The Hamptons with hurleys: Waterford’s billionaire boom won’t bring a wealth tax windfall

The relatively sudden influx of billionaires, triggers talk of wealth taxes

Meta chief Mark Zuckerberg (right) and his wife Priscilla Chan. The pair put down €51m on Strancally Castle and its 440 acres on the Blackwater. Picture: Daniel Acker

Ireland has been an attractive location for new residents for a long time. But in recent months and years, there has been an influx of the ultra-wealthy seeking a slice of Irish life and snapping up castles and mansions around the country.

The most recent arrivals are Meta chief Mark Zuckerberg and his wife Priscilla Chan. The pair put down €51m on Strancally Castle and its 440 acres on the Blackwater. 

Just a short distance downstream, James Dyson is already ensconced in Ballynatray House. Between Dyson and the Zuckerbergs, West Waterford is turning into the Hamptons with hurleys.

They are not alone. Estate agents from Skibbereen to Westport told the Irish Examiner this summer of a steady flow of wealthy buyers fleeing European heatwaves and American politics. One Bandon agent says US enquiries are up 50% to 60% since Donald Trump returned to the White House. 

Ireland has become a Goldilocks zone: not too hot, not too cold, and politically less extreme.

The relatively sudden influx of billionaires, as it does elsewhere, triggers talk of wealth taxes and other measures that target the ultrawealthy.

Paul Murphy told the Dáil in June that a wealth tax on the top 1% could raise €9bn. The Central Bank reports that Irish household wealth hit a record €1.4 trillion this year, and the richest 10% hold almost half of it, five times what the bottom half owns between them.

Globally, the ultra-rich are having a very good year. Bloomberg's Billionaires Index reports that the world's tech billionaires added $845bn in the first nine months of this year. Zuckerberg alone added $23bn, with €51m spent on an Irish castle coming out as a rounding error.

In response to Murphy, the Tánaiste Simon Harris ruled out such a tax, pointing to existing measures which target wealth such as capital gains tax, capital acquisitions tax, the local property tax and stamp duty, along with taxes on stocks and shares.

This week, the ESRI joined the fray. Working with economists from the Department of Finance, they published a detailed costing of what an Irish wealth tax would raise. It modelled a 1% annual charge on households worth more than €2m, or €4m for a married couple.

If the family home, farms and business assets are exempt, as they almost always are when it comes to designing a wealth tax, it would raise just €109m a year. Approximately 5,000 households would pay an average of €21,000 each. 

The research found that when adjusting for the avoidance measures seen in Spain, where the wealthy shuffled assets into exempt categories, the take falls further, to €74m. It means there is a sizeable gulf between Murphy’s €9bn and the ESRI’s €74m. 

To raise serious money, about €1bn, the ESRI said you would have to tax everything bar pensions. That would mean homes, farms and family firms. Such a measure would hit 27,000 households and would raise roughly what inheritance tax already brings in. Try selling that in rural Ireland. 

The bigger problem is who would actually pay. Under the narrow scenario, households headed by someone aged 65 and above would foot more than half of the bill, with the tax targeting savings, shares and a second property. The typical payer would not be a tech billionaire but, overwhelmingly, a retired couple with a decent pension and a holiday home.

The tech billionaires have their fortunes tied up in shares and in company valuations, and a wealth tax would only impact those who are resident in Ireland. Those flying in for a few weeks on the Blackwater would be exempt.

A wealth tax would land on the people who can't leave. The ones who can leave, do. When Norway raised its wealth tax in 2022, a string of billionaires decamped to Switzerland. Economists argue over how much it cost, and some research suggests the exodus was smaller than the headlines claimed.

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Ireland also tried a wealth tax before. The 1975 wealth tax was filled with exemptions and ultimately cost a fortune to administer. It was ultimately scrapped just three years later.

Across the OECD, the ESRI notes that wealth taxes rarely raised more than 1% of total tax revenue, and that it then shrank over time. The 2022 Commission on Taxation looked at the idea and did not recommend it.

So while Ireland's new billionaire residents can enjoy their fortunes here in peace, it is ironic that the Budget last week introduced a wealth tax of another form. The new personal investment accounts will charge a 1% tax on balances above €50,000.