003.
This means that the UK’s population has increased by around 5 million since 2001, and by more than 10 million since 1964.
Natural change (births minus deaths) contributed slightly more than net international migration to the population gain in the year. There were 212,100 more births than deaths (53% of the increase) and 183,400 more immigrants arriving than emigrants leaving (46% of the increase).
The estimated populations of the four constituent countries of the UK in mid-2013 are 53.9 million (growth of 0.70%) in England, 5.3 million (growth of 0.27%) in Scotland, 3.1 million (growth of 0.27%) in Wales and 1.8 million (growth of 0.33%) in Northern Ireland.
There were 792,400 births and 580,300 deaths in the year ending 30 June 2013. The number of births decreased from the previous year but is still above average for the last decade. The number of deaths increased from the previous year and is the highest since the year to mid-2005.
The population of the UK aged 65 and over was 11.1 million (17.4% of the UK population) in mid-2013, up by 290,800 from mid-2012. The number of people in this age group has increased by 17.3% since 2003.
Growth of the UK population in the year to mid-2013 was higher than the EU average and highest of the four most populous EU member states.
Aliwibble, thanks for your excellent response, which I totally agree with, apart from one point.
You say that :-
"The pressure due to immigration is just the icing on the cake (particularly if we're just talking about EU immigration, as it's largely balanced out by those Brits like Prague and Algarve working in the EU, and all those pensioners who've retired to Spain). "
How can that be, when net long term migration to the UK was 212,000 in the year ending December 2013.
This figure is reasonably reflective of the previous 10 years as well.
So we have an extra 212,000 people to house every year.
Just to clarify some of the stats, there is quite a large margin for error, these figures are only done on the survey of a few thousand people entering. Of course that could mean it is actually higher but it's important to keep in mind.
Also of the number entering the UK, nearly a third are to study meaning they are likely to leave after a few years.
Finally, I don't think you can take one years figure and extrapolate that as what the picture will be in 5 years time. Given the new EU members and that the UK economy has been performing stronger than some of the other EU economies this means that more will be looking to move to the UK, this won't always be the case.
So basically, when you are given figures from the ONS, proof, and not just opinions, these too are rejected.
If you cannot accept facts, there's little point debating these issues further is there ?
It would be more honest to admit, that you have no interest in immigration facts, because whatever they are, you feel we should remain in the EU. I can appreciate that viewpoint, it may well be the best tact to take.
It's the denying the evidence that I find frustrating.
NB, not that I expect these additional facts to be accepted. However, just for the record here are the net EU figures, including both immigration and emigration from 1975-2013. They disprove points made about only being 1 year's figures. 1 year's figures are misleading etc etc.
So basically, when you are given figures from the ONS, proof, and not just opinions, these too are rejected.
If you can't accept facts, there's little point debating these issues further is there ?
Look no need to get so defensive, I was merely pointing out the limitations to just looking at a headline figure. I'd like to think given my job I'd know a little bit about using statistics and their downfalls. For example, if I was to go to my CEO and say "last year we made a £212k profit, therefore over the next 5 years we'll make £1m" I'd be laughed out of his office. it doesn't take into account many other factors going on or what made up that figure in the first place. It's similar to the £8bn "saving" we could receive if we left the EU. Looking at that number alone it's hard to argue against staying in the EU but I think I've said before about the dangers of just using a headline figure to prove a point.
So basically, when you are given figures from the ONS, proof, and not just opinions, these too are rejected.
If you can't accept facts, there's little point debating these issues further is there ?
Look no need to get so defensive, I was merely pointing out the limitations to just looking at a headline figure. I'd like to think given my job I'd know a little bit about using statistics and their downfalls. For example, if I was to go to my CEO and say "last year we made a £212k profit, therefore over the next 5 years we'll make £1m" I'd be laughed out of his office. it doesn't take into account many other factors going on or what made up that figure in the first place. It's similar to the £8bn "saving" we could receive if we left the EU. Looking at that number alone it's hard to argue against staying in the EU but I think I've said before about the dangers of just using a headline figure to prove a point.
I accept what you say. Now have a look at the graph/trend on my link for the last 10 years figures.
Presumably you would still try to claim that this is only 1 years headline figures.
It's not. These levels have been similarish for the last 10 years.
