People come to live and work in Ireland for many reasons, but low taxes is not one of them

Ireland has a competitive tax environment for companies but we do not compete well when it comes to personal tax

Sun, 30 Oct, 2022 - 10:02

Brian Keegan

Many Irish people identify their nationality as something really meaningful to them. This may be why there is some unease about the Department of Justice’s Immigrant Investor Scheme, because for some at least, “Irish-ness” is not something that should be for sale. Under the terms of the scheme, wealthy individuals from outside Europe can buy an entitlement to residency status in this country (though residency is not the same as citizenship).

The scheme has recently been in the news due to a surge in applications from individuals wanting to relocate here. More generally, the Immigrant Investor Scheme and others like it across the EU (we are not the only country which offers residency rights for cash) are under scrutiny from the European Parliament. Of course, generally speaking, EU nationals can come and live and work here without hindrance.

The Immigrant Investor Scheme is not for everyone. An individual must make an investment of at least €500,000 out of their own wealth into an Irish venture and undergo extensive scrutiny before their application will be entertained. There are good reasons why individuals might want to locate to this country. In many nations, long-established personal and property rights are no longer certainties.

Some people may also wish to leave what are becoming increasingly repressive regimes or war zones. Unfortunately, we are all too familiar with the refugee crisis prompted by the illegal Russian attack on Ukraine, and with harrowing stories of migrants crossing the Mediterranean and the English channel. At the less extreme end of this migrant spectrum, the lifting of pandemic restrictions is not just marking a surge in business and tourist travel but is also prompting demand for relocation to countries like Ireland.

It would be naïve to think that there are no ulterior motives for some people applying to get into Ireland using the Immigrant Investor Scheme. However, tax planning is unlikely to be among them, particularly as no special tax rules apply for the Immigrant Investor Scheme. Ireland has a competitive tax environment for companies but we do not compete well internationally when it comes to personal tax for individuals.

A recent study by the US-based Tax Foundation found that Ireland was fourth from bottom on a list of OECD countries when it comes to tax policy competitiveness, even including the 12.5% corporation tax rate. High-income tax, USC and PRSI rates for individuals earning more than a relatively modest €40,000 or so puts us second last in the OECD league table for competitiveness in personal tax. A person might want to come to live and work in Ireland for many reasons, but lower taxes is not one of them.

We should not be too resistant to any genuine application to come to our country to live and work, whether they come via the Immigrant Investor Scheme, or through an employment permit from the Department of Enterprise or have otherwise been granted residence permits. Maintaining our borders so that social services are not overstretched is important, but so too is building capacity in the national workforce. The Department of Enterprise maintains a register of critical skills which are in short supply, ranging from health professionals to engineers to accountants. Many Irish businesses are looking for staff at all levels. Workers are scarce, which is a counterintuitive consequence of the current inflationary spiral.

A wider and more diverse workforce means that we will all be better off. It’s a point worth remembering before criticising any route to becoming a resident in this country.

Brian Keegan is Director of Public Policy at Chartered Accountants Ireland