Corr. lang. var. Apply "apparent" to the growth, as the basic point is that this was not accounting of real national economics but a corporate tax-driven distortion. Clarify which post-war. Qualify the "a major tax haven" point, which was not undisputed, and "academics" (as it cannot be said to be a consensus, though many hold the view, for sure). Follow-on + consequences - tautology, cut one.
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'''Leprechaun economics''' |
'''Leprechaun economics''' was a term coined by economist [[Paul Krugman]] to describe the 26.3 per cent rise in Irish 2015 [[Gross domestic product|GDP]], later revised to 34.4 per cent,{{efn|name=upgrade|The Central Statistics Office (Ireland) further restated Irish 2015 data several times in 2017–18; by September 2018, Irish 2015 GDP was a further 6.4% above the 12 July 2016 restatement, as listed in [[Modified gross national income#Irish GDP versus Modified GNI (2009–2017)|Irish GDP versus Modified GNI (2009–2017)]]. This was the highest post-[[World War II]] annual GDP apparent growth of an OECD country.<ref>{{cite web|url=https://data.worldbank.org/indicator/ny.gdp.mktp.kd.zg|title=The World Bank Database: Real GDP Data|publisher=[[The World Bank]]|date=2018|access-date=30 August 2018|archive-url=https://web.archive.org/web/20180830210157/https://data.worldbank.org/indicator/ny.gdp.mktp.kd.zg|archive-date=30 August 2018|url-status=live|df=dmy-all}}</ref>}} in a 12 July 2016 publication by the [[Central Statistics Office (Ireland)|Irish Central Statistics Office]] (CSO), restating 2015 Irish national accounts.<ref name="CSO1"/><ref name=X1/><ref name=X2/><ref name=X3/> At that point, the distortion of Irish economic data by tax-driven accounting flows reached a climax.<ref name=Reuters/><ref name="bbgquint"/><ref name="Financial Times"/> In 2020, Krugman said the term was a feature of all [[tax havens]].<ref name=NYT7/> |
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While the event that caused the artificial Irish GDP growth occurred in Q1 2015, the Irish CSO had to delay its GDP revision and redact the release of its regular economic data in 2016–2017 to protect the source's identity, as required by Irish law.<ref name="csoo"/> Only in Q1 2018 could economists confirm [[Apple Inc.|Apple]] as the source, <ref name="co1"/><ref name="patrick.smyth"/><ref name=IT9/> and that this was the largest ever [[base erosion and profit shifting]] (BEPS) action,<ref name=FORTUNE/> and the largest hybrid–[[tax inversion]] of a U.S. corporation.<ref name="cofr"/><ref name=IT10/> |
While the event that caused the artificial Irish GDP growth occurred in Q1 2015, the Irish CSO had to delay its GDP revision and redact the release of its regular economic data in 2016–2017 to protect the source's identity, as required by Irish law.<ref name="csoo"/> Only in Q1 2018 could economists confirm [[Apple Inc.|Apple]] as the source, <ref name="co1"/><ref name="patrick.smyth"/><ref name=IT9/> and that this was the largest ever [[base erosion and profit shifting]] (BEPS) action,<ref name=FORTUNE/> and the largest hybrid–[[tax inversion]] of a U.S. corporation.<ref name="cofr"/><ref name=IT10/> |
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The event marked the replacement of Ireland's prohibited BEPS tool, the [[Double Irish]], with the more powerful [[Double Irish arrangement#CAIA|Capital Allowances for Intangible Assets]] (CAIA) tool.<ref name="patrick.smyth"/><ref name=IT9/> Apple used the CAIA tool to restructure out of its hybrid–Double Irish tool, on which the [[EU illegal State aid case against Apple in Ireland|EU Commission would levy a €13 billion fine in August 2016]].{{efn|name=findings|From a 9 January 2015 meeting with the EU Commission which was documented when the EU Commission published their full decision (S.A 38373), page 42 section 2.5.7 ''Apple's new corporate structure in Ireland as of 2015''.<ref name="eu1"/>}}<ref name="patrick.smyth"/><ref name=IT9/> As a result of the action by Apple, a range of academics calculated that Ireland, already held by some to be a major tax haven, was the world's largest tax haven.<ref name="gbz"/><ref name="zuc10"/><ref name="zux"/><ref name="WPaidan.regan"/> |
The event marked the replacement of Ireland's prohibited BEPS tool, the [[Double Irish]], with the more powerful [[Double Irish arrangement#CAIA|Capital Allowances for Intangible Assets]] (CAIA) tool.<ref name="patrick.smyth"/><ref name=IT9/> Apple used the CAIA tool to restructure out of its hybrid–Double Irish tool, on which the [[EU illegal State aid case against Apple in Ireland|EU Commission would levy a €13 billion fine in August 2016]].{{efn|name=findings|From a 9 January 2015 meeting with the EU Commission which was documented when the EU Commission published their full decision (S.A 38373), page 42 section 2.5.7 ''Apple's new corporate structure in Ireland as of 2015''.<ref name="eu1"/>}}<ref name="patrick.smyth"/><ref name=IT9/> As a result of the action by Apple, a range of academics calculated that Ireland, already held by some to be a major tax haven, was the world's largest tax haven.<ref name="gbz"/><ref name="zuc10"/><ref name="zux"/><ref name="WPaidan.regan"/> |
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The "Leprechaun economics" incident had follow-on effects. In September 2016, Ireland became the first of the major tax havens to be "blacklisted" by a [[G20]] economy, Brazil.<ref name=BRAZ/> In February 2017, Ireland replaced GDP with "[[Modified gross national income|Modified GNI (or GNI*)]]" (2017 Irish GDP was [[Modified gross national income#Irish GDP versus Modified GNI (2009–2017)|162%]] of 2017 Irish GNI*, whereas EU–28 2017 GDP was 100% of GNI).<ref name=RTÉ5/><ref name="eurostat2">{{cite web|url=https://ec.europa.eu/eurostat/web/products-datasets/-/sdg_08_10|title=Real GDP per capita|publisher=[[Eurostat]]|access-date=26 November 2018|archive-url=https://web.archive.org/web/20181126221404/https://ec.europa.eu/eurostat/web/products-datasets/-/sdg_08_10|archive-date=26 November 2018|url-status=live|df=dmy-all}}</ref> In December 2017, the U.S and the EU introduced |
The "Leprechaun economics" incident had follow-on effects. In September 2016, Ireland became the first of the major tax havens to be "blacklisted" by a [[G20]] economy, Brazil.<ref name=BRAZ/> In February 2017, Ireland replaced GDP with "[[Modified gross national income|Modified GNI (or GNI*)]]" (2017 Irish GDP was [[Modified gross national income#Irish GDP versus Modified GNI (2009–2017)|162%]] of 2017 Irish GNI*, whereas EU–28 2017 GDP was 100% of GNI).<ref name=RTÉ5/><ref name="eurostat2">{{cite web|url=https://ec.europa.eu/eurostat/web/products-datasets/-/sdg_08_10|title=Real GDP per capita|publisher=[[Eurostat]]|access-date=26 November 2018|archive-url=https://web.archive.org/web/20181126221404/https://ec.europa.eu/eurostat/web/products-datasets/-/sdg_08_10|archive-date=26 November 2018|url-status=live|df=dmy-all}}</ref> In December 2017, the U.S and the EU introduced countermeasures to the Irish BEPS tools.<ref name=R1/><ref name=R2/><ref name=R3/> In October 2018, Ireland introduced a reverse tax, to discourage IP from leaving Ireland.<ref name="reverse"/> In 2018, the [[OECD]] showed that Ireland's public debt metrics differ dramatically depending on whether Debt-to-GDP, Debt-to-GNI* or Debt-per-Capita is used;<ref name="oecd"/><ref name="it1"/><ref name="irip"/> and in 2019, the [[IMF]] estimated 60 per cent of Irish [[foreign direct investment]] was "phantom".<ref name=IMF4/><ref name=CLIFF4/><ref name=IMF5/> |
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==Naming and use== |
==Naming and use== |
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===2015 GDP data=== |
===2015 GDP data=== |
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On the 12 July 2016 at 11am GMT, the [[Central Statistics Office (Ireland)|Central Statistics Office]] posted a data revision showing that 2015 Irish GDP data rose by 26.3 per cent{{efn|name=upgrade}} and 2015 Irish GNP rose by 18.7 per cent.<ref name="CSO1">{{cite web|url=http://www.cso.ie/en/releasesandpublications/er/nie/nationalincomeandexpenditureannualresults2015/|title=National Income and Expenditure Annual Results 2015|author=CSO Statistical Release|publisher=[[Central Statistics Office (Ireland)]]|date=12 July 2016|access-date=19 January 2018|archive-url=https://web.archive.org/web/20171122004553/http://www.cso.ie/en/releasesandpublications/er/nie/nationalincomeandexpenditureannualresults2015/|archive-date=22 November 2017|url-status=live|df=dmy-all}}</ref> Twenty four minutes later, at 11.24am GMT, [[Nobel Prize]]-winning economist [[Paul Krugman]] responded to the data |
On the 12 July 2016, at 11am GMT, the [[Central Statistics Office (Ireland)|Central Statistics Office]] posted a data revision showing that 2015 Irish GDP data rose by 26.3 per cent{{efn|name=upgrade}} and 2015 Irish GNP rose by 18.7 per cent.<ref name="CSO1">{{cite web|url=http://www.cso.ie/en/releasesandpublications/er/nie/nationalincomeandexpenditureannualresults2015/|title=National Income and Expenditure Annual Results 2015|author=CSO Statistical Release|publisher=[[Central Statistics Office (Ireland)]]|date=12 July 2016|access-date=19 January 2018|archive-url=https://web.archive.org/web/20171122004553/http://www.cso.ie/en/releasesandpublications/er/nie/nationalincomeandexpenditureannualresults2015/|archive-date=22 November 2017|url-status=live|df=dmy-all}}</ref> Twenty four minutes later, at 11.24am GMT, [[Nobel Prize]]-winning economist [[Paul Krugman]] responded to the data release by posting: |
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{{quote|Leprechaun economics: Ireland reports 26 percent growth! But it doesn't make sense. Why are these in GDP?|author=[[Paul Krugman]], 12 July 2016<ref name="pk">{{cite tweet|user=paulkrugman|number=752841032870551552|last=Krugman|first=Paul|author-link=Paul Krugman|date=12 July 2016|access-date=29 April 2019|title=Leprechaun economics: Ireland reports 26 percent growth! But it doesn't make sense. Why are these in GDP?|archive-url=https://web.archive.org/web/20180616095311/https://twitter.com/paulkrugman/status/752841032870551552|archive-date=16 June 2018|url-status=live|df=dmy-all}}</ref>}} |
{{quote|Leprechaun economics: Ireland reports 26 percent growth! But it doesn't make sense. Why are these in GDP?|author=[[Paul Krugman]], 12 July 2016<ref name="pk">{{cite tweet|user=paulkrugman|number=752841032870551552|last=Krugman|first=Paul|author-link=Paul Krugman|date=12 July 2016|access-date=29 April 2019|title=Leprechaun economics: Ireland reports 26 percent growth! But it doesn't make sense. Why are these in GDP?|archive-url=https://web.archive.org/web/20180616095311/https://twitter.com/paulkrugman/status/752841032870551552|archive-date=16 June 2018|url-status=live|df=dmy-all}}</ref>}} |
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Over the 12 to 13 July 2016, the term ''leprechaun economics'' was used widely by the Irish and international media when discussing Ireland's revised 26.3% 2015 GDP growth rate.<ref name=X1>{{cite news|url=https://www.independent.ie/business/irish/leprechaun-economics-irelands-26pc-growth-spurt-laughed-off-as-farcical-34879232.html|title='Leprechaun economics' - Ireland's 26pc growth spurt laughed off as 'farcical'|newspaper=[[Irish Independent]]|date=13 July 2016|access-date=29 April 2019|author=Colm Kelpie|archive-url=https://web.archive.org/web/20180614021337/https://www.independent.ie/business/irish/leprechaun-economics-irelands-26pc-growth-spurt-laughed-off-as-farcical-34879232.html|archive-date=14 June 2018|url-status=live|df=dmy-all}}</ref><ref name=X2>{{cite news|url=https://www.irishtimes.com/business/economy/concern-as-irish-growth-rate-dubbed-leprechaun-economics-1.2719676?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fconcern-as-irish-growth-rate-dubbed-leprechaun-economics-1.2719676|title=Concern as Irish growth rate dubbed 'leprechaun economics'|newspaper=[[Irish Times]]|date=13 July 2016|access-date=29 April 2019|author1=Eoin Burke Kennedy|author2=Ciarán Hancock|archive-url=https://web.archive.org/web/20180319213828/https://www.irishtimes.com/business/economy/concern-as-irish-growth-rate-dubbed-leprechaun-economics-1.2719676?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fconcern-as-irish-growth-rate-dubbed-leprechaun-economics-1.2719676|archive-date=19 March 2018|url-status=live|df=dmy-all}}</ref><ref name=X3>{{cite web|url=https://www.rte.ie/news/business/2016/0723/804214-blog-story-behind-leprechaun-economics-fiasco/|title=Blog: The real story behind Ireland's 'Leprechaun' economics fiasco|publisher=[[RTÉ News]]|date=25 July 2017|access-date=29 April 2019|archive-url=https://web.archive.org/web/20180320043640/https://www.rte.ie/news/business/2016/0723/804214-blog-story-behind-leprechaun-economics-fiasco/|archive-date=20 March 2018|url-status=live|df=dmy-all}}</ref><ref name="Financial Times">{{cite news|url=https://www.ft.com/content/8a1ebc9c-4846-11e6-8d68-72e9211e86ab|title=Irish tell a tale of 26.3% growth spurt|newspaper=[[Financial Times]]|date=12 July 2016|access-date=29 April 2019|quote=Rate attributed to multinational inversions — or "leprechaun economics"|author=Vincent Boland|archive-url=https://web.archive.org/web/20180319213733/https://www.ft.com/content/8a1ebc9c-4846-11e6-8d68-72e9211e86ab|archive-date=19 March 2018|url-status=live|df=dmy-all}}</ref><ref>{{cite news|url=http://www.thejournal.ie/gdp-growth-leprechaun-economics-2876138-Jul2016/|title="Leprechaun economics" - experts aren't impressed with Ireland's GDP figures|newspaper=[[TheJournal.ie]]|date=13 July 2016|access-date=29 April 2019|author=Paul Hosford|archive-url=https://web.archive.org/web/20180413234859/http://www.thejournal.ie/gdp-growth-leprechaun-economics-2876138-Jul2016/|archive-date=13 April 2018|url-status=live|df=dmy-all}}</ref><ref name=Reuters>{{cite web|url=https://www.reuters.com/article/us-ireland-economy/leprechaun-economics-leaves-irish-growth-story-in-limbo-idUSKCN0ZT21K|title='Leprechaun economics' leaves Irish growth story in limbo|publisher=[[Reuters News]]|author=Padraic Halpin|date=13 July 2016|access-date=29 April 2019|archive-url=https://web.archive.org/web/20180330012532/https://www.reuters.com/article/us-ireland-economy/leprechaun-economics-leaves-irish-growth-story-in-limbo-idUSKCN0ZT21K|archive-date=30 March 2018|url-status=live|df=dmy-all}}</ref><ref name="bbgquint"/> ''Leprechaun economics'' became a label for the Irish 2015 GDP 26.3% growth rate, and has been as such by a diverse range of sources.<ref name="lancet">{{cite journal|url=https://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(18)30461-6.pdf|title=Putting Ireland's health spending into perspective|journal=[[The Lancet]]|date=March 2018|volume=391|issue=10123|pages=833–834|quote=Similarly, health spending as a percentage of GDP declined sharply in 2015, despite an increase in health spending, as Irish GDP increased by 26% (a figure that spawned the phrase leprechaun economics)|doi=10.1016/S0140-6736(18)30461-6|pmid=29508738|last1=Turner|first1=B.|s2cid=3741394|doi-access=free}}</ref><ref>{{cite web | url=https://www.weforum.org/agenda/2019/03/everything-you-need-to-know-about-ireland-s-economy/ | title= Everything you need to know about Ireland's economy | author=Douglas Broom | website=[[World Economic Forum]] | date=19 March 2019 | access-date=30 January 2020 | quote='Leprechaun economics'}}</ref> In December 2019, the ''[[Irish Times]]'' named "Leprechaun Economics" |