Not rejected, questionned. It's the basis of any decent scientific enquiry - how did you get the original data, are there any flaws in the measuring process, what are you basing your extrapolation of that data on? It's a big assumption that all long term stayers who go on to leave later are included in the emigration figures, given that in recent years our inward controls have been a lot more stringent than our exit controls until very recently - remember @PragueAddick's thread about getting the third degree when he was going back to the Czech Republic? That's a result of the Home Office trying to get a better handle on the figures.
So basically, when you are given figures from the ONS, proof, and not just opinions, these too are rejected.
If you can't accept facts, there's little point debating these issues further is there ?
Look no need to get so defensive, I was merely pointing out the limitations to just looking at a headline figure. I'd like to think given my job I'd know a little bit about using statistics and their downfalls. For example, if I was to go to my CEO and say "last year we made a £212k profit, therefore over the next 5 years we'll make £1m" I'd be laughed out of his office. it doesn't take into account many other factors going on or what made up that figure in the first place. It's similar to the £8bn "saving" we could receive if we left the EU. Looking at that number alone it's hard to argue against staying in the EU but I think I've said before about the dangers of just using a headline figure to prove a point.
I accept what you say. Now have a look at the graph/trend on my link for the last 10 years figures.
Presumably you would still try to claim that this is only 1 years headline figures.
It's not. These levels have been similarish for the last 10 years.
Well having downloaded the data file a couple of points. 10 year average net migration 2004-13 is 90,000. 5 year 2009-13 is 84,000. Now look at what happened in those years, new countries joining the EU meaning more freedom for those people to move and the economic downturn and subsequent recovery. These are big events and are unlikely to be the norm over the coming decades.
That said I don't completely disagree there is a problem with immigration, namely the housing situation in the UK. As I've said before these immigrants are net contributors to the economy. We need to be using more of that benefit in housing and infrastructure.
But as mentioned earlier, the housing problem would exist even if it weren't for immigration. As a country we've skimped on infrastructure spending for years, and it's coming back to bite us on the arse.
So the UK could not stop Amazon (eg) from trading in the UK?
In a simple way one could try but such a government might be labelled anti business and corporations could simply relocate to another, low cost EU domicile. So I'm afraid one has to concede some sovereignty and agree collectively that no EU country will drop VAT or corporation tax below an agreed value. Secondly you need a powerful collective challenge to the concept of intellectual property... Quite simply Starbucks move almost all of their profits out of the EU using two mechanisms - royalties on the branding and sale of coffee into the EU from Switzerland, that well known coffee growing region! My solution is to boycott Starbucks but collectively the consumers of the EU need to collect adequate taxes on their purchases to pay for their services. We in the cities have more in common with the peoples of Dublin, Paris, Milan and Prague than UKIP cares to admit and that's why UKIP does not have any chance in complex, multi cultural, service industry economies. It is the OECD and the EU that is leading the thinking on global corporations and it's the OECD which collates stats and reports on western economies. There is no one answer but stoking up fear and blame will cause crisis and take attention away from solutions for 2050. I see a poll today suggests that the NHS is top of the agenda for 2015... And that jobs/pay and immigration are the next on the list(20%) with the deficit at just 7% Labour should therefore win as they are not out to cut the NHS nor freeze benefits for the working poor. The deficit can be tackled but only if rich and smart people agree what the global or at least EU rules should be. What appears blindingly obvious is that Osborne is using the deficit to attack the average or below average earner... And that for all Farage's man with pint stuff he ain't talking about jobs or the NHS. I think the Lib Dems are being kicked for taking power but they may have an opportunity to set the record straight IF Labour are the largest party but without a majority. All to play for...and like others I thank everyone for the quality of debate.
So the UK could not stop Amazon (eg) from trading in the UK?
I don't think we want them to stop trading in the UK. We just want them to pay corporation tax in line with the trading they do, and in the way competitors like John Lewis, or Sainsbury do (that is exactly what the CEO of Sainsbury demanded a few months ago). But it seems we just don't have the balls. Did you know that Osbourne actually cut the budget of the Revenue in the last year, so they are even less able to pay for sufficient people with the brains and knowledge to take these bastards on?
Anyway the Germans want to take them on but they recognise that even they may need a hand, so that's why they are happy enough to do it through the EC
So the UK could not stop Amazon (eg) from trading in the UK?
They could try!
Bottom line - how can a government - any government - regulate online businesses that don't need to have a physical presence in the UK?
The Internet has created an open platform for these mega corporations to have global reach at very low cost - and with very little responsibility.
They do have a physical presence in the UK.
