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Ireland cannot live without Google, crisis-talks influenced by search giant

22 November 2010 BY

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Europe is going through some tough times. A couple of months ago it was Greece which as a country was almost bankrupt. These days the attention goes to The Republic of Ireland. The country is close to being bankrupt too and has a big problem when it comes to keeping people employed and the economy going.

Normally this wouldn’t be an issue for the technology business. After all, technology can be ‘made’ everywhere, you don’t ‘need’ to be in a specific place. But in the case of Ireland things are a bit different. The situation in Ireland might have a direct impact on the Tech-business and search in special and vice versa. Why? Because Google resides in Ireland.

Google has chosen Ireland as their European headquarters for a simple reason: taxes. The Irish tax system is the most ‘friendly’ one in Europe for companies like Google. The tax Google has to pay is only 12,5%. Compare that to the over 50% some countries have and you know why Google has chosen Ireland.

There has been rumor before about Google trying to avoid paying taxes in other countries by taking the “Ireland-route” but now another issue comes up.

Because of the economical issues Ireland is having the European Union starts interfering with the way the Irish run their country. Which means that off course they look at the low tax numbers in Ireland. Countries like France and Italy have now put pressure on the Irish government to increase their taxes so that they will get more money from it. But in comes Google.

Google Irelands big man John Herlihy threatens the Irish government that Google might just be leaving the Irish Republic if the taxes are going up:

“Anything that impinges on Ireland’s competitiveness is going to be a big thing for Google, including corporation tax, and anything that increases the cost-base of a business is negative for competitiveness.”

he told the Belfast Telegraph.

Herlihy is not alone in this. Intel, another big company which has chosen Ireland because of its tax-system, apparently feels the same.

Herlihy doesn’t take that many words, but he does raise an interesting point. What if the Irish raise their taxes and Google would leave Ireland? The strange thing is that it would most probably hurt Ireland more than not raising the taxes. Companies like Google and Intel might be enjoying the low taxes, they also provide jobs for many in Ireland. “Taking away Google and Intel” would mean many Irish would lose their jobs, not just at Google and Intel, but also at other companies which are building their business based on these two.

Chances are slim therefore that the Irish government, who already stated they wouldn’t touch the taxes, will be giving in to the pressure from France and Italy. It would just mean to much other problems which show up. But it is remarkable that now is shown how much influence a company like Google can have on how a country is run…

AUTHORED BY:
h

Bas van den Beld is a speaker, trainer and online marketing strategist. Bas is the founder of Stateofdigital.com. -- You can hire Bas to speak, train or consult.
  • http://www.greatwebsitesblog.com Barry Adams

    A lot of IT companies have chosen Ireland as their base, especially for their call centres (Apple for example has a huge presence in Cork). So I imagine more big companies have exerted pressure on the Irish government to do what it can to prevent its taxes from going up – including accepting money from the EU and IMF.

    In the long term however this may come to work against them, as the money coming from the EU and the IMF comes with strings attached. One of those strings might well be a future rise in the Irish corporation tax….

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  • http://hauntingthunder.wordpress.com/ maurice

    ah the cult of the ” Big Man” is one of the reasons Ireland got into trouble – i suspect that Mr Herlihy is like a lot of Irish business men and in deep denial as to how much shit they are in.

    I would not be surprised if the statements that the capital gains tax are like the lib dems promises over tuition fees and will be blown away by “events dear boy events” as a tory grandee commented back in the 50’s

  • http://www.guava.dk Mark Edmondson

    Things have moved on a little since this post – this was a major hurdle to getting IMF bail out payments this weekend since the Irish were refusing to ask if the conditions attached to the loan were to raise corporation tax. Once they got an assurance this would not be a condition, they have got the bail-out and Google and the other corporate HQs are satisfied.

  • http://hauntingthunder.worpdress.com maurice

    @mark

    I am not sure the IMF deal is finalised yet (the devil will be in the details), retaining the low corporation tax depends how bad it gets and if theres any social unrest

    the average man in the street is going to be asking even if the put it up corporation tax up 6/7 % it’s still way lower than the rest of europe so why am i taking all the pain.

    Google and the other high tech companies should have done any lobying in private off the record – you dont want to be lumped in with the bankers at the moment.

  • Pingback: Google closes personal Adwords support in Europe - State of Search()

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