Over the 12 to 13 July 2016, the term ''leprechaun economics'' was used widely by the Irish and international media when discussing Ireland's revised 26.3% 2015 GDP growth rate.<ref name=X1>{{cite news|url=https://www.independent.ie/business/irish/leprechaun-economics-irelands-26pc-growth-spurt-laughed-off-as-farcical-34879232.html|title='Leprechaun economics' - Ireland's 26pc growth spurt laughed off as 'farcical'|newspaper=[[Irish Independent]]|date=13 July 2016|access-date=29 April 2019|author=Colm Kelpie|archive-url=https://web.archive.org/web/20180614021337/https://www.independent.ie/business/irish/leprechaun-economics-irelands-26pc-growth-spurt-laughed-off-as-farcical-34879232.html|archive-date=14 June 2018|url-status=live|df=dmy-all}}</ref><ref name=X2>{{cite news|url=https://www.irishtimes.com/business/economy/concern-as-irish-growth-rate-dubbed-leprechaun-economics-1.2719676?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fconcern-as-irish-growth-rate-dubbed-leprechaun-economics-1.2719676|title=Concern as Irish growth rate dubbed 'leprechaun economics'|newspaper=[[Irish Times]]|date=13 July 2016|access-date=29 April 2019|author1=Eoin Burke Kennedy|author2=Ciarán Hancock|archive-url=https://web.archive.org/web/20180319213828/https://www.irishtimes.com/business/economy/concern-as-irish-growth-rate-dubbed-leprechaun-economics-1.2719676?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fconcern-as-irish-growth-rate-dubbed-leprechaun-economics-1.2719676|archive-date=19 March 2018|url-status=live|df=dmy-all}}</ref><ref name=X3>{{cite web|url=https://www.rte.ie/news/business/2016/0723/804214-blog-story-behind-leprechaun-economics-fiasco/|title=Blog: The real story behind Ireland's 'Leprechaun' economics fiasco|publisher=[[RTÉ News]]|date=25 July 2017|access-date=29 April 2019|archive-url=https://web.archive.org/web/20180320043640/https://www.rte.ie/news/business/2016/0723/804214-blog-story-behind-leprechaun-economics-fiasco/|archive-date=20 March 2018|url-status=live|df=dmy-all}}</ref><ref name="Financial Times">{{cite news|url=https://www.ft.com/content/8a1ebc9c-4846-11e6-8d68-72e9211e86ab|title=Irish tell a tale of 26.3% growth spurt|newspaper=[[Financial Times]]|date=12 July 2016|access-date=29 April 2019|quote=Rate attributed to multinational inversions — or "leprechaun economics"|author=Vincent Boland|archive-url=https://web.archive.org/web/20180319213733/https://www.ft.com/content/8a1ebc9c-4846-11e6-8d68-72e9211e86ab|archive-date=19 March 2018|url-status=live|df=dmy-all}}</ref><ref>{{cite news|url=http://www.thejournal.ie/gdp-growth-leprechaun-economics-2876138-Jul2016/|title="Leprechaun economics" - experts aren't impressed with Ireland's GDP figures|newspaper=[[TheJournal.ie]]|date=13 July 2016|access-date=29 April 2019|author=Paul Hosford|archive-url=https://web.archive.org/web/20180413234859/http://www.thejournal.ie/gdp-growth-leprechaun-economics-2876138-Jul2016/|archive-date=13 April 2018|url-status=live|df=dmy-all}}</ref><ref name=Reuters>{{cite web|url=https://www.reuters.com/article/us-ireland-economy/leprechaun-economics-leaves-irish-growth-story-in-limbo-idUSKCN0ZT21K|title='Leprechaun economics' leaves Irish growth story in limbo|publisher=[[Reuters News]]|author=Padraic Halpin|date=13 July 2016|access-date=29 April 2019|archive-url=https://web.archive.org/web/20180330012532/https://www.reuters.com/article/us-ireland-economy/leprechaun-economics-leaves-irish-growth-story-in-limbo-idUSKCN0ZT21K|archive-date=30 March 2018|url-status=live|df=dmy-all}}</ref><ref name="bbgquint"/> ''Leprechaun economics'' became a label for the Irish 2015 GDP 26.3% growth rate, and has been as such by a diverse range of sources.<ref name="lancet">{{cite journal|url=https://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(18)30461-6.pdf|title=Putting Ireland's health spending into perspective|journal=[[The Lancet]]|date=March 2018|volume=391|issue=10123|pages=833–834|quote=Similarly, health spending as a percentage of GDP declined sharply in 2015, despite an increase in health spending, as Irish GDP increased by 26% (a figure that spawned the phrase leprechaun economics)|doi=10.1016/S0140-6736(18)30461-6|pmid=29508738|last1=Turner|first1=B.|s2cid=3741394|doi-access=free}}</ref><ref>{{cite web | url=https://www.weforum.org/agenda/2019/03/everything-you-need-to-know-about-ireland-s-economy/ | title= Everything you need to know about Ireland's economy | author=Douglas Broom | website=[[World Economic Forum]] | date=19 March 2019 | access-date=30 January 2020 | quote='Leprechaun economics'}}</ref> In December 2019, the ''[[Irish Times]]'' named "Leprechaun Economics" as one of its "Top 10 business stories of the decade".<ref name=IT10>{{cite news | url=https://www.irishtimes.com/business/economy/top-10-business-stories-of-the-decade-1.4119566 | title=Top 10 business stories of the decade | author=Eoin Burke-Kennedy | date=27 December 2019 | access-date=28 January 2020 | newspaper=[[Irish Times]]}}</ref> |
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===Irish economy=== |
===Irish economy=== |
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{{quote|Nobody believes our GDP numbers any more, not after a 26 per cent jump in 2015, which was famously derided as "leprechaun economics". Even the CSO cautions against viewing last year's [2017] 7.8 per cent jump as a reflection of real economic activity|author=[[The Irish Times]]|source=17 March 2018<ref>{{cite news|url=https://www.irishtimes.com/business/economy/give-me-a-crash-course-in-irish-economic-growth-1.3429505?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fgive-me-a-crash-course-in-irish-economic-growth-1.3429505|title=Give me a crash course in .... Irish economic growth|newspaper=[[The Irish Times]]|author=Eoin Burke-Kennedy|date=17 March 2018|quote=Nobody believes our GDP numbers any more, not after a 26 per cent jump in 2015, which was famously derided as "leprechaun economics". Even the CSO cautions against viewing last year's [2017] 7.8 per cent jump as a reflection of real economic activity|access-date=25 August 2018|archive-url=https://web.archive.org/web/20180825181754/https://www.irishtimes.com/business/economy/give-me-a-crash-course-in-irish-economic-growth-1.3429505?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fgive-me-a-crash-course-in-irish-economic-growth-1.3429505|archive-date=25 August 2018|url-status=live|df=dmy-all}}</ref>}} |
{{quote|Nobody believes our GDP numbers any more, not after a 26 per cent jump in 2015, which was famously derided as "leprechaun economics". Even the CSO cautions against viewing last year's [2017] 7.8 per cent jump as a reflection of real economic activity|author=[[The Irish Times]]|source=17 March 2018<ref>{{cite news|url=https://www.irishtimes.com/business/economy/give-me-a-crash-course-in-irish-economic-growth-1.3429505?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fgive-me-a-crash-course-in-irish-economic-growth-1.3429505|title=Give me a crash course in .... Irish economic growth|newspaper=[[The Irish Times]]|author=Eoin Burke-Kennedy|date=17 March 2018|quote=Nobody believes our GDP numbers any more, not after a 26 per cent jump in 2015, which was famously derided as "leprechaun economics". Even the CSO cautions against viewing last year's [2017] 7.8 per cent jump as a reflection of real economic activity|access-date=25 August 2018|archive-url=https://web.archive.org/web/20180825181754/https://www.irishtimes.com/business/economy/give-me-a-crash-course-in-irish-economic-growth-1.3429505?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fgive-me-a-crash-course-in-irish-economic-growth-1.3429505|archive-date=25 August 2018|url-status=live|df=dmy-all}}</ref>}} |
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In March 2018, the first paper was published in an established international economic journal, the ''[[New Political Economy (journal)|New Political Economy]]'' |
In March 2018, the first paper was published in an established international economic journal - in this case, the ''[[New Political Economy (journal)|New Political Economy]]'' - with ''leprechaun economics'' in its title: "Celtic Phoenix or Leprechaun Economics? The Politics of an FDI-led Growth Model in Europe".<ref>{{cite journal|title=Celtic Phoenix or Leprechaun Economics? The Politics of an FDI-led Growth Model in Europe|date=March 2018|author1=Aidan Regan|author2=Samuel Brazys|volume=23|issue=2|pages=223–238|journal=[[New Political Economy (journal)|New Political Economy]]|doi=10.1080/13563467.2017.1370447|s2cid=157109256|url=http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201701.pdf}}</ref> By September 2018, the term ''leprechaun economics'' had been used 83 times during debates in the Irish [[Dáil Éireann]].<ref>{{cite web|url=https://www.oireachtas.ie/en/debates/find/|title=Dail Eireann Oireachtas Debates: Search|access-date=26 August 2018|archive-url=https://web.archive.org/web/20180826052922/https://www.oireachtas.ie/en/debates/find/|archive-date=26 August 2018|url-status=live|df=dmy-all}}</ref> |
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In September 2019, former Northern Ireland minister [[Nelson McCausland]], criticised Ireland's reliance on tax-driven schemes for economic growth, which he referred to as ''Leprechaun economics'', in an opinion piece for ''[[The Belfast Telegraph]]'' titled: "Northern Ireland will prosper once it’s rid of the EU... not by being tied to 'economics of the leprechaun'".<ref>{{cite news | url=https://www.belfasttelegraph.co.uk/opinion/columnists/nelson-mccausland/nelson-mccausland-northern-ireland-will-prosper-once-its-rid-of-the-eu-not-by-being-tied-to-economics-of-the-leprechaun-38490365.html | author=Nelson McCausland | newspaper=[[The Belfast Telegraph]] | date=12 September 2019 | access-date=30 January 2020 | title=Nelson McCausland: Northern Ireland will prosper once it's rid of the EU... not by being tied to 'economics of the leprechaun'| author-link=Nelson McCausland }}</ref> |
In September 2019, former Northern Ireland minister [[Nelson McCausland]], criticised Ireland's reliance on tax-driven schemes for economic growth, which he referred to as ''Leprechaun economics'', in an opinion piece for ''[[The Belfast Telegraph]]'' titled: "Northern Ireland will prosper once it’s rid of the EU... not by being tied to 'economics of the leprechaun'".<ref>{{cite news | url=https://www.belfasttelegraph.co.uk/opinion/columnists/nelson-mccausland/nelson-mccausland-northern-ireland-will-prosper-once-its-rid-of-the-eu-not-by-being-tied-to-economics-of-the-leprechaun-38490365.html | author=Nelson McCausland | newspaper=[[The Belfast Telegraph]] | date=12 September 2019 | access-date=30 January 2020 | title=Nelson McCausland: Northern Ireland will prosper once it's rid of the EU... not by being tied to 'economics of the leprechaun'| author-link=Nelson McCausland }}</ref> |
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===Wider use=== |
===Wider use=== |
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Since July 2016, ''leprechaun economics'' has also been used many times ( |
Since July 2016, ''leprechaun economics'' has also been used many times (including by Krugman himself), to refer to distorted or unsound economic data outside Ireland, including by: |
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{{ordered list|type=lower-roman |
{{ordered list|type=lower-roman |
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===Controversy=== |
===Controversy=== |
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In June 2021, the Irish Ambassador to the US, Daniel Mulhall, wrote a letter to the ''New York Times'' saying, "This is not the first time your columnist has used the word 'leprechaun' when referring to Ireland, and I see it as my duty to point out that this represents an unacceptable slur."<ref>{{cite web| url=https://www.rte.ie/news/2021/0612/1227743-columnist-leprechaun-us-ireland/ | author=Brian O'Donovan | author-link=Brian O'Donovan | title=NYT columnist's 'leprechaun' reference criticised | website=[[RTÉ News]] | publisher=Raidió Teilifís Éireann | access-date=12 June 2021}}</ref> |
In June 2021, the Irish Ambassador to the US, [[Daniel Mulhall]], wrote a letter to the ''New York Times'' saying, "This is not the first time your columnist has used the word 'leprechaun' when referring to Ireland, and I see it as my duty to point out that this represents an unacceptable slur."<ref>{{cite web| url=https://www.rte.ie/news/2021/0612/1227743-columnist-leprechaun-us-ireland/ | author=Brian O'Donovan | author-link=Brian O'Donovan | title=NYT columnist's 'leprechaun' reference criticised | website=[[RTÉ News]] | date=12 June 2021 | publisher=Raidió Teilifís Éireann | access-date=12 June 2021}}</ref> |
