Ireland should back move to make global tax system fairer

Many Irish people were shocked and disappointed to read about the latest Irish tax exploits from Vodafone.

The danger with a story like this is precisely that such shock and disappointment will kick in too hard to allow lessons to be drawn, especially when there is sensitivity towards any Irish involvement in yet another tax scandal. However, that is no reason not to examine honestly some of the questions the story raises, and to think about where the solutions might lie.

The facts are well covered. We know that for years Vodafone ran millions of euro in royalties through an Irish subsidiary with no employees whatsoever. Only later did the group attempt to retrofit some substance to the Irish company by relocating London workers to Dublin, giving them the stark choice of continuing doing their jobs from there, or facing redundancy. We know that when challenged by the UK tax authorities on the alchemy of making money without a workforce, the company reached a settlement with them effectively agreeing that those profits were properly subject to UK rather than to Irish tax. As a consequence, they claimed back the Irish tax they had already paid here, which basically means that the Irish taxpayer stumped back up €67m in taxc, and this was used to partially offset the company’s UK settlement. We know that all of this was perfectly legal. And that last fact is perhaps the most challenging of all.