Some do - like Amazon with their distribution centres - but what about companies selling purely digital goods like video, music, messaging or cloud services?
There are plenty of them out there all making mega money from the UK and they need not have a single employee there at all.
Even if they did have a physical presence - like Amazon - then that's not really the point as they can still circumvent the UK taxation system with very few problems.
This is a major global problem which governments all over the world are wrestling with because they are seeing their tax revenues crumbles as these digital giants put plenty of physical retailers out of business and force others to cut jobs just to stay alive.
Not rejected, questionned. It's the basis of any decent scientific enquiry - how did you get the original data, are there any flaws in the measuring process, what are you basing your extrapolation of that data on? It's a big assumption that all long term stayers who go on to leave later are included in the emigration figures, given that in recent years our inward controls have been a lot more stringent than our exit controls until very recently - remember @PragueAddick's thread about getting the third degree when he was going back to the Czech Republic? That's a result of the Home Office trying to get a better handle on the figures.
That's the funny thing @Aliwibble. I am not sure whether the UK has decided that I have "emigrated", and therefore show up in the figures for emigres to the EU. I'm a current UK taxpayer, on the electoral roll, UK bank account and address. I'm not resident for tax purposes but I am sure that is not enough to get me onto the Home Office stats for emigrants. Anyone who does a one year stint for their company in Paris would be tax non resident that year, but certainly not an emigrant. I reckon there are a lot of people with my status hanging out in the EU. If that's true, the figures for emigration to the EU understate the real numbers who are leaving space for @Covered End to wander around Eltham :-).
Aren't high house prices in the south east and London just driven by demand though? Perhaps if the country was organised better the prices would be lower. You can buy a house in Wales for about 40p, but people don't want to. Doing away with immigration is unlikely to have much effect
This is a valid point. I seem to recall that no other developed nation has an economy so skewed towards its capital (biggest) city. London's economy produces over 20% of the UK's GVA (which seems to be a more popular measure than GDP these days). While stats at city level are quite difficult to come by in the UK, it seems that London exports twice as much as Birmingham (our second biggest city) produces and that city struggles to get to 20% of London's GVA and is now, in economic terms in danger of being overtaken by Manchester. In contrast the huge economic base which is New York is less than twice as large as LA with Chicago not far behind. Somehow, and without destroying London's dynamism in the process, we do need to re-distribute the economy.
So the UK could not stop Amazon (eg) from trading in the UK?
I don't think we want them to stop trading in the UK. We just want them to pay corporation tax in line with the trading they do, and in the way competitors like John Lewis, or Sainsbury do (that is exactly what the CEO of Sainsbury demanded a few months ago). But it seems we just don't have the balls. Did you know that Osbourne actually cut the budget of the Revenue in the last year, so they are even less able to pay for sufficient people with the brains and knowledge to take these bastards on?
Anyway the Germans want to take them on but they recognise that even they may need a hand, so that's why they are happy enough to do it through the EC
Our objection might be that Amazon is perceived as paying too little tax but they are doing nothing illegal and are paying what they are liable to pay. The arrangement described about Amazon orders and invoices might seem crazy and contrived to us but would look quite normal to an accountant.
The EU are not claiming tax from Amazon, they are claiming that a member state is giving special treatment to a corporation which allows the corporation, in the case of Amazon, to reduce the receipts on which it is liable to declare for tax and this is regarded as a STATE SUBSIDY. It is the member state's alleged wrong doing, not Amazon's. The idea that the EU has the power to make Amazon pay more tax is a delusion.
One outcome could simply be that Amazon pay more tax in Luxembourg, how does that help the rest of the EU. Another outcome could be Amazon re-arranges affairs outside an EU country, how will that help the EU. So the solution is not the EU bullying Ireland and Luxembourg on the pretext of them subsidising Amazon, (when it is really just following its instinct of wanting to eliminate competition) but all countries altering the tax laws. Problem is how do you make tax rules work that are based on physical presence, and where money ends up, for a virtual online business. Only a radical change in how tax and accounting laws work across the whole world is going to change anything. Because neither the EU nor our own politicians have a solution, all we are seeing is political gesturing and seeking a scapegoat, the sort of thing UKIP might be accused of.
Combined pressure from the EU and "other governments" - that means the US - forces Ireland to abandon the 'Double Irish'....