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==Obfuscation of source (2016)== |
==Obfuscation of source (2016)== |
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The delay by the Central Statistics Office in publishing revisions to Q1 2015 data (the period in which the growth appeared), as well as the redaction of regular data from 2016 to 2017, meant that it would take almost three years for economists to show {{slink|#Proof of Apple (2018)}} in Q1 2018. In addition, the Central Statistics Office further obfuscated the picture by asserting that the "leprechaun economics" growth was not attributable to a main source, but was from several sources and part of Ireland's position as a ''Modernised Global Economy''.<ref>{{cite web|url=http://www.cso.ie/en/media/csoie/newsevents/documents/seminars/globalisationinireland/Globalisation_-_Meeting_the_Measurement_Challenges_-_Michael_Connolly,_CSO.pdf|title=Challenges of Measuring the Modern Global Economy|author=Michael Connolly|publisher=[[Central Statistics Office (Ireland)]]|date=November 2016|access-date=17 May 2018|archive-url=https://web.archive.org/web/20180514064935/http://www.cso.ie/en/media/csoie/newsevents/documents/seminars/globalisationinireland/Globalisation_-_Meeting_the_Measurement_Challenges_-_Michael_Connolly,_CSO.pdf|archive-date=14 May 2018|url-status=live|df=dmy-all}}</ref> |
The delay by the Central Statistics Office in publishing revisions to Q1 2015 data (the period in which the growth appeared), as well as the redaction of regular data from 2016 to 2017, meant that it would take almost three years for economists to show {{slink|#Proof of Apple (2018)}} in Q1 2018. In addition, the Central Statistics Office further obfuscated the picture by asserting that the "leprechaun economics" growth was not attributable to a main source, but was from several sources and part of Ireland's position as a ''Modernised Global Economy''.<ref>{{cite web|url=http://www.cso.ie/en/media/csoie/newsevents/documents/seminars/globalisationinireland/Globalisation_-_Meeting_the_Measurement_Challenges_-_Michael_Connolly,_CSO.pdf|title=Challenges of Measuring the Modern Global Economy|author=Michael Connolly|publisher=[[Central Statistics Office (Ireland)]]|date=November 2016|access-date=17 May 2018|archive-url=https://web.archive.org/web/20180514064935/http://www.cso.ie/en/media/csoie/newsevents/documents/seminars/globalisationinireland/Globalisation_-_Meeting_the_Measurement_Challenges_-_Michael_Connolly,_CSO.pdf|archive-date=14 May 2018|url-status=live|df=dmy-all}}</ref> |
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While the Double Irish |
While the Double Irish was a widely used Irish BEPS tool, Apple's Irish subsidiary, ASI, used a hybrid version approved by the Irish [[Revenue Commissioners|Revenue]], which the EU Commission argued was state aid. In September 2016, the Central Statistics Office again denied this claim and repeated its assertion that the growth was from a range of sources including aircraft leasing.<ref>{{cite news|url=https://www.independent.ie/business/irish/leprechaun-economics-not-all-down-to-apple-move-insists-cso-35034545.html|title='Leprechaun Economics' not all down to Apple move, insists CSO|quote=Last night, CSO statistician Andrew McManus insisted that the earlier guidance had been correct. "There were a number of factors involved. That was the situation then and now," he said.|newspaper=Irish Independent|date=9 September 2016|access-date=19 March 2018|archive-url=https://web.archive.org/web/20180319214126/https://www.independent.ie/business/irish/leprechaun-economics-not-all-down-to-apple-move-insists-cso-35034545.html|archive-date=19 March 2018|url-status=live|df=dmy-all}}</ref> |
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By early 2017, research in the [[MIT Sloan School of Management|Sloan School of Management]] in the [[Massachusetts Institute of Technology]], using the limited data released by the Irish Central Statistics Office, concluded: ''While corporate inversions and aircraft leasing firms were credited for increasing Irish [2015] GDP, the impact may have been exaggerated''.<ref>{{cite web|url=https://www.slideshare.net/DanielTierney4/finding-gold-in-leprechaun-economics-an-analysis-of-irelands-recent-macroeconomic-growth-and-subsequent-market-responses|title=Finding "Gold" in Leprechaun Economics|publisher=[[MIT Sloan School of Management]]|author=Daniel Tierney|date=2017|page=5,28,30}}</ref> |
By early 2017, research in the [[MIT Sloan School of Management|Sloan School of Management]] in the [[Massachusetts Institute of Technology]], using the limited data released by the Irish Central Statistics Office, concluded: ''While corporate inversions and aircraft leasing firms were credited for increasing Irish [2015] GDP, the impact may have been exaggerated''.<ref>{{cite web|url=https://www.slideshare.net/DanielTierney4/finding-gold-in-leprechaun-economics-an-analysis-of-irelands-recent-macroeconomic-growth-and-subsequent-market-responses|title=Finding "Gold" in Leprechaun Economics|publisher=[[MIT Sloan School of Management]]|author=Daniel Tierney|date=2017|page=5,28,30}}</ref> |
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The use by Ireland of complex data protection and data privacy laws, such as contained in the 1993 Statistics Act, to protect Irish BEPS tools and Irish corporate tax avoidance schemes is documented by ''tax justice'' groups |
The use by Ireland of complex data protection and data privacy laws, such as contained in the 1993 Statistics Act, to protect Irish BEPS tools and Irish corporate tax avoidance schemes is documented by ''tax justice'' groups. The Irish Central Statistics Office was accused of "[[putting on the green jersey]]" to hide Apple's tax planning schemes, by some Irish political opposition groups.<ref>{{cite book|title='Leprechaun economics' has damaged the reputation of Ireland's economic data|author=Pearse Doherty|publisher=[[Sinn Féin]]|date=November 2016|author-link=Pearse Doherty}}</ref> The Central Statistics Office (Ireland) did not list [[Modified gross national income|Modified GNI]] (discussed later) in their ''Key Summary Economic Indicitors'' for September 2018, but only GDP, GNP and Debt-to-GDP.<ref>{{cite web|url=https://www.cso.ie/indicators/Maintable.aspx|title=Key Economic Indicators|publisher=[[Central Statistics Office (Ireland)]]|date=2018|access-date=1 September 2018|archive-url=https://web.archive.org/web/20180826220045/https://www.cso.ie/indicators/Maintable.aspx|archive-date=26 August 2018|url-status=live|df=dmy-all}}</ref> |
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===EU GDP levy=== |
===EU GDP levy=== |
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==Introduction of GNI* (2017)== |
==Introduction of GNI* (2017)== |
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{{Main|Irish modified GNI (or GNI star)}} |
{{Main|Irish modified GNI (or GNI star)}} |
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[[File:2020 EU ratio of GNI to GDP.png|thumb|Ireland has one of the most disparate GNI to GDP ratios in the EU.<ref>{{Cite web |title=GDP (current US$) {{!}} Data |url=https://data.worldbank.org/indicator/NY.GDP.MKTP.CD |access-date=2022-05-13 |website=data.worldbank.org}}</ref><ref>{{Cite web |title=GNI per capita, Atlas method (current US$) {{!}} Data |url=https://data.worldbank.org/indicator/ny.gnp.pcap.cd?year_high_desc=true |access-date=2022-05-13 |website=data.worldbank.org}}</ref>]] |
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[[File:2011 Ratio of GNI to GDP (EuroStat National Accounts).png|thumb|'''Ratio of GNI to GDP''' National Accounts Data (2011), [[Eurostat]].<ref name="gnx1">{{cite web|url=http://economic-incentives.blogspot.ie/2013/04/gdp-and-international-comparisons.html|title=International GNI to GDP Comparisons|author=[[Seamus Coffey]], [[Irish Fiscal Advisory Council]]|publisher=Economic Incentives|date=29 April 2013|access-date=19 March 2018|archive-url=https://web.archive.org/web/20180319213831/http://economic-incentives.blogspot.ie/2013/04/gdp-and-international-comparisons.html|archive-date=19 March 2018|url-status=dead|df=dmy-all}}</ref><ref name="gnx2">{{cite news|url=https://www.irishtimes.com/business/economy/europe-points-finger-at-ireland-over-tax-avoidance-1.3417948|title=Europe points finger at Ireland over tax avoidance|newspaper=Irish Times|date=7 March 2018|quote=Multinational companies have made such extensive use of Ireland to funnel royalties – a common way to shift profits and avoid tax – that these payments averaged 23 per cent of the country’s annual gross domestic product between 2010 and 2015, according to an EU Commission report seen by the ''Financial Times''.|access-date=19 March 2018|archive-url=https://web.archive.org/web/20180307095256/https://www.irishtimes.com/business/economy/europe-points-finger-at-ireland-over-tax-avoidance-1.3417948|archive-date=7 March 2018|url-status=live|df=dmy-all}}</ref>]] |
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===Pre-2015 distortions=== |
===Pre-2015 distortions=== |
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From early academic research on tax havens by [[James R. Hines Jr.]] in 1994, Ireland has been noted as a tax haven (one of Hines' ''seven major havens'').<ref>{{cite journal|url=http://taxdoctoralseminar.web.unc.edu/files/2016/02/Hines-Rice.pdf|title=Fiscal Paradise: Foreign Tax havens and American Business|author1=James R. Hines Jr.|author2=Eric M. Rice|quote=We identify 41 countries and regions as tax havens for the purposes of U. S. businesses. Together the seven tax havens with populations greater than one million (Hong Kong, Ireland, Liberia, Lebanon, Panama, Singapore, and Switzerland) account for 80 percent of total tax haven population and 89 percent of tax haven GDP.|journal=Quarterly Journal of Economics (Harvard/MIT)|date=February 1994|volume=9|issue=1|access-date=24 August 2018|archive-url=https://web.archive.org/web/20170825172644/http://taxdoctoralseminar.web.unc.edu/files/2016/02/Hines-Rice.pdf|archive-date=25 August 2017|url-status=dead|df=dmy-all|author1-link=James R. Hines Jr}}</ref> Hines would go on to become the most-cited author in the research of tax havens,<ref name="respec">{{cite web|url=https://ideas.repec.org/cgi-bin/htsearch?form=extended&wm=wrd&dt=range&ul=&q=tax+haven&cmd=Search%21&wf=4BFF&s=C&db=&de=|title=IDEAS/RePEc Database|quote=Tax Havens by Most Cited|access-date=24 August 2018|archive-url=https://web.archive.org/web/20181204123511/https://ideas.repec.org/cgi-bin/htsearch?form=extended&wm=wrd&dt=range&ul=&q=tax+haven&cmd=Search%21&wf=4BFF&s=C&db=&de=|archive-date=4 December 2018|url-status=live|df=dmy-all}}</ref> recording Ireland's rise to become the 3rd largest global tax haven in the [[James R. Hines Jr.#Hines 2010 list|Hines 2010 list]].<ref name="h1">{{cite journal|url=https://repository.law.umich.edu/cgi/viewcontent.cgi?referer=https://www.google.ie/&httpsredir=1&article=1716&context=articles|title=Treasure Islands|pages=103–125|author=James R. Hines Jr.|quote=Table 2: Largest Tax Havens|journal=[[Journal of Economic Perspectives]]|volume=4|issue=24|date=2010}}</ref> As well as identifying and ranking tax havens, Hines, and others, including [[Dhammika Dharmapala]], established that one of the main attributes of tax havens, is the artificial distortion of the haven's GDP from the BEPS accounting flows.<ref name="be">{{cite web|url=https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2385&context=law_and_economics|title=What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature|publisher=[[University of Chicago]]|author=Dhammika Dharmapala|date=2014|access-date=24 August 2018|archive-url=https://web.archive.org/web/20180720094150/https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2385&context=law_and_economics|archive-date=20 July 2018|url-status=live|df=dmy-all|author-link=Dhammika Dharmapala}}</ref> The [[Tax haven#Inflated GDP-per-capita|highest GDP-per-capita countries]], excluding oil and gas nations, are all tax havens.<ref name="WPaidan.regan">{{cite news|url=https://www.washingtonpost.com/politics/2019/04/25/ireland-is-tax-haven-thats-becoming-controversial-home/?noredirect=on|title=Ireland is a tax haven — and that's becoming controversial at home|author=Aidan Regan|newspaper=[[Washington Post]]|date=25 April 2019|access-date=25 April 2019}}</ref> |
