Minister Michael McGrath TD
Department of Finance
The US-Ireland relationship is strong, and continues to benefit us both.
Ireland and the United States enjoy a special and cooperative relationship. It is a relationship which boosts jobs, investment, trade across the U.S. and EU, and allows for the development of cutting-edge research. Throughout recent periods of global uncertainty, Ireland’s role as a hub for US companies has been central to our mutual economic success. This is a relationship which we must continue to foster as further uncertainties are on the horizon.
The great challenge of our time, mitigating climate change, requires significant and immediate action to accelerate the transition towards carbon-neutrality. We are also in an era of momentous technological advancement, which will create enormous opportunities, but also mandates a role for governments in creating efficient and safe digitised societies. This dual transition will force the global economy to rapidly evolve over the coming decades.
It is also clear that in the immediate term, the global economy is facing a sustained period of uncertainty as conflict continues to cause inflationary impacts and investment diversion, which are weighing on global economic activity.
In 2022, direct investment in Ireland originating in the US amounted to €1 trillion, with more than 950 US companies supporting over 200,000 jobs directly and over 160,000 indirectly. In Ireland, US companies benefit from a plentiful supply of skilled labour, an operating environment that is supportive of entrepreneurship and access to a market of around 450 million people. Uniquely, Ireland also has paperwork-free access to both the EU and UK labour markets, which contains many of the highest educated populations globally. Ireland has a competitive and stable taxation system. In last year’s Finance Act, we introduced significant changes to the R&D tax credit by increasing the rate from 25% to 30%. Last year we also announced plans to introduce territorial elements to our corporate tax system and committed to the introduction of a participation exemption for foreign sourced dividends. US companies are represented across all sectors of our economy, in particular in highly successful, innovative and productive sectors such as ICT and pharmaceuticals, which together accounted for approximately half of Irish exports in 2022.
Investment continues to flow both ways, as over 700 Irish-owned firms based in the US are linked to approximately 250,000 jobs, while profit income repatriated by Irish-based US firms back to US shareholders amounted to some €90 billion in 2022.
The dual transitions will require considerable additional investment, both public and private, to ensure that we pave a way toward climate neutrality while also adapting to a highly digitalised economy. This has been recognised on both sides of the Atlantic, as both the US and EU are seeking to future-proof our economies by developing new industries which can compete well into the future, while minimising supply risks.
Throughout this period of transition, change, and uncertainty, we must ensure our policies continue to complement each other, that our economic ties remain symbiotic, and that we focus on how our partnerships can help us achieve common goals. Ireland will continue to prioritise a balanced approach which promotes strong cross-Atlantic relations between the US and the EU, built upon a fair European single market, which accelerates the Green and Digital Transitions through international collaboration and which brings continued economic progress globally.
Ireland’s approach will be complimented by the wide ranging and diverse portfolio of US multinationals which have made a home for themselves here over the last half a century.
I firmly believe that the firms located here, and the firms yet to choose Ireland as a hub, can take full advantage of these transitions and prosper well into the future.