Ireland to Close ‘Double Irish’ Tax Loophole
By SAM SCHECHNER CONNECT Updated Oct. 14, 2014 4:48 p.m. ET
The Irish government moved on Tuesday to close one of the world’s best-known corporate-tax loopholes, in a step that could boost overseas income tax for a wide range of U.S. companies, particularly in the technology sector.
Ireland will change its tax code to require that all Irish-registered companies be tax residents in Ireland within the next six years, slowly ending a tax-optimization structure known as the “Double Irish,” Irish Finance Minister Michael Noonan said in a parliamentary address to introduce the 2015 budget.
“Aggressive tax planning by the multinational companies has been criticized by governments across the globe, and has damaged the reputation of many countries,” Mr. Noonan said.
Ireland’s decision to close the loophole follows heavy pressure from other governments and the European Union amid a broader effort to update tax rules written before the Internet era. Countries want to make it more difficult for companies such as Google Inc. GOOGL +0.72% and Facebook Inc. FB +0.82% to funnel billions in non-U.S. profits to offshore tax havens such as Bermuda and the Cayman Islands.
“The supertanker is turning,” said Heather Self, a tax expert with Pinsent Masons LLP in London. “We are moving toward some tax being paid somewhere on all income.”
The Double Irish uses a twist in Irish law to send royalty payments for intellectual property from one Irish-registered subsidiary to another that resides for tax purposes in a country with no corporate income taxes. While the total number of companies that use the structure isn’t publicly disclosed, hundreds of companies funnel tens of billions of dollars a year in profit to tax havens via Ireland, including many practitioners in the tech and pharmaceutical sectors, tax experts say.
The structure or variants are used by companies including Facebook, LinkedIn Corp. LNKD +1.50% Microsoft Corp. MSFT +0.18% and VMware Inc., VMW -1.16% according to corporate filings. Google alone used the structure to send €8.8 billion ($11.2 billion) in royalties in 2012 to a Bermuda-based company registered in Ireland.
“We’re deeply committed to Ireland and will work to implement these changes as they become law,” said a spokesman for Google.
Facebook, LinkedIn, Microsoft and VMware all declined to comment on the Double Irish in recent days.
Ireland’s move comes amid increasing tension between European governments and a cadre of largely U.S. tech superpowers over a range of issues from taxes to privacy. The EU is probing Amazon.com Inc. AMZN +0.61% ’s tax arrangements with Luxembourg, and alleged that tax deals between Apple Inc. AAPL -1.06% and Ireland amount to illegal state aid. Google has seen an antitrust settlement it struck with the EU crumble. It also faces privacy probes in multiple EU countries and is fighting a French tax bill that could surpass €1 billion ($1.28 billion).
EU officials reacted with cautious optimism to Ireland’s changes, saying they validate a strategy of pressuring companies to make changes while pursuing new rules within the Organization for Economic Cooperation and Development.
“It is important that we push this agenda to fight against tax fraud and avoidance as hard as possible,” said Algirdas Semeta, the EU’s taxation commissioner. “And that provides good results, be it on the European or on the national level.”
But tax experts and European politicians are already raising questions about the lengthy phaseout period.
“The transition period…is not very ambitious,” said Lothar Binding, financial spokesman for Germany’s ruling Social Democratic Party. “It is very long.”
While the new rule takes effect in January, Mr. Noonan said it won’t be applied to companies currently using the structure until the end of 2020, giving a six-year window for companies to come into compliance.
At the same time, the minister said Ireland would introduce measures to persuade international corporations to stay in Ireland, where tech companies have pumped in large investments, turning Dublin into a hub.
Mr. Noonan said the country would never budge on its low 12.5% corporate tax rate—earning a cheer from lawmakers.
He also said Ireland would create a new tax rate for income derived from intellectual property, potentially offsetting some of the tax hit for companies that would have to declare tax residency in Ireland.
Mr. Noonan didn’t give details, but such so-called patent boxes, while used by several countries including the U.K. and the Netherlands, are under investigation by the EU. The outcome of one investigation is due by the end of the year.
“A patent box is clearly the national tax incentive of choice in the first part of this century, and the minister is giving a clear signal that Ireland will not be left behind here,” said Feargal O’Rourke, head of tax at PricewaterhouseCoopers in Ireland.
Given these incentives and the long lead time before the Double Irish disappears entirely, it is unclear what the tax hit will be for affected companies.
Companies will likely need to restructure their operations, to reflect the new rules and pay higher taxes than now, tax experts say. But Ireland and other countries might race to offer other incentives to lure companies, helping to damp the blow.