From early academic research on tax havens by [[James R. Hines Jr.]] in 1994, Ireland has been noted as a tax haven (one of Hines' ''seven major havens'').<ref>{{cite journal|url=http://taxdoctoralseminar.web.unc.edu/files/2016/02/Hines-Rice.pdf|title=Fiscal Paradise: Foreign Tax havens and American Business|author1=James R. Hines Jr.|author2=Eric M. Rice|quote=We identify 41 countries and regions as tax havens for the purposes of U. S. businesses. Together the seven tax havens with populations greater than one million (Hong Kong, Ireland, Liberia, Lebanon, Panama, Singapore, and Switzerland) account for 80 percent of total tax haven population and 89 percent of tax haven GDP.|journal=Quarterly Journal of Economics (Harvard/MIT)|date=February 1994|volume=9|issue=1|access-date=24 August 2018|archive-url=https://web.archive.org/web/20170825172644/http://taxdoctoralseminar.web.unc.edu/files/2016/02/Hines-Rice.pdf|archive-date=25 August 2017|url-status=dead|df=dmy-all|author1-link=James R. Hines Jr}}</ref> Hines would go on to become the most-cited author in the research of tax havens,<ref name="respec">{{cite web|url=https://ideas.repec.org/cgi-bin/htsearch?form=extended&wm=wrd&dt=range&ul=&q=tax+haven&cmd=Search%21&wf=4BFF&s=C&db=&de=|title=IDEAS/RePEc Database|quote=Tax Havens by Most Cited|access-date=24 August 2018|archive-url=https://web.archive.org/web/20181204123511/https://ideas.repec.org/cgi-bin/htsearch?form=extended&wm=wrd&dt=range&ul=&q=tax+haven&cmd=Search%21&wf=4BFF&s=C&db=&de=|archive-date=4 December 2018|url-status=live|df=dmy-all}}</ref> recording Ireland's rise to become the 3rd largest global tax haven in the [[James R. Hines Jr.#Hines 2010 list|Hines 2010 list]].<ref name="h1">{{cite journal|url=https://repository.law.umich.edu/cgi/viewcontent.cgi?referer=https://www.google.ie/&httpsredir=1&article=1716&context=articles|title=Treasure Islands|pages=103–125|author=James R. Hines Jr.|quote=Table 2: Largest Tax Havens|journal=[[Journal of Economic Perspectives]]|volume=4|issue=24|date=2010}}</ref> As well as identifying and ranking tax havens, Hines, and others, including [[Dhammika Dharmapala]], established that one of the main attributes of tax havens, is the artificial distortion of the haven's GDP from the BEPS accounting flows.<ref name="be">{{cite web|url=https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2385&context=law_and_economics|title=What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature|publisher=[[University of Chicago]]|author=Dhammika Dharmapala|date=2014|access-date=24 August 2018|archive-url=https://web.archive.org/web/20180720094150/https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2385&context=law_and_economics|archive-date=20 July 2018|url-status=live|df=dmy-all|author-link=Dhammika Dharmapala}}</ref> The [[Tax haven#Inflated GDP-per-capita|highest GDP-per-capita countries]], excluding oil and gas nations, are all tax havens.<ref name="WPaidan.regan">{{cite news|url=https://www.washingtonpost.com/politics/2019/04/25/ireland-is-tax-haven-thats-becoming-controversial-home/?noredirect=on|title=Ireland is a tax haven — and that's becoming controversial at home|author=Aidan Regan|newspaper=[[Washington Post]]|date=25 April 2019|access-date=25 April 2019}}</ref> |
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In 2010, as part of Ireland's ECB bailout, Eurostat began tracking the distortion of Ireland's national accounts by BEPS flows. By 2011, [[Eurostat]] showed that Ireland's ratio of [[Gross national income|GNI]] to [[GDP]], had fallen to 80% (i.e. Irish GDP was 125% of Irish GNI, or artificially inflated by 25%). Only Luxembourg, who ranked 1st on Hines' 2010 list of global tax havens,<ref name="h1"/> was lower at 73% (i.e. Luxembourg GDP was 137% of Luxembourg GNI). Eurostat's GNI/GDP table (see graphic) showed EU GDP is equal to EU GNI for almost every EU country, and for the ''aggregate'' EU–27 average.<ref name="gnx1"/><ref name="ber">{{cite web|url=https://www.socialeurope.eu/wp-content/uploads/2017/01/p_imk_wp_175_2017.pdf|author=Heike Joebges|title=Crisis Recovery in a Country With a High Presence of Foreign-Owned Companies: The Case of Ireland|publisher=IMK Macroeconomic Policy Institute, [[Hans-Böckler-Stiftung]]|date=January 2017|access-date=30 March 2018|archive-url=https://web.archive.org/web/20190412082814/https://www.socialeurope.eu/wp-content/uploads/2017/01/p_imk_wp_175_2017.pdf|archive-date=12 April 2019|url-status=dead|df=dmy-all}}</ref> A 2015 Eurostat report showed that from 2010 to 2015, almost 23% of Ireland's GDP was now represented by untaxed multinational net royalty payments, thus implying that Irish GDP was now circa 130% of Irish GNI (e.g. artificially inflated by 30%).<ref>{{cite news|url=https://www.irishtimes.com/business/economy/europe-points-finger-at-ireland-over-tax-avoidance-1.3417948|title=Europe points finger at Ireland over tax avoidance|newspaper=Irish Times|date=7 March 2018|access-date=19 March 2018|archive-url=https://web.archive.org/web/20180307095256/https://www.irishtimes.com/business/economy/europe-points-finger-at-ireland-over-tax-avoidance-1.3417948|archive-date=7 March 2018|url-status=live|df=dmy-all}}</ref> |
In 2010, as part of Ireland's ECB bailout, Eurostat began tracking the distortion of Ireland's national accounts by BEPS flows. By 2011, [[Eurostat]] showed that Ireland's ratio of [[Gross national income|GNI]] to [[GDP]], had fallen to 80% (i.e. Irish GDP was 125% of Irish GNI, or artificially inflated by 25%). Only Luxembourg, who ranked 1st on Hines' 2010 list of global tax havens,<ref name="h1"/> was lower at 73% (i.e. Luxembourg GDP was 137% of Luxembourg GNI). Eurostat's GNI/GDP table (see graphic) showed EU GDP is equal to EU GNI for almost every EU country, and for the ''aggregate'' EU–27 average.<ref name="gnx1">{{cite web |author=[[Seamus Coffey]], [[Irish Fiscal Advisory Council]] |date=29 April 2013 |title=International GNI to GDP Comparisons |url=http://economic-incentives.blogspot.ie/2013/04/gdp-and-international-comparisons.html |url-status=dead |archive-url=https://web.archive.org/web/20180319213831/http://economic-incentives.blogspot.ie/2013/04/gdp-and-international-comparisons.html |archive-date=19 March 2018 |access-date=19 March 2018 |publisher=Economic Incentives |df=dmy-all}}</ref><ref name="ber">{{cite web|url=https://www.socialeurope.eu/wp-content/uploads/2017/01/p_imk_wp_175_2017.pdf|author=Heike Joebges|title=Crisis Recovery in a Country With a High Presence of Foreign-Owned Companies: The Case of Ireland|publisher=IMK Macroeconomic Policy Institute, [[Hans-Böckler-Stiftung]]|date=January 2017|access-date=30 March 2018|archive-url=https://web.archive.org/web/20190412082814/https://www.socialeurope.eu/wp-content/uploads/2017/01/p_imk_wp_175_2017.pdf|archive-date=12 April 2019|url-status=dead|df=dmy-all}}</ref> A 2015 Eurostat report showed that from 2010 to 2015, almost 23% of Ireland's GDP was now represented by untaxed multinational net royalty payments, thus implying that Irish GDP was now circa 130% of Irish GNI (e.g. artificially inflated by 30%).<ref>{{cite news|url=https://www.irishtimes.com/business/economy/europe-points-finger-at-ireland-over-tax-avoidance-1.3417948|title=Europe points finger at Ireland over tax avoidance|newspaper=Irish Times|date=7 March 2018|access-date=19 March 2018|archive-url=https://web.archive.org/web/20180307095256/https://www.irishtimes.com/business/economy/europe-points-finger-at-ireland-over-tax-avoidance-1.3417948|archive-date=7 March 2018|url-status=live|df=dmy-all}}</ref> |
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===Climax of 2015=== |
===Climax of 2015=== |
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The move was timely; in 2018, research using 2015 data showed Ireland had become the world's largest tax haven ([[Gabriel Zucman#Zucman-Tørsløv-Wier 2018 list|Zucman–Tørsløv–Wier 2018 list]]).<ref name="gbz">{{cite web|url=http://gabriel-zucman.eu/missingprofits/|title=The Missing Profits of Nations|quote=Appendix Table 2: Tax Havens|page=31|author1=Gabriel Zucman|author2=Thomas Torslov|author3=Ludvig Wier|publisher=[[National Bureau of Economic Research]], Working Papers|date=June 2018|access-date=25 April 2019|archive-url=https://web.archive.org/web/20190402221958/http://gabriel-zucman.eu/missingprofits/|archive-date=2 April 2019|url-status=live|df=dmy-all|author1-link=Gabriel Zucman}}</ref><ref name="zuc10">{{cite news|url=https://www.wsj.com/articles/corporations-push-profits-into-tax-havens-as-countries-struggle-in-pursuit-study-says-1528634659|title=Zucman:Corporations Push Profits Into Corporate Tax Havens as Countries Struggle in Pursuit, Gabrial Zucman Study Says|quote=Such profit shifting leads to a total annual revenue loss of $200 billion globally|newspaper=[[Wall Street Journal]]|author=Richard Rubin|date=10 June 2018|access-date=25 April 2019|archive-url=https://web.archive.org/web/20190404203053/https://www.wsj.com/articles/corporations-push-profits-into-tax-havens-as-countries-struggle-in-pursuit-study-says-1528634659|archive-date=4 April 2019|url-status=live|df=dmy-all}}</ref><ref name="zux">{{cite news|url=https://www.irishtimes.com/business/economy/ireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401|title=Ireland is the world's biggest corporate 'tax haven', say academics|quote=New Gabriel Zucman study claims State shelters more multinational profits than the entire Caribbean|newspaper=[[Irish Times]]|date=13 June 2018|access-date=25 April 2019|author=Mark Paul|archive-url=https://web.archive.org/web/20180824044322/https://www.irishtimes.com/business/economy/ireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401|archive-date=24 August 2018|url-status=live|df=dmy-all}}</ref><ref name="WPaidan.regan"/> |
The move was timely; in 2018, research using 2015 data showed Ireland had become the world's largest tax haven ([[Gabriel Zucman#Zucman-Tørsløv-Wier 2018 list|Zucman–Tørsløv–Wier 2018 list]]).<ref name="gbz">{{cite web|url=http://gabriel-zucman.eu/missingprofits/|title=The Missing Profits of Nations|quote=Appendix Table 2: Tax Havens|page=31|author1=Gabriel Zucman|author2=Thomas Torslov|author3=Ludvig Wier|publisher=[[National Bureau of Economic Research]], Working Papers|date=June 2018|access-date=25 April 2019|archive-url=https://web.archive.org/web/20190402221958/http://gabriel-zucman.eu/missingprofits/|archive-date=2 April 2019|url-status=live|df=dmy-all|author1-link=Gabriel Zucman}}</ref><ref name="zuc10">{{cite news|url=https://www.wsj.com/articles/corporations-push-profits-into-tax-havens-as-countries-struggle-in-pursuit-study-says-1528634659|title=Zucman:Corporations Push Profits Into Corporate Tax Havens as Countries Struggle in Pursuit, Gabrial Zucman Study Says|quote=Such profit shifting leads to a total annual revenue loss of $200 billion globally|newspaper=[[Wall Street Journal]]|author=Richard Rubin|date=10 June 2018|access-date=25 April 2019|archive-url=https://web.archive.org/web/20190404203053/https://www.wsj.com/articles/corporations-push-profits-into-tax-havens-as-countries-struggle-in-pursuit-study-says-1528634659|archive-date=4 April 2019|url-status=live|df=dmy-all}}</ref><ref name="zux">{{cite news|url=https://www.irishtimes.com/business/economy/ireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401|title=Ireland is the world's biggest corporate 'tax haven', say academics|quote=New Gabriel Zucman study claims State shelters more multinational profits than the entire Caribbean|newspaper=[[Irish Times]]|date=13 June 2018|access-date=25 April 2019|author=Mark Paul|archive-url=https://web.archive.org/web/20180824044322/https://www.irishtimes.com/business/economy/ireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401|archive-date=24 August 2018|url-status=live|df=dmy-all}}</ref><ref name="WPaidan.regan"/> |
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In |
InApril 2018, Eurostat welcomed GNI*, but showed it could not eliminate all BEPS effects (e.g. as the distortion in OECD [[Modified gross national income#2018 Debt metrics|Irish debt metrics]] showed).<ref name="eurostat1">{{cite web|url=https://ec.europa.eu/eurostat/cros/system/files/euronaissue2-2016-art2.pdf|title=Globalisation at work in statistics — Questions arising from the 'Irish case'|publisher=[[EuroStat]]|author1=Silke Stapel-Weber|author2=John Verrinder|quote=Nevertheless the rise in [Irish] GNI is still very substantial because the additional income flows of the companies (interest and dividends) concerned are considerably smaller than the value added of their activities|page=31|date=December 2017|access-date=24 August 2018|archive-url=https://web.archive.org/web/20180428205432/https://ec.europa.eu/eurostat/cros/system/files/euronaissue2-2016-art2.pdf|archive-date=28 April 2018|url-status=live|df=dmy-all}}</ref> |
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==Proof of Apple (2018)== |
==Proof of Apple (2018)== |
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Coffey's January 2018 post also showed that Apple had restructured into the Irish ''[[Double Irish arrangement#CAIA|Capital Allowances for Intangible Assets]]'' ("CAIA") BEPS tool. Apple's previous hybrid–[[Double Irish]] BEPS tool had a modest effect on Irish economic data as it was ''offshore''. However, by ''onshoring'' their [[intellectual property]] ("IP") from Jersey, via the CAIA BEPS tool, the full effect of circa US$40 billion in profits that ASI was ''shifting'' by 2015 (see Table 1), would appear in the Irish national accounts; and was equivalent to over 20% of Irish GDP.<ref name="co1"/> The IMF began to correlate the effect of Apple iPhone sales on the Irish economic cycle.<ref name="imf1">{{cite web|url=https://www.rte.ie/news/business/2018/0417/955163-iphone-effect-on-irish-economy/|title=Quarter of Irish economic growth due to Apple's iPhone, says IMF|publisher=RTÉ News|date=17 April 2018|access-date=18 April 2018|archive-url=https://web.archive.org/web/20180418162336/https://www.rte.ie/news/business/2018/0417/955163-iphone-effect-on-irish-economy/|archive-date=18 April 2018|url-status=live|df=dmy-all}}</ref><ref name="imf2">{{cite news|url=https://www.irishtimes.com/business/economy/iphone-exports-accounted-for-quarter-of-irish-economic-growth-in-2017-imf-1.3464658|title=iPhone exports accounted for quarter of Irish economic growth in 2017 - IMF|newspaper=Irish Times|date=17 April 2018|access-date=18 April 2018|archive-url=https://web.archive.org/web/20180418225318/https://www.irishtimes.com/business/economy/iphone-exports-accounted-for-quarter-of-irish-economic-growth-in-2017-imf-1.3464658|archive-date=18 April 2018|url-status=live|df=dmy-all}}</ref> |
