Ireland’s 5 Million People Distort Euro Zone GDP With Tax-Driven Multinational Profits
Updated
Updated · Bloomberg · Jun 5
Ireland’s 5 Million People Distort Euro Zone GDP With Tax-Driven Multinational Profits
3 articles · Updated · Bloomberg · Jun 5
Summary
Ireland’s national accounts can skew the euro zone growth picture because profits and assets booked there by multinationals inflate GDP far beyond underlying domestic activity.
Hundreds of foreign companies set up European hubs in Ireland to benefit from lower corporate taxes, making the country a major booking center for earnings generated across the region.
That model has transformed Ireland from one of Europe’s poorer economies into one of its richest on paper, helped deliver record corporate tax receipts and produced a rare budget surplus.
The result is that Irish data can mislead policymakers and investors trying to judge the true strength of both Ireland’s home economy and the wider euro area.