Gilead Sciences Inc., GILD -4.20% which lowered its tax rate to 19% in the first half of this year from 27% a year earlier, in part by storing the intellectual property for its hepatitis C drugs in Ireland, could experience a 3% to 5% hit to its earnings per share, RBC Capital estimated.
Gilead declined to comment on its tax status. “Our world-wide revenue base and operations in Ireland will provide structuring alternatives in the future,” a spokeswoman said.
“No one knows what it’ll cost,” one tech executive said. “But a lot of companies are going to be leaving Bermuda.”
Wall Street Journal —Lisa Fleisher, Jonathan D. Rockoff, Gabriele Steinhauser and Andrea Thomas contributed to this article.
Aliwibble, thanks for your excellent response, which I totally agree with, apart from one point.
You say that :-
"The pressure due to immigration is just the icing on the cake (particularly if we're just talking about EU immigration, as it's largely balanced out by those Brits like Prague and Algarve working in the EU, and all those pensioners who've retired to Spain). "
How can that be, when net long term migration to the UK was 212,000 in the year ending December 2013.
This figure is reasonably reflective of the previous 10 years as well.
So we have an extra 212,000 people to house every year.
But earlier in the thread pro UKIP folk were telling us that Polish plumbers were living 14 to a room in order to undercut good, honest British workers in the pay stakes; so they are taking up less space than indigenous people knocking out a sprog who expect a two bedroom council house to be set aside for just two people...
Comments
You are making the points for me about interpreting Directives, I was going to say something similar. Why should it be impossible to interpret what our law makers are charged with implementing? As good honest members of the EU community we err on the side of prudence and make the extreme interpretation for fear of implementing lower standards than required. The rest of Europe familiar with the game of making rules up to suit yourself, exploit the imprecision to the maximum.
"What's the EU ever done for us that we couldn't have done for ourselves - if the electorate had wanted it- and what can't we do that other non-EU counties have done on trade negotiations?"
Right, I can answer that. However to do so, i have to assume that you - and most informed voters - agree with me that the following is laughably outrageous
1. You buy a book from Amazon. You pay in sterling, it is delivered from one of their many distrib centres in the UK, to your UK address. However Amazon send you an electronic invoice which appears to suggest you did business with a company in Luxembourg, and on that basis all profit related to that transaction is taxed in Luxembourg.
2. Google and Facebook are basically media owners (advertising sales companies). They sell advertising alongside their content, in just the same way as ITV does. In order to do big business with the big advertising agencies, they have teams of high powered sales people, living and working in London, whose job is to sell that space to the likes of Group M. Just like ITV have. The key difference is that Google and Facebook send their invoices to Group M from a computer based in Ireland and claim that they should pay tax on the -considerable -profit in Ireland, on the basis that "the deal was closed" in Ireland.
The Reasonable Man, whom you and I well know, would, when presented with these facts conclude that this is the biggest tall story he has heard since Arthur Daley tried to sell him a car with 5k on the clock. But has the Reasonable Man been given the chance? In other words has the Inland revenue taken those three companies to task, let alone to court, for shielding billions of pounds from UK tax on the basis of this
scamscheme? Have they ****. But the European Commission is doing so. And they have a good chance of winning, just as they have won against Microsoft and Intel; and that is quite simply because only Europe as a bloc is big enough to take on these companies. And the more I find out about those companies the more I think it is urgent to take them on.In terms of house prices, it also doesn't help that first time buyers are being priced out by people with buy to let portfolios. We've also lost huge amounts of social housing due to right to buy, and regeneration projects that have turned estates into half social half luxury development, in order to get funding. So instead those people are having to go into the private rented sector, which pushes up rents for everyone and increases the housing benefit bill. What we really need to do is stop selling off social housing, build a load more of it, as well as shared ownership and 1st time buyer schemes, and have incentives to get empty properties back into use. Personally I'd love to see restrictions on buy to let, but I suspect that's a forlorn hope, given the reaction to the Mortgage Credit Directive.
The only good thing about the success and profit these companies have made so far is that they may now rely on the UK markets they trade in which gives us some leverage.
You say that :-
"The pressure due to immigration is just the icing on the cake (particularly if we're just talking about EU immigration, as it's largely balanced out by those Brits like Prague and Algarve working in the EU, and all those pensioners who've retired to Spain). "
How can that be, when net long term migration to the UK was 212,000 in the year ending December 2013.