Coffey's January 2018 post also showed that Apple had restructured into the Irish ''[[Double Irish arrangement#CAIA|Capital Allowances for Intangible Assets]]'' ("CAIA") BEPS tool. Apple's previous hybrid–[[Double Irish]] BEPS tool had a modest effect on Irish economic data as it was ''offshore''. However, by ''onshoring'' their [[intellectual property]] ("IP") from Jersey, via the CAIA BEPS tool, the full effect of circa US$40 billion in profits that ASI was ''shifting'' by 2015 (see Table 1), would appear in the Irish national accounts; and was equivalent to over 20% of Irish GDP.<ref name="co1"/> The IMF began to correlate the effect of Apple iPhone sales on the Irish economic cycle.<ref name="imf1">{{cite web|url=https://www.rte.ie/news/business/2018/0417/955163-iphone-effect-on-irish-economy/|title=Quarter of Irish economic growth due to Apple's iPhone, says IMF|publisher=RTÉ News|date=17 April 2018|access-date=18 April 2018|archive-url=https://web.archive.org/web/20180418162336/https://www.rte.ie/news/business/2018/0417/955163-iphone-effect-on-irish-economy/|archive-date=18 April 2018|url-status=live|df=dmy-all}}</ref><ref name="imf2">{{cite news|url=https://www.irishtimes.com/business/economy/iphone-exports-accounted-for-quarter-of-irish-economic-growth-in-2017-imf-1.3464658|title=iPhone exports accounted for quarter of Irish economic growth in 2017 - IMF|newspaper=Irish Times|date=17 April 2018|access-date=18 April 2018|archive-url=https://web.archive.org/web/20180418225318/https://www.irishtimes.com/business/economy/iphone-exports-accounted-for-quarter-of-irish-economic-growth-in-2017-imf-1.3464658|archive-date=18 April 2018|url-status=live|df=dmy-all}}</ref> |
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{| class="wikitable sortable" style="text-align: |
{| class="wikitable sortable" style="text-align:right" |
||
|+ |
|+Estimates of profits shifted through Apple's Irish subsidiary, Apple Sales International ("ASI") from 2004 to 2014<ref name="co1"/> |
||
|- |
|- |
||
!style=" |
!style="text-align:center"|Year<br /> |
||
!style="background:#cfc |
!style="background:#cfc;text-align:center"|ASI Profit<br />Shifted<br>(USD m) |
||
!style=" |
!style="text-align:center"|Average<br />€/$ rate |
||
!style="background:#cfc |
!style="background:#cfc;text-align:center"|ASI Profit<br />Shifted<br>(EUR m) |
||
!style=" |
!style="text-align:center"|Irish Corp.<br />Tax Rate |
||
!style="background:#cfc |
!style="background:#cfc;text-align:center"|Irish Corp. Tax<br />Avoided<br>(EUR m) |
||
|- |
|- |
||
|2004||268||.805||216||12.5%||27 |
|2004||268||.805||216||12.5%||27 |
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|} |
|} |
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By April 2018, economists confirmed Coffey's analysis, and estimated Apple ''onshored'' USD 300 billion of IP from Jersey in Q1 2015 in the largest recorded BEPS action in history.<ref name=FORTUNE>{{cite magazine | url=https://fortune.com/2020/01/08/corporate-tax-haven-laws-loopholes/ | title=New Laws Meant to Close Down Tax Havens and Shut Loopholes Could Have the Opposite Effect | date=8 January 2020 | access-date=7 February 2020 | author=Erik Sherman | magazine=[[Fortune (magazine)|Fortune]] | quote=By April 2018, economists estimated Apple had onshored [to Ireland] $300 billion of intellectual property from Jersey in Q1 2015, appartently the largest recorded BEPS action in history. This was equivalent to over 20% of Irish GDP"}}</ref><ref name="cofr"/><ref name="brads">{{Cite web|title=Apple's Exports Aren't Missing: They Are in Ireland|url=https://www.cfr.org/blog/apples-exports-arent-missing-they-are-ireland|publisher=[[Council on Foreign Relations]]|author=Brad Setser|date=30 October 2017|access-date=30 April 2018|archive-url=https://web.archive.org/web/20180429025322/https://www.cfr.org/blog/apples-exports-arent-missing-they-are-ireland|archive-date=29 April 2018|url-status=live|df=dmy-all|author-link=Brad Setser}}</ref><ref name="patrick.smyth"/> In June 2018, the [[European United Left–Nordic Green Left|GUE-NGL]] EU Parliament group published an analysis of Apple's new Irish CAIA BEPS tool, they labeled |
By April 2018, economists confirmed Coffey's analysis, and estimated Apple ''onshored'' USD 300 billion of IP from Jersey in Q1 2015 in the largest recorded BEPS action in history.<ref name=FORTUNE>{{cite magazine | url=https://fortune.com/2020/01/08/corporate-tax-haven-laws-loopholes/ | title=New Laws Meant to Close Down Tax Havens and Shut Loopholes Could Have the Opposite Effect | date=8 January 2020 | access-date=7 February 2020 | author=Erik Sherman | magazine=[[Fortune (magazine)|Fortune]] | quote=By April 2018, economists estimated Apple had onshored [to Ireland] $300 billion of intellectual property from Jersey in Q1 2015, appartently the largest recorded BEPS action in history. This was equivalent to over 20% of Irish GDP"}}</ref><ref name="cofr"/><ref name="brads">{{Cite web|title=Apple's Exports Aren't Missing: They Are in Ireland|url=https://www.cfr.org/blog/apples-exports-arent-missing-they-are-ireland|publisher=[[Council on Foreign Relations]]|author=Brad Setser|date=30 October 2017|access-date=30 April 2018|archive-url=https://web.archive.org/web/20180429025322/https://www.cfr.org/blog/apples-exports-arent-missing-they-are-ireland|archive-date=29 April 2018|url-status=live|df=dmy-all|author-link=Brad Setser}}</ref><ref name="patrick.smyth"/> In June 2018, the [[European United Left–Nordic Green Left|GUE-NGL]] EU Parliament group published an analysis of Apple's new Irish CAIA BEPS tool, they labeled the Green Jersey.<ref name="emmaclancy">{{cite web|url=https://www.taxjustice.net/2018/06/25/new-report-is-apple-paying-less-than-1-tax-in-the-eu/|title=New Report on Apple's New Irish Tax Structure|publisher=[[Tax Justice Network]]|author=Naomi Fowler|date=25 June 2018|access-date=4 August 2018|archive-url=https://web.archive.org/web/20180702064405/https://www.taxjustice.net/2018/06/25/new-report-is-apple-paying-less-than-1-tax-in-the-eu/|archive-date=2 July 2018|url-status=live|df=dmy-all}}</ref><ref name="emma">{{cite web|url=http://src.bna.com/zNy|title=Apple's Irish Tax Deals|publisher=[[European United Left–Nordic Green Left]] EU Parliament|author1=Martin Brehm Christensen|author2=Emma Clancy|date=21 June 2018|access-date=4 August 2018|archive-url=https://web.archive.org/web/20180714041128/http://src.bna.com/zNy|archive-date=14 July 2018|url-status=live|df=dmy-all}}</ref><ref name="patrick.smyth">{{cite news|url=https://www.irishtimes.com/business/economy/explainer-apple-s-13bn-tax-appeal-has-huge-implications-1.4017044|title=Explainer: Apple's €13bn tax appeal has huge implications|author=Patrick Syth, European Editor|newspaper=[[Irish Times]]|date=13 September 2019|access-date=15 October 2019|quote=Apple has changed its own corporate structure, restructured a new Irish Beps tool called Capital Allowances for Intangible Assets (CAIA), also nicknamed the “Green Jersey”. The bookkeeping change was so significant that it contributed to the extraordinary one-off revision in Irish GDP for 2015 by 26 per cent (later revised to 34.4 per cent).}}</ref> |
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On 17 February 2020, Krugman tweeted, "So Tim Cook is the leprechaun in leprechaun economics".<ref>{{cite tweet|user=paulkrugman | number=1229478817678471169 | title=So Tim Cook is the leprechaun in leprechaun economics | author=Paul Krugman | date=17 February 2020 | author-link=Paul Krugman}}</ref> |
On 17 February 2020, Krugman tweeted, "So Tim Cook is the leprechaun in leprechaun economics".<ref>{{cite tweet|user=paulkrugman | number=1229478817678471169 | title=So Tim Cook is the leprechaun in leprechaun economics | author=Paul Krugman | date=17 February 2020 | author-link=Paul Krugman}}</ref> |
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In April 2017, the [[Revenue Commissioners]] released Irish corporation tax data for 2015 showing a 49% increase, or €2.26 billion, to €6.87 billion in one year.<ref name="ct1">{{cite web|url=https://www.revenue.ie/en/corporate/documents/research/corporation-tax-returns-2016.pdf|title=An Analysis of 2015 Corporation Tax Returns and 2016 Payments|publisher=[[Revenue Commissioners]]|date=April 2017|access-date=4 April 2018|archive-url=https://web.archive.org/web/20171128143457/https://revenue.ie/en/corporate/documents/research/corporation-tax-returns-2016.pdf|archive-date=28 November 2017|url-status=live|df=dmy-all}}</ref> The report also showed that "intangible allowances", which are claimed under the CAIA BEPS tool, jumped by over 1,000 per cent, or €26.2 billion in 2015 (from €2.7 billion in 2014), which was consistent with the euro amount of profits that Apple's ASI was ''shifting'' through its hybrid–Double Irish BEPS tool at the time.<ref name="co1"/> However, the €2.26 billion rise in corporate tax for 2015 looked similar to the effective tax ASI would pay in Ireland if it was not using Irish BEPS tools. No other company has been identified as the source of such a large jump in Irish corporation tax in a single year, as it required Irish booked profits of over US$30 billion. |
In April 2017, the [[Revenue Commissioners]] released Irish corporation tax data for 2015 showing a 49% increase, or €2.26 billion, to €6.87 billion in one year.<ref name="ct1">{{cite web|url=https://www.revenue.ie/en/corporate/documents/research/corporation-tax-returns-2016.pdf|title=An Analysis of 2015 Corporation Tax Returns and 2016 Payments|publisher=[[Revenue Commissioners]]|date=April 2017|access-date=4 April 2018|archive-url=https://web.archive.org/web/20171128143457/https://revenue.ie/en/corporate/documents/research/corporation-tax-returns-2016.pdf|archive-date=28 November 2017|url-status=live|df=dmy-all}}</ref> The report also showed that "intangible allowances", which are claimed under the CAIA BEPS tool, jumped by over 1,000 per cent, or €26.2 billion in 2015 (from €2.7 billion in 2014), which was consistent with the euro amount of profits that Apple's ASI was ''shifting'' through its hybrid–Double Irish BEPS tool at the time.<ref name="co1"/> However, the €2.26 billion rise in corporate tax for 2015 looked similar to the effective tax ASI would pay in Ireland if it was not using Irish BEPS tools. No other company has been identified as the source of such a large jump in Irish corporation tax in a single year, as it required Irish booked profits of over US$30 billion. |
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Seamus Coffey posted several articles in 2018 on the rise in Irish "intangible allowances", which hit €35.7 billion in 2016, or €4.5 billion of Irish corporate tax avoided at the 12.5% rate.<ref>{{cite web|url=http://economic-incentives.blogspot.com/2018/07/capital-allowances-and-companies-with.html|title=Capital Allowances and companies with Net Trading Income that is negative or nil|date=17 July 2018|author=[[Seamus Coffey]], [[Irish Fiscal Advisory Council]]|publisher=Economic Incentives, [[University College Cork]]|quote=And we see that after the application of losses, and most importantly, capital allowances, the resulting net trading income of these companies with almost €50 billion of Gross Trading Profits in 2016 was zero|access-date=25 August 2018|archive-url=https://web.archive.org/web/20180825212601/http://economic-incentives.blogspot.com/2018/07/capital-allowances-and-companies-with.html|archive-date=25 August 2018|url-status=live|df=dmy-all}}</ref> This is consistent with 2018 research showing that the " |
Seamus Coffey posted several articles in 2018 on the rise in Irish "intangible allowances", which hit €35.7 billion in 2016, or €4.5 billion of Irish corporate tax avoided at the 12.5% rate.<ref>{{cite web|url=http://economic-incentives.blogspot.com/2018/07/capital-allowances-and-companies-with.html|title=Capital Allowances and companies with Net Trading Income that is negative or nil|date=17 July 2018|author=[[Seamus Coffey]], [[Irish Fiscal Advisory Council]]|publisher=Economic Incentives, [[University College Cork]]|quote=And we see that after the application of losses, and most importantly, capital allowances, the resulting net trading income of these companies with almost €50 billion of Gross Trading Profits in 2016 was zero|access-date=25 August 2018|archive-url=https://web.archive.org/web/20180825212601/http://economic-incentives.blogspot.com/2018/07/capital-allowances-and-companies-with.html|archive-date=25 August 2018|url-status=live|df=dmy-all}}</ref> This is consistent with 2018 research showing that the "Green Jersey" is the largest BEPS tool in the world. However, in the absence of confirming data, Coffey is reluctant to draw a parallel between the dramatic 2015 rise in Irish corporation tax receipts, which has carried into 2016, and any potential change of tax strategy by Apple from the additional EU scrutiny into Apple's Q1 2015 restructure.<ref>{{cite web|url=http://economic-incentives.blogspot.com/2018/07/the-2016-aggregate-corporation-tax.html|title=The 2016 Aggregate Corporation Tax Calculation|date=17 July 2018|author=[[Seamus Coffey]], [[Irish Fiscal Advisory Council]]|publisher=Economic Incentives, [[University College Cork]]|quote=And, again it highlights, that although the surge in CT receipts may have happened in the same year as the jump in GDP, they are not necessarily directly related. As with lots of things lately, capital allowances play a central role in this and it is to them that we will turn next|access-date=25 August 2018|archive-url=https://web.archive.org/web/20180825212559/http://economic-incentives.blogspot.com/2018/07/the-2016-aggregate-corporation-tax.html|archive-date=25 August 2018|url-status=live|df=dmy-all}}</ref> |
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In May 2019, ''[[The Times]]'' reported that IMF experts, including Erik De Vrijer, Director of the IMF's European department, expressed concern about the lack of official understanding about the driver in the dramatic rise in Irish corporation tax receipts since 2014, and the implications for long-term State spending.<ref>{{cite news|url=https://www.thetimes.co.uk/edition/ireland/risky-to-count-too-much-on-corporation-tax-imf-warns-ttpvlbkfl|title=Risky to count too much on corporation tax, IMF warns|newspaper=[[The Times]]|author=Paul O'Donoghue|date=1 May 2019|access-date=1 May 2019|quote=[Irish] Corporation tax receipts have surged in recent years, doubling from €5.2 billion in 2014 to €10.4 billion last year [2018]. Experts are unsure about what has caused this spike.|archive-url=https://web.archive.org/web/20190501063855/https://www.thetimes.co.uk/edition/ireland/risky-to-count-too-much-on-corporation-tax-imf-warns-ttpvlbkfl|archive-date=1 May 2019|url-status=live|df=dmy-all}}</ref> |
In May 2019, ''[[The Times]]'' reported that IMF experts, including Erik De Vrijer, Director of the IMF's European department, expressed concern about the lack of official understanding about the driver in the dramatic rise in Irish corporation tax receipts since 2014, and the implications for long-term State spending.<ref>{{cite news|url=https://www.thetimes.co.uk/edition/ireland/risky-to-count-too-much-on-corporation-tax-imf-warns-ttpvlbkfl|title=Risky to count too much on corporation tax, IMF warns|newspaper=[[The Times]]|author=Paul O'Donoghue|date=1 May 2019|access-date=1 May 2019|quote=[Irish] Corporation tax receipts have surged in recent years, doubling from €5.2 billion in 2014 to €10.4 billion last year [2018]. Experts are unsure about what has caused this spike.|archive-url=https://web.archive.org/web/20190501063855/https://www.thetimes.co.uk/edition/ireland/risky-to-count-too-much-on-corporation-tax-imf-warns-ttpvlbkfl|archive-date=1 May 2019|url-status=live|df=dmy-all}}</ref> Section 815A of the ''1997 Tax Acts'' prevents disclosure of Irish taxation data, even to other officers of the Irish State, outside of the Irish [[Revenue Commissioners]].<ref name="apple.largest.factcheck">{{cite news|url=http://www.thejournal.ie/apple-biggest-taxpayer-ireland-facts-tim-cook-michael-noonan-2960327-Sep2016/|title=FactCheck: Is Apple really the "largest taxpayer in Ireland"?|quote=Revenue said: "Interactions between Revenue and individual taxpayers are subject to the taxpayer confidentiality provisions of Section 851A".|newspaper=[[TheJournal.ie]]|date=4 September 2016|access-date=29 April 2019|author=Dan MacGuill|archive-url=https://web.archive.org/web/20190427220418/https://www.thejournal.ie/apple-biggest-taxpayer-ireland-facts-tim-cook-michael-noonan-2960327-Sep2016/|archive-date=27 April 2019|url-status=live|df=dmy-all}}</ref> |
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==Reverse leprechaun taxes (2019)== |
==Reverse leprechaun taxes (2019)== |
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===Anti-Irish taxation measures=== |
===Anti-Irish taxation measures=== |
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{{see|Tax inversion#Countermeasures|Ireland as a tax haven#Countermeasures}} |
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In September 2016, Ireland became the first of the major [[tax haven]]s, to be "blacklisted" by a [[G20]] economy, Brazil.<ref name=BRAZ>{{cite news|url=http://www.thejournal.ie/ireland-brazil-tax-haven-jbs-2-2990888-Sep2016/|title=Ireland is trying to get off a Brazilian black list for tax havens|newspaper=[[TheJournal.ie]]|date=16 September 2016|author=Paul O’Donoghue|access-date=17 May 2018|archive-url=https://web.archive.org/web/20180517223213/http://www.thejournal.ie/ireland-brazil-tax-haven-jbs-2-2990888-Sep2016/|archive-date=17 May 2018|url-status=live|df=dmy-all}}</ref> |
In September 2016, Ireland became the first of the major [[tax haven]]s, to be "blacklisted" by a [[G20]] economy, Brazil.<ref name=BRAZ>{{cite news|url=http://www.thejournal.ie/ireland-brazil-tax-haven-jbs-2-2990888-Sep2016/|title=Ireland is trying to get off a Brazilian black list for tax havens|newspaper=[[TheJournal.ie]]|date=16 September 2016|author=Paul O’Donoghue|access-date=17 May 2018|archive-url=https://web.archive.org/web/20180517223213/http://www.thejournal.ie/ireland-brazil-tax-haven-jbs-2-2990888-Sep2016/|archive-date=17 May 2018|url-status=live|df=dmy-all}}</ref> |
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{{See|Capital Allowances for Intangible Assets}} |
{{See|Capital Allowances for Intangible Assets}} |
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In July 2018, it was reported that Microsoft was preparing to execute a "Green Jersey" BEPS transaction.<ref name="em">{{cite web|url=https://www.businesspost.ie/news/irish-microsoft-firm-worth-100bn-ahead-merger-419721|title=Irish Microsoft firm worth $100bn ahead of merger|publisher=[[The Sunday Business Post]]|author=Ian Guider|date=24 June 2018|access-date=4 August 2018|archive-url=https://web.archive.org/web/20180716111632/https://www.businesspost.ie/news/irish-microsoft-firm-worth-100bn-ahead-merger-419721|archive-date=16 July 2018|url-status=live|df=dmy-all}}</ref> which, due to |
In July 2018, it was reported that Microsoft was preparing to execute a "Green Jersey" BEPS transaction.<ref name="em">{{cite web|url=https://www.businesspost.ie/news/irish-microsoft-firm-worth-100bn-ahead-merger-419721|title=Irish Microsoft firm worth $100bn ahead of merger|publisher=[[The Sunday Business Post]]|author=Ian Guider|date=24 June 2018|access-date=4 August 2018|archive-url=https://web.archive.org/web/20180716111632/https://www.businesspost.ie/news/irish-microsoft-firm-worth-100bn-ahead-merger-419721|archive-date=16 July 2018|url-status=live|df=dmy-all}}</ref> which, due to technical issues with the TCJA, makes the CAIA BEPS tool attractive to U.S. multinationals. In July 2018, Coffey posted that Ireland could see a "boom" in the ''onshoring'' of U.S. IP between now and 2020.<ref name="seamus coffey green jersey">{{cite web|url=http://economic-incentives.blogspot.com/2018/07/when-can-we-expect-next-wave-of-ip.html|title=When can we expect the next wave of IP onshoring?|quote=IP onshoring is something we should be expecting to see much more of as we move towards the end of the decade. Buckle up!|publisher=Economics Incentives, [[University College Cork]]|author=[[Seamus Coffey]], [[Irish Fiscal Advisory Council]]|date=18 July 2018|access-date=24 August 2018|archive-url=https://web.archive.org/web/20180804140642/http://economic-incentives.blogspot.com/2018/07/when-can-we-expect-next-wave-of-ip.html|archive-date=4 August 2018|url-status=live|df=dmy-all}}</ref> In May 2019, it was reported Microsoft moved $52.8bn of IP assets to Ireland.<ref>{{cite news | url=https://www.irishtimes.com/business/technology/microsoft-moves-52-8bn-of-assets-and-its-asian-trading-operation-to-ireland-1.3903630 | title=Microsoft moves $52.8bn of assets and its Asian trading operation to Ireland | author=Mark Paul | date=25 May 2019 | access-date=29 January 2020 | newspaper=Irish Times}}</ref> In January 2020, the ''Irish Times'' speculated that [[Google Inc.]], was also considering using the CAIA BEPS tool, and noting that the CAIA had helped "trigger the Leprechaun Economics affair".<ref name=IT9>{{cite news | url=https://www.independent.ie/business/why-google-might-still-benefit-from-irish-tax-breaks-38830700.html | title=Why Google might still benefit from Irish tax breaks| author=David Chance | date=3 January 2020 | access-date=30 January 2020 |newspaper=[[Irish Times]] | quote=Apple restructured its tax operations in 2015 using the State's capital allowance for intangible assets (CAIA), helping trigger the so-called Leprechaun Economics effect that year when the Irish economy suddenly surged by 26pc}}</ref> |
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==See also== |
==See also== |
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{{Portal|Ireland|Companies|Economy}} |
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{{div col|colwidth=30em}} |
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* [[CAIA arrangement]] |
* [[CAIA arrangement]] |
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* [[Corporation tax in the Republic of Ireland]] |
* [[Corporation tax in the Republic of Ireland]] |
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* [[Criticism of Apple Inc.]] |
* [[Criticism of Apple Inc.]] |
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* [[Double Irish arrangement]] |
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* [[Dutch Sandwich]] |
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* [[Economy of the Republic of Ireland]] |
* [[Economy of the Republic of Ireland]] |
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* [[EU illegal State aid case against Apple in Ireland]] |
* [[EU illegal State aid case against Apple in Ireland]] |
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* [[Glossary of economics]] |
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* [[International Financial Services Centre]] |
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* [[Ireland as a tax haven]] |
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* [[Irish Fiscal Advisory Council]] |
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* [[Put on the green jersey]] |
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* [[Single malt arrangement]] |
* [[Single malt arrangement]] |
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{{div col end}} |
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== Explanatory notes== |
== Explanatory notes== |
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==External links== |
==External links== |
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{{scholia}} |
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* [http://www.cso.ie/en/index.html Irish Central Statistics Office] |
* [http://www.cso.ie/en/index.html Irish Central Statistics Office] |
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* [http://www.fiscalcouncil.ie/ Irish Fiscal Advisory Council] |
* [http://www.fiscalcouncil.ie/ Irish Fiscal Advisory Council] |
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* [http://research.ucc.ie/profiles/B008/scoffey Seamus Coffey University College Cork] |
* [http://research.ucc.ie/profiles/B008/scoffey Seamus Coffey University College Cork] |
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* [https://www.irishtimes.com/business/apple-s-cash-mountain-how-it-avoids-tax-and-the-irish-link-1.3281734 Apple's BEPS tool explained], Irish Times Video |
* [https://www.irishtimes.com/business/apple-s-cash-mountain-how-it-avoids-tax-and-the-irish-link-1.3281734 Apple's BEPS tool explained], Irish Times Video |
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* [https://www.slideshare.net/DanielTierney4/finding-gold-in-leprechaun-economics-an-analysis-of-irelands-recent-macroeconomic-growth-and-subsequent-market-responses Finding "Gold" in Leprechaun Economics], Sloan School of Management, Massachusetts Institute of Technology, Spring 2017 |
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{{Globalization}} |
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{{Authority control}} |
{{Authority control}} |
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[[Category:Apple Inc.]] |
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[[Category:Corporate tax avoidance]] |
[[Category:Corporate tax avoidance]] |
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[[Category:Corporate taxation in the United States]] |
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[[Category:Economic controversies]] |
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[[Category:Economy of the Republic of Ireland]] |
[[Category:Economy of the Republic of Ireland]] |
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[[Category:Gross domestic product]] |
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[[Category:Microsoft]] |
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[[Category:National accounts]] |
[[Category:National accounts]] |
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[[Category:Taxation in the Republic of Ireland]] |
[[Category:Taxation in the Republic of Ireland]] |
Leprechaun economics was a term coined by economist Paul Krugman to describe the 26.3 per cent rise in Irish 2015 GDP, later revised to 34.4 per cent,[a] in a 12 July 2016 publication by the Irish Central Statistics Office (CSO), restating 2015 Irish national accounts.[5][6][7][8] At that point, the distortion of Irish economic data by tax-driven accounting flows reached a climax.[1][2][9] In 2020, Krugman said the term was a feature of all tax havens.[10]
While the event that caused the artificial Irish GDP growth occurred in Q1 2015, the Irish CSO had to delay its GDP revision and redact the release of its regular economic data in 2016–2017 to protect the source's identity, as required by Irish law.[11] Only in Q1 2018 could economists confirm Apple as the source, [12][13][14] and that this was the largest ever base erosion and profit shifting (BEPS) action,[15] and the largest hybrid–tax inversion of a U.S. corporation.[3][16]
The event marked the replacement of Ireland's prohibited BEPS tool, the Double Irish, with the more powerful Capital Allowances for Intangible Assets (CAIA) tool.[13][14] Apple used the CAIA tool to restructure out of its hybrid–Double Irish tool, on which the EU Commission would levy a €13 billion fine in August 2016.[b][13][14] As a result of the action by Apple, a range of academics calculated that Ireland, already held by some to be a major tax haven, was the world's largest tax haven.[18][19][20][21]
The "Leprechaun economics" incident had follow-on effects. In September 2016, Ireland became the first of the major tax havens to be "blacklisted" by a G20 economy, Brazil.[22] In February 2017, Ireland replaced GDP with "Modified GNI (or GNI*)" (2017 Irish GDP was 162% of 2017 Irish GNI*, whereas EU–28 2017 GDP was 100% of GNI).[23][24] In December 2017, the U.S and the EU introduced countermeasures to the Irish BEPS tools.[25][26][27] In October 2018, Ireland introduced a reverse tax, to discourage IP from leaving Ireland.[28] In 2018, the OECD showed that Ireland's public debt metrics differ dramatically depending on whether Debt-to-GDP, Debt-to-GNI* or Debt-per-Capita is used;[29][30][31] and in 2019, the IMF estimated 60 per cent of Irish foreign direct investment was "phantom".[32][33][34]
On the 12 July 2016, at 11am GMT, the Central Statistics Office posted a data revision showing that 2015 Irish GDP data rose by 26.3 per cent[a] and 2015 Irish GNP rose by 18.7 per cent.[5] Twenty four minutes later, at 11.24am GMT, Nobel Prize-winning economist Paul Krugman responded to the data release by posting:
Leprechaun economics: Ireland reports 26 percent growth! But it doesn't make sense. Why are these in GDP?