This figure is reasonably reflective of the previous 10 years as well.
So we have an extra 212,000 people to house every year.
An extra 1,000,000 every 5 years.
fromhttp://www.ons.gov.uk/ons/rel/migration1/migration-statistics-quarterly-report/may-2014/index.html
However regarding your second point, it's important to be aware that they play this game right across Europe, and Amazon Germany is, I think bigger than Amazon UK. The Germans are bloody furious about it, as they are about Amazon's games with their employee's contracts. More chance of winning with the Germans on our side, wouldn't you agree on that?
Oh, and are they including students in those figures?
However, a political collective like the EU does have the muscle to take these people on and, more importantly, can pressure member states like Ireland to stop allowing these companies to manipulate the European tax system.
No surprise at all that in recent days the Irish have announced that they will be normalising their taxation system - albeit incrementally - to being it into line with EU norms.
This is because, quite simply, the EU told them they could not expect bail outs from them whilst undermining fellow member states with this sort of unfair taxation.
These figures quoted (admittedly not just from EU) are net figures.
Obviously as an intelligent person, you understand what a net increase is.
If 200,000 people net (immigration less emigration) is the yearly figure, then of course we will have an extra 1,000,000 people living in the UK every 5 years.
201,000 EU citizens immigrated in the year ending December 2013, a statistically significant increase from 158,000 the previous year.
125,000 EU citizens immigrated for work in the year ending December 2013, a statistically significant increase from 95,000 the previous year.
The population of the UK grew to 64.1 million in mid-2013, representing a gain of 400,600 (0.63%) over the previous year mid-2012. This growth is slightly below the average since 2003.
This means that the UK’s population has increased by around 5 million since 2001, and by more than 10 million since 1964.
Natural change (births minus deaths) contributed slightly more than net international migration to the population gain in the year. There were 212,100 more births than deaths (53% of the increase) and 183,400 more immigrants arriving than emigrants leaving (46% of the increase).
The estimated populations of the four constituent countries of the UK in mid-2013 are 53.9 million (growth of 0.70%) in England, 5.3 million (growth of 0.27%) in Scotland, 3.1 million (growth of 0.27%) in Wales and 1.8 million (growth of 0.33%) in Northern Ireland.
There were 792,400 births and 580,300 deaths in the year ending 30 June 2013. The number of births decreased from the previous year but is still above average for the last decade. The number of deaths increased from the previous year and is the highest since the year to mid-2005.
The population of the UK aged 65 and over was 11.1 million (17.4% of the UK population) in mid-2013, up by 290,800 from mid-2012. The number of people in this age group has increased by 17.3% since 2003.
Growth of the UK population in the year to mid-2013 was higher than the EU average and highest of the four most populous EU member states.
http://www.ons.gov.uk/ons/rel/pop-estimate/population-estimates-for-uk--england-and-wales--scotland-and-northern-ireland/2013/index.html
Also of the number entering the UK, nearly a third are to study meaning they are likely to leave after a few years.
Finally, I don't think you can take one years figure and extrapolate that as what the picture will be in 5 years time. Given the new EU members and that the UK economy has been performing stronger than some of the other EU economies this means that more will be looking to move to the UK, this won't always be the case.
If you cannot accept facts, there's little point debating these issues further is there ?
It would be more honest to admit, that you have no interest in immigration facts, because whatever they are, you feel we should remain in the EU.
I can appreciate that viewpoint, it may well be the best tact to take.
It's the denying the evidence that I find frustrating.
NB, not that I expect these additional facts to be accepted. However, just for the record here are the net EU figures, including both immigration and emigration from 1975-2013. They disprove points made about only being 1 year's figures. 1 year's figures are misleading etc etc.
http://www.ons.gov.uk/ons/rel/migration1/migration-statistics-quarterly-report/may-2014/sty-eu-migration.html
Bottom line - how can a government - any government - regulate online businesses that don't need to have a physical presence in the UK?
The Internet has created an open platform for these mega corporations to have global reach at very low cost - and with very little responsibility.
Presumably you would still try to claim that this is only 1 years headline figures.
It's not. These levels have been similarish for the last 10 years.
That said I don't completely disagree there is a problem with immigration, namely the housing situation in the UK. As I've said before these immigrants are net contributors to the economy. We need to be using more of that benefit in housing and infrastructure.
So I'm afraid one has to concede some sovereignty and agree collectively that no EU country will drop VAT or corporation tax below an agreed value.