— Paul Krugman, 12 July 2016[35]
Over the 12 to 13 July 2016, the term leprechaun economics was used widely by the Irish and international media when discussing Ireland's revised 26.3% 2015 GDP growth rate.[6][7][8][9][36][1][2] Leprechaun economics became a label for the Irish 2015 GDP 26.3% growth rate, and has been as such by a diverse range of sources.[37][38] In December 2019, the Irish Times named "Leprechaun Economics" as one of its "Top 10 business stories of the decade".[16]
Since July 2016, leprechaun economics has become used by economists in relation to caveats and concerns regarding Irish economic data.[39][40][41][42]
Nobody believes our GDP numbers any more, not after a 26 per cent jump in 2015, which was famously derided as "leprechaun economics". Even the CSO cautions against viewing last year's [2017] 7.8 per cent jump as a reflection of real economic activity
— The Irish Times, 17 March 2018[43]
In March 2018, the first paper was published in an established international economic journal - in this case, the New Political Economy - with leprechaun economics in its title: "Celtic Phoenix or Leprechaun Economics? The Politics of an FDI-led Growth Model in Europe".[44] By September 2018, the term leprechaun economics had been used 83 times during debates in the Irish Dáil Éireann.[45]
In September 2019, former Northern Ireland minister Nelson McCausland, criticised Ireland's reliance on tax-driven schemes for economic growth, which he referred to as Leprechaun economics, in an opinion piece for The Belfast Telegraph titled: "Northern Ireland will prosper once it’s rid of the EU... not by being tied to 'economics of the leprechaun'".[46]
Since July 2016, leprechaun economics has also been used many times (including by Krugman himself), to refer to distorted or unsound economic data outside Ireland, including by:
In January 2020, Krugman noted in the New York Times the more general application of the term, saying: "Now, I've coined a few economic phrases I'm proud of: "leprechaun economics" for the distortion of statistics caused by multinational corporations in search of tax havens, ...";[10] and followed with tweet saying: "You know what's really gratifying as a commentator? When a phrase you coined (leprechaun economics) is widely used without attribution. No, really — it means you've changed the discourse".[53]
In June 2021, the Irish Ambassador to the US, Daniel Mulhall, wrote a letter to the New York Times saying, "This is not the first time your columnist has used the word 'leprechaun' when referring to Ireland, and I see it as my duty to point out that this represents an unacceptable slur."[54]
Despite the scale of the revision to 2015 Irish GDP,[55] the Irish Central Statistics Office issued a short one-page note on 12 July 2016 explaining that it was as a result of an annual benchmarking exercise. The office also stated that: "As a consequence of the overall scale of these additions, elements of the results that would previously been published are now suppressed to protect the confidentiality of the contributing companies, in accordance with the Statistics Act 1993."[11]
On the 12 July 2016, the Irish State attributed the 2015 growth revision to a combination of factors, including aircraft purchases (Ireland is a hub for aircraft securitisation),[c] and the reclassification of technology and pharmaceutical corporate balance sheets following the closure of the Double Irish tax scheme in 2014,[57][58] despite the fact that existing users of the Double Irish, which Noonan was referring to, had until 2020 to switch out of their Irish BEPS tool.[59][60]
On 13 July 2016, the ex-Governor of the Central Bank of Ireland made the following comment:
The statistical distortions created by the impact on the Irish National Accounts of the global assets and activities of a handful of large multinational corporations have now become so large as to make a mockery of conventional uses of Irish GDP.
The delay by the Central Statistics Office in publishing revisions to Q1 2015 data (the period in which the growth appeared), as well as the redaction of regular data from 2016 to 2017, meant that it would take almost three years for economists to show § Proof of Apple (2018) in Q1 2018. In addition, the Central Statistics Office further obfuscated the picture by asserting that the "leprechaun economics" growth was not attributable to a main source, but was from several sources and part of Ireland's position as a Modernised Global Economy.[62]
While the Double Irish was a widely used Irish BEPS tool, Apple's Irish subsidiary, ASI, used a hybrid version approved by the Irish Revenue, which the EU Commission argued was state aid. In September 2016, the Central Statistics Office again denied this claim and repeated its assertion that the growth was from a range of sources including aircraft leasing.[63]
By early 2017, research in the Sloan School of Management in the Massachusetts Institute of Technology, using the limited data released by the Irish Central Statistics Office, concluded: While corporate inversions and aircraft leasing firms were credited for increasing Irish [2015] GDP, the impact may have been exaggerated.[64]
The use by Ireland of complex data protection and data privacy laws, such as contained in the 1993 Statistics Act, to protect Irish BEPS tools and Irish corporate tax avoidance schemes is documented by tax justice groups. The Irish Central Statistics Office was accused of "putting on the green jersey" to hide Apple's tax planning schemes, by some Irish political opposition groups.[65] The Central Statistics Office (Ireland) did not list Modified GNI (discussed later) in their Key Summary Economic Indicitors for September 2018, but only GDP, GNP and Debt-to-GDP.[66]
In July 2016, the Irish media reported that while the drivers of Ireland's "leprechaun economics" growth might not have produced tangible additional tax revenues for Ireland, the 26.3%[a] rise in Ireland's GDP directly increased the due cost of Ireland's annual EU budget levy, which is calculated as a percentage of Eurostat GDP, by an estimated €380 million per annum.[67][68][2]
In September 2016, the Irish government appealed to the EU Commission to amend the terms of the EU GDP levy to a GNI approach, so Ireland would not incur the full €380 million increase. There were unsubstantiated claims by the Irish government that the effective impact of the increase in the GDP levy would be reduced to circa €280 million per annum.[69]
The "leprechaun economics" affair prompted an October 2016 audit by Eurostat into Ireland's economic statistics, including questions from the International Monetary Fund, however no irregularities were detected and it was accepted that the Irish Central Statistics Office had followed the Eurostat guidelines, as detailed in the Eurostat ESA 2010 Guidelines manual, in preparing the 2015 National Accounts.[70][71]
On the 8 November 2016, a report by the EU Director-General for Internal Policies ("DG IPOL") on Ireland's "leprechaun economics" affair, noted that Detailed explanations are not provided, due to confidentiality rules aimed at protecting companies, and that the International Monetary Fund had stated that Additional metrics better reflecting the underlying developments of the Irish economy should be developed.[71] The report concluded that: It is becoming increasingly difficult to represent the complexity of economic activity in Ireland in a single headline indicator such as GDP.[71]
From early academic research on tax havens by James R. Hines Jr. in 1994, Ireland has been noted as a tax haven (one of Hines' seven major havens).[74] Hines would go on to become the most-cited author in the research of tax havens,[75] recording Ireland's rise to become the 3rd largest global tax haven in the Hines 2010 list.[76] As well as identifying and ranking tax havens, Hines, and others, including Dhammika Dharmapala, established that one of the main attributes of tax havens, is the artificial distortion of the haven's GDP from the BEPS accounting flows.[77] The highest GDP-per-capita countries, excluding oil and gas nations, are all tax havens.[21]
In 2010, as part of Ireland's ECB bailout, Eurostat began tracking the distortion of Ireland's national accounts by BEPS flows. By 2011, Eurostat showed that Ireland's ratio of GNItoGDP, had fallen to 80% (i.e. Irish GDP was 125% of Irish GNI, or artificially inflated by 25%). Only Luxembourg, who ranked 1st on Hines' 2010 list of global tax havens,[76] was lower at 73% (i.e. Luxembourg GDP was 137% of Luxembourg GNI). Eurostat's GNI/GDP table (see graphic) showed EU GDP is equal to EU GNI for almost every EU country, and for the aggregate EU–27 average.[78][79] A 2015 Eurostat report showed that from 2010 to 2015, almost 23% of Ireland's GDP was now represented by untaxed multinational net royalty payments, thus implying that Irish GDP was now circa 130% of Irish GNI (e.g. artificially inflated by 30%).[80]
Apple's Q1 2015 BEPS transaction implied that Irish GDP was now well over 155% of Irish GNI, exceeding even Luxembourg, and making it inappropriate for ongoing monitoring of the high level of Irish indebtedness. In response, in February 2017, the Central Bank of Ireland became the first of the major tax havens to abandon GDP and GNP as metrics, and replaced them with a new measure: Modified gross national income, or GNI* (or GNI Star).[23]
In July 2017, the Financial Times reporting on the new GNI* measure said: "The Irish economy is about a third smaller than expected. The country’s current account surplus is actually a deficit. And its debt level is at least a quarter higher than taxpayers have been led to believe"; and that "Embarrassed by what Paul Krugman, the economist, denounced as "leprechaun economics", Ireland's policymakers were determined to avoid a repeat".[81]
At this point, multinational profit shifting doesn't just distort Ireland’s balance of payments; it constitutes Ireland’s balance of payments.
— Brad Setser and Cole Frank, Council on Foreign Relations, "Tax Avoidance and the Irish Balance of Payments", 25 April 2018[3]
The move was timely; in 2018, research using 2015 data showed Ireland had become the world's largest tax haven (Zucman–Tørsløv–Wier 2018 list).[18][19][20][21]
In April 2018, Eurostat welcomed GNI*, but showed it could not eliminate all BEPS effects (e.g. as the distortion in OECD Irish debt metrics showed).[82]
Economist Seamus Coffey is Chairman of the State's Irish Fiscal Advisory Council,[83] and authored the State's 2017 Review of Ireland's Corporation Tax Code.[84][85] Coffey had analysed Apple's Irish structure in detail,[86] and was interviewed by the international media on Apple in Ireland.[87] However, despite speculation,[88] the suppression of regular economic data by the Irish Central Statistics Office meant that no economist could confirm the source of "leprechaun economics" was Apple.
On 24 January 2018, Coffey published a long analysis on his respected economics blog, confirming the data now proved Apple was the source:[12]
We know Apple changed its structure from the first of January 2015. This is described in section 2.5.7 on page 42 of the EU Commission's decision [on Apple's State aid case].[17] This would be useful but bar telling us that the new structure came into operation on the first of January 2015 everything else is redacted. Although the details of the new structure were not revealed it was still felt that Ireland was still central to the structure and maybe even more so with the revised structure. Many of the dramatic shifts that occurred in Ireland's national accounts and balance of payments data were attributed to Apple but this was largely supposition – even if it was likely to be true. Now we know it to be true.