Secondly you need a powerful collective challenge to the concept of intellectual property... Quite simply Starbucks move almost all of their profits out of the EU using two mechanisms - royalties on the branding and sale of coffee into the EU from Switzerland, that well known coffee growing region!
My solution is to boycott Starbucks but collectively the consumers of the EU need to collect adequate taxes on their purchases to pay for their services.
We in the cities have more in common with the peoples of Dublin, Paris, Milan and Prague than UKIP cares to admit and that's why UKIP does not have any chance in complex, multi cultural, service industry economies.
It is the OECD and the EU that is leading the thinking on global corporations and it's the OECD which collates stats and reports on western economies.
There is no one answer but stoking up fear and blame will cause crisis and take attention away from solutions for 2050. I see a poll today suggests that the NHS is top of the agenda for 2015... And that jobs/pay and immigration are the next on the list(20%) with the deficit at just 7%
Labour should therefore win as they are not out to cut the NHS nor freeze benefits for the working poor. The deficit can be tackled but only if rich and smart people agree what the global or at least EU rules should be.
What appears blindingly obvious is that Osborne is using the deficit to attack the average or below average earner... And that for all Farage's man with pint stuff he ain't talking about jobs or the NHS.
I think the Lib Dems are being kicked for taking power but they may have an opportunity to set the record straight IF Labour are the largest party but without a majority.
All to play for...and like others I thank everyone for the quality of debate.
Anyway the Germans want to take them on but they recognise that even they may need a hand, so that's why they are happy enough to do it through the EC
There are plenty of them out there all making mega money from the UK and they need not have a single employee there at all.
Even if they did have a physical presence - like Amazon - then that's not really the point as they can still circumvent the UK taxation system with very few problems.
This is a major global problem which governments all over the world are wrestling with because they are seeing their tax revenues crumbles as these digital giants put plenty of physical retailers out of business and force others to cut jobs just to stay alive.
London's economy produces over 20% of the UK's GVA (which seems to be a more popular measure than GDP these days). While stats at city level are quite difficult to come by in the UK, it seems that London exports twice as much as Birmingham (our second biggest city) produces and that city struggles to get to 20% of London's GVA and is now, in economic terms in danger of being overtaken by Manchester.
In contrast the huge economic base which is New York is less than twice as large as LA with Chicago not far behind.
Somehow, and without destroying London's dynamism in the process, we do need to re-distribute the economy.
The EU are not claiming tax from Amazon, they are claiming that a member state is giving special treatment to a corporation which allows the corporation, in the case of Amazon, to reduce the receipts on which it is liable to declare for tax and this is regarded as a STATE SUBSIDY. It is the member state's alleged wrong doing, not Amazon's. The idea that the EU has the power to make Amazon pay more tax is a delusion.
One outcome could simply be that Amazon pay more tax in Luxembourg, how does that help the rest of the EU. Another outcome could be Amazon re-arranges affairs outside an EU country, how will that help the EU. So the solution is not the EU bullying Ireland and Luxembourg on the pretext of them subsidising Amazon, (when it is really just following its instinct of wanting to eliminate competition) but all countries altering the tax laws. Problem is how do you make tax rules work that are based on physical presence, and where money ends up, for a virtual online business. Only a radical change in how tax and accounting laws work across the whole world is going to change anything. Because neither the EU nor our own politicians have a solution, all we are seeing is political gesturing and seeking a scapegoat, the sort of thing UKIP might be accused of.
Ireland to Close ‘Double Irish’ Tax Loophole
By SAM SCHECHNER CONNECT
Updated Oct. 14, 2014 4:48 p.m. ET
The Irish government moved on Tuesday to close one of the world’s best-known corporate-tax loopholes, in a step that could boost overseas income tax for a wide range of U.S. companies, particularly in the technology sector.
Ireland will change its tax code to require that all Irish-registered companies be tax residents in Ireland within the next six years, slowly ending a tax-optimization structure known as the “Double Irish,” Irish Finance Minister Michael Noonan said in a parliamentary address to introduce the 2015 budget.
“Aggressive tax planning by the multinational companies has been criticized by governments across the globe, and has damaged the reputation of many countries,” Mr. Noonan said.
Ireland’s decision to close the loophole follows heavy pressure from other governments and the European Union amid a broader effort to update tax rules written before the Internet era. Countries want to make it more difficult for companies such as Google Inc. GOOGL +0.72% and Facebook Inc. FB +0.82% to funnel billions in non-U.S. profits to offshore tax havens such as Bermuda and the Cayman Islands.
“The supertanker is turning,” said Heather Self, a tax expert with Pinsent Masons LLP in London. “We are moving toward some tax being paid somewhere on all income.”
The Double Irish uses a twist in Irish law to send royalty payments for intellectual property from one Irish-registered subsidiary to another that resides for tax purposes in a country with no corporate income taxes. While the total number of companies that use the structure isn’t publicly disclosed, hundreds of companies funnel tens of billions of dollars a year in profit to tax havens via Ireland, including many practitioners in the tech and pharmaceutical sectors, tax experts say.
The structure or variants are used by companies including Facebook, LinkedIn Corp. LNKD +1.50% Microsoft Corp. MSFT +0.18% and VMware Inc., VMW -1.16% according to corporate filings. Google alone used the structure to send €8.8 billion ($11.2 billion) in royalties in 2012 to a Bermuda-based company registered in Ireland.
“We’re deeply committed to Ireland and will work to implement these changes as they become law,” said a spokesman for Google.
Facebook, LinkedIn, Microsoft and VMware all declined to comment on the Double Irish in recent days.
Ireland’s move comes amid increasing tension between European governments and a cadre of largely U.S. tech superpowers over a range of issues from taxes to privacy. The EU is probing Amazon.com Inc. AMZN +0.61% ’s tax arrangements with Luxembourg, and alleged that tax deals between Apple Inc. AAPL -1.06% and Ireland amount to illegal state aid. Google has seen an antitrust settlement it struck with the EU crumble. It also faces privacy probes in multiple EU countries and is fighting a French tax bill that could surpass €1 billion ($1.28 billion).
EU officials reacted with cautious optimism to Ireland’s changes, saying they validate a strategy of pressuring companies to make changes while pursuing new rules within the Organization for Economic Cooperation and Development.
“It is important that we push this agenda to fight against tax fraud and avoidance as hard as possible,” said Algirdas Semeta, the EU’s taxation commissioner. “And that provides good results, be it on the European or on the national level.”
But tax experts and European politicians are already raising questions about the lengthy phaseout period.
“The transition period…is not very ambitious,” said Lothar Binding, financial spokesman for Germany’s ruling Social Democratic Party. “It is very long.”
While the new rule takes effect in January, Mr. Noonan said it won’t be applied to companies currently using the structure until the end of 2020, giving a six-year window for companies to come into compliance.
At the same time, the minister said Ireland would introduce measures to persuade international corporations to stay in Ireland, where tech companies have pumped in large investments, turning Dublin into a hub.
Mr. Noonan said the country would never budge on its low 12.5% corporate tax rate—earning a cheer from lawmakers.
He also said Ireland would create a new tax rate for income derived from intellectual property, potentially offsetting some of the tax hit for companies that would have to declare tax residency in Ireland.
Mr. Noonan didn’t give details, but such so-called patent boxes, while used by several countries including the U.K. and the Netherlands, are under investigation by the EU. The outcome of one investigation is due by the end of the year.
“A patent box is clearly the national tax incentive of choice in the first part of this century, and the minister is giving a clear signal that Ireland will not be left behind here,” said Feargal O’Rourke, head of tax at PricewaterhouseCoopers in Ireland.
Given these incentives and the long lead time before the Double Irish disappears entirely, it is unclear what the tax hit will be for affected companies.
Companies will likely need to restructure their operations, to reflect the new rules and pay higher taxes than now, tax experts say. But Ireland and other countries might race to offer other incentives to lure companies, helping to damp the blow.
Gilead Sciences Inc., GILD -4.20% which lowered its tax rate to 19% in the first half of this year from 27% a year earlier, in part by storing the intellectual property for its hepatitis C drugs in Ireland, could experience a 3% to 5% hit to its earnings per share, RBC Capital estimated.
Gilead declined to comment on its tax status. “Our world-wide revenue base and operations in Ireland will provide structuring alternatives in the future,” a spokeswoman said.
“No one knows what it’ll cost,” one tech executive said. “But a lot of companies are going to be leaving Bermuda.”
Wall Street Journal —Lisa Fleisher, Jonathan D. Rockoff, Gabriele Steinhauser and Andrea Thomas contributed to this article.
Write to Sam Schechner at sam.schechner@wsj.com
;-)