Coffey's January 2018 post also showed that Apple had restructured into the Irish Capital Allowances for Intangible Assets ("CAIA") BEPS tool. Apple's previous hybrid–Double Irish BEPS tool had a modest effect on Irish economic data as it was offshore. However, by onshoring their intellectual property ("IP") from Jersey, via the CAIA BEPS tool, the full effect of circa US$40 billion in profits that ASI was shifting by 2015 (see Table 1), would appear in the Irish national accounts; and was equivalent to over 20% of Irish GDP.[12] The IMF began to correlate the effect of Apple iPhone sales on the Irish economic cycle.[89][90]
Year |
ASI Profit Shifted (USD m) |
Average €/$ rate |
ASI Profit Shifted (EUR m) |
Irish Corp. Tax Rate |
Irish Corp. Tax Avoided (EUR m) |
---|---|---|---|---|---|
2004 | 268 | .805 | 216 | 12.5% | 27 |
2005 | 725 | .804 | 583 | 12.5% | 73 |
2006 | 1,180 | .797 | 940 | 12.5% | 117 |
2007 | 1,844 | .731 | 1,347 | 12.5% | 168 |
2008 | 3,127 | .683 | 2,136 | 12.5% | 267 |
2009 | 4,003 | .719 | 2,878 | 12.5% | 360 |
2010 | 12,095 | .755 | 9,128 | 12.5% | 1,141 |
2011 | 21,855 | .719 | 15,709 | 12.5% | 1,964 |
2012 | 35,877 | .778 | 27,915 | 12.5% | 3,489 |
2013 | 32,099 | .753 | 24,176 | 12.5% | 3,022 |
2014 | 34,229 | .754 | 25,793 | 12.5% | 3,224 |
Total | 147,304 | 110,821 | 13,853 |
By April 2018, economists confirmed Coffey's analysis, and estimated Apple onshored USD 300 billion of IP from Jersey in Q1 2015 in the largest recorded BEPS action in history.[15][3][91][13] In June 2018, the GUE-NGL EU Parliament group published an analysis of Apple's new Irish CAIA BEPS tool, they labeled the Green Jersey.[92][93][13]
On 17 February 2020, Krugman tweeted, "So Tim Cook is the leprechaun in leprechaun economics".[94]
The November 2017 Paradise Papers leaks, documented how in 2014, Apple and its lawyers, offshore magic circle firm Appleby, looked for a replacement for Apple's Irish hybrid–Double Irish BEPS tool. The leaks showed Apple considering a number of tax havens, especially Jersey and Ireland. Some of the documents demonstrated that tax avoidance was the driver of Apple's decision making.[95][96][97]
Experts noted that it is prohibited under Ireland's tax code (Section 291A(c), Taxes and Consolation Act 1997), to use the CAIA BEPS tool for reasons that are not "commercial bona fide reasons", and in schemes where the main purpose is "... the avoidance of, or reduction in, liability to tax".[98][99][100][d]
In November 2017, the Irish media noted that the then Finance Minister Michael Noonan, had increased the tax relief threshold for the Irish CAIA BEPS scheme from 80 per cent to 100 per cent in the 2015 budget, which would reduce the effective Irish corporate tax rate on the CAIA BEPS tool from 2.5 per cent to 0 per cent. This was changed back in the subsequent 2017 budget by the new Finance Minister Paschal Donohoe, however firms which had started their Irish CAIA BEPS tool in 2015, like Apple, were allowed to stay at the 100 per cent relief level for the duration of their scheme,[101][102] which can, under certain conditions, be extended indefinitely.[100]
In November 2017, it was reported that the EU Commission had asked for details on Apple's new Irish structure post the EU Commission's 2004–2014 ruling.[103]
In January 2018, when Seamus Coffey and others, estimated that since the Q1 2015 restructuring, Apple avoided Irish taxes of €2.5–3bn per annum, based on the 0% effective tax rate Noonan introduced for the CAIA scheme in the 2015 budget.[12][104] Coffey estimated that a second EU Apple State aid fine for the 2015–2018 (inclusive) period, could reach over €10bn, excluding interest penalties,[105][106] adding to Apple's existing €13 billion EU fine for the 2004–2014 period.
In July 2016, financial commentators were confused that Ireland had incurred €380 million per annum in additional EU GDP levies (earlier), but given Apple (in the 2015 budget, per above), an effective tax rate of 0% for the Apple IP that was onshored. Some pointed to the benefits of "leprechaun economics" to Ireland's credit rating, and Debt-to-GDP metrics.[107] In August 2016, however, Apple CEO Tim Cook, stated that Apple was now "the largest tax payer in Ireland".[108][109]
In April 2017, the Revenue Commissioners released Irish corporation tax data for 2015 showing a 49% increase, or €2.26 billion, to €6.87 billion in one year.[110] The report also showed that "intangible allowances", which are claimed under the CAIA BEPS tool, jumped by over 1,000 per cent, or €26.2 billion in 2015 (from €2.7 billion in 2014), which was consistent with the euro amount of profits that Apple's ASI was shifting through its hybrid–Double Irish BEPS tool at the time.[12] However, the €2.26 billion rise in corporate tax for 2015 looked similar to the effective tax ASI would pay in Ireland if it was not using Irish BEPS tools. No other company has been identified as the source of such a large jump in Irish corporation tax in a single year, as it required Irish booked profits of over US$30 billion.
Seamus Coffey posted several articles in 2018 on the rise in Irish "intangible allowances", which hit €35.7 billion in 2016, or €4.5 billion of Irish corporate tax avoided at the 12.5% rate.[111] This is consistent with 2018 research showing that the "Green Jersey" is the largest BEPS tool in the world. However, in the absence of confirming data, Coffey is reluctant to draw a parallel between the dramatic 2015 rise in Irish corporation tax receipts, which has carried into 2016, and any potential change of tax strategy by Apple from the additional EU scrutiny into Apple's Q1 2015 restructure.[112]
In May 2019, The Times reported that IMF experts, including Erik De Vrijer, Director of the IMF's European department, expressed concern about the lack of official understanding about the driver in the dramatic rise in Irish corporation tax receipts since 2014, and the implications for long-term State spending.[113] Section 815A of the 1997 Tax Acts prevents disclosure of Irish taxation data, even to other officers of the Irish State, outside of the Irish Revenue Commissioners.[109]
In October 2018, Irish Finance Minister Paschal Donohoe introduced an IP exit-tax, which the Irish Independent described as being "to prevent a 'reverse leprechaun'".[28] The new tax legislation classifies any gains realised in Ireland as a result of a multinational selling its Irish–based IP to another jurisdiction, as an Irish capital gain. While the Irish rate of capital gains tax was 33 per cent, the new legislation gave a lower rate of 12.5 per cent on IP capital gains; however this could be subject to change (or challenged by the EU Commission), and the rate brought into alignment with the general Irish 33 per cent capital gains tax rate.[115][116]
In October 2017, Seamus Coffey questioned whether "reverse leprechaun" taxes would have any effect on U.S. multinationals leaving Ireland:
In 2015 there were a number of “balance-sheet relocations” with companies who had acquired IP while resident outside the country becoming Irish-resident. It is possible that companies holding IP for which capital allowances are currently being claimed could become non-resident and remove themselves from the charge to tax in Ireland. If they leave in this fashion there will be no transaction that triggers an exit tax liability.
— Seamus Coffey, "Intangibles, taxation and Ireland's contribution to the EU Budget", October 2017[117]
Since leprechaun economics, research groups and commentators have highlighted that many Irish statistics are materially distorted by "leprechaun economics" type effects:[118]
By April 2018, economists noted EU-28 aggregate GDP was being distorted by Irish BEPS tools, and the Apple iPhone sales cycle.[51] By January 2020, economists had begun to realise that the Netherlands, as well as Ireland was also distorting EU-28 statistics, with the US Council of Foreign Relations, in a note titled: "Leprechaun Adjusted Euro Area GDP", said: "The entire euro area's economic statistics now need to be adjusted to remove the distortions created by the tax transactions of large multinationals operating in Ireland and the Netherlands".[52]
In September 2016, Ireland became the first of the major tax havens, to be "blacklisted" by a G20 economy, Brazil.[22]
In December 2017, the U.S. and EU introduced new anti-Irish BEPS tool tax regimes (e.g. the U.S. GILTI–BEAT–FDII regimes, and the EU Digital Service Tax).[25][26][27]
In July 2018, it was reported that Microsoft was preparing to execute a "Green Jersey" BEPS transaction.[122] which, due to technical issues with the TCJA, makes the CAIA BEPS tool attractive to U.S. multinationals. In July 2018, Coffey posted that Ireland could see a "boom" in the onshoring of U.S. IP between now and 2020.[123] In May 2019, it was reported Microsoft moved $52.8bn of IP assets to Ireland.[124] In January 2020, the Irish Times speculated that Google Inc., was also considering using the CAIA BEPS tool, and noting that the CAIA had helped "trigger the Leprechaun Economics affair".[14]
Rate attributed to multinational inversions — or "leprechaun economics"
Now, I've coined a few economic phrases I'm proud of: "leprechaun economics" for the distortion of statistics caused by multinational corporations in search of tax havens, .. [.]
As a consequence of the overall scale of these additions, elements of the results that would previously been published are now suppressed to protect the confidentiality of the contributing companies, in accordance with the Statistics Act 1993
Apple has changed its own corporate structure, restructured a new Irish Beps tool called Capital Allowances for Intangible Assets (CAIA), also nicknamed the "Green Jersey". The bookkeeping change was so significant that it contributed to the extraordinary one-off revision in Irish GDP for 2015 by 26 per cent (later revised to 34.4 per cent).
{{cite news}}
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has generic name (help)
Apple restructured its tax operations in 2015 using the State's capital allowance for intangible assets (CAIA), helping trigger the so-called Leprechaun Economics effect that year when the Irish economy suddenly surged by 26pc
By April 2018, economists estimated Apple had onshored [to Ireland] $300 billion of intellectual property from Jersey in Q1 2015, appartently the largest recorded BEPS action in history. This was equivalent to over 20% of Irish GDP"
Brussels. 30.8.2016 C(2016) 5605 final. Total Pages (130)
Appendix Table 2: Tax Havens
Such profit shifting leads to a total annual revenue loss of $200 billion globally
New Gabriel Zucman study claims State shelters more multinational profits than the entire Caribbean
One recent report said that the bulk of the foreign direct investment here was "phantom" and driven by tax avoidance. Another said that we are one of the world's biggest tax havens. [..] More leprechaun economics at work?
Prominent cases include Irish GDP growth of 26 percent in 2015, following some multinationals' relocation of intellectual property rights to Ireland, and Luxembourg's status as one of the world's largest FDI hosts.
Similarly, health spending as a percentage of GDP declined sharply in 2015, despite an increase in health spending, as Irish GDP increased by 26% (a figure that spawned the phrase leprechaun economics)
'Leprechaun economics'
The bulk of that decline occurred in 2015 when MFP in the FDI sector dropped by a leprechaun-like 57.2%.
Its skyrocketing GDP is heavily skewed by "leprechaun economics," a term used to describe the tax inversion practices of corporations like Apple that base subsidiaries in Ireland.
Nobody believes our GDP numbers any more, not after a 26 per cent jump in 2015, which was famously derided as "leprechaun economics". Even the CSO cautions against viewing last year's [2017] 7.8 per cent jump as a reflection of real economic activity
Ireland has, more or less, stopped using GDP to measure its own economy. And on current trends [because Irish GDP is distorting EU–28 aggregate data], the eurozone taken as a whole may need to consider something similar.
During the same period, the assets of the companies concerned increased from €65.8bn in 2012 to €141.6bn in 2016 while the industry's liabilities increased from €60.6bn in 2012 to €141.1bn in 2016. The assets in 2016 included €4.8bn in cash deposits.
Ireland has officially announced the phased abolition of its controversial "Double Irish" tax scheme that has enabled multinationals such as Apple to dramatically cut down their tax bills
First, existing companies incorporated in Ireland will enjoy a long "grandfather" period. In particular, the new rule will not be applicable to these companies – including the Irish subsidiaries of Google and Microsoft – until 2021
A handful of multinational companies in the tech, pharma and aircraft leasing sectors were responsible for an extraordinary jump in Ireland's headline rate of economic growth last year
Last night, CSO statistician Andrew McManus insisted that the earlier guidance had been correct. "There were a number of factors involved. That was the situation then and now," he said.
We identify 41 countries and regions as tax havens for the purposes of U. S. businesses. Together the seven tax havens with populations greater than one million (Hong Kong, Ireland, Liberia, Lebanon, Panama, Singapore, and Switzerland) account for 80 percent of total tax haven population and 89 percent of tax haven GDP.
Tax Havens by Most Cited
Table 2: Largest Tax Havens
Nevertheless the rise in [Irish] GNI is still very substantial because the additional income flows of the companies (interest and dividends) concerned are considerably smaller than the value added of their activities
Seamus Coffey, an economics lecturer at University College Cork, who has examined Apple's Irish tax affairs, said: "The EC can demand back payments for 10 years, which would take it back to 2004."
The Government has yet to admit that the enormous disruption to Irish GDP figures and the surge in corporate tax revenues was due to the actions of a single multi-national. [..] Karl Whelan, professor of economics at UCD, said a large part of the surge in corporate tax receipts and the huge GDP revisions can be attributed to the rearrangement of Apple's tax affairs
Revenue said: "Interactions between Revenue and individual taxpayers are subject to the taxpayer confidentiality provisions of Section 851A".
And we see that after the application of losses, and most importantly, capital allowances, the resulting net trading income of these companies with almost €50 billion of Gross Trading Profits in 2016 was zero
And, again it highlights, that although the surge in CT receipts may have happened in the same year as the jump in GDP, they are not necessarily directly related. As with lots of things lately, capital allowances play a central role in this and it is to them that we will turn next
[Irish] Corporation tax receipts have surged in recent years, doubling from €5.2 billion in 2014 to €10.4 billion last year [2018]. Experts are unsure about what has caused this spike.
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.
While the early introduction of the regime was not widely anticipated, the good news is that the rate of the exit tax is 12.5% (the same rate of tax imposed on trading income) rather than the capital gains tax rate of 33% (subject to anti-avoidance rules).
It had been feared that the exit tax, one of five legally-binding anti-abuse measures to prevent aggressive tax planning, could have been applied in Ireland at the current capital gains tax rate of 33pc rather than the announced 12.5pc.
How did Irish workers get to be the most productive on the planet?
IP onshoring is something we should be expecting to see much more of as we move towards the end of the decade. Buckle up!