News

Ireland’s professional jobs market takes a breather as London makes the most of its time left in the EU, writes Trayc Keevans.   The number of professional job vacancies available in Ireland reduced by 12% in July compared to the same month a year ago, and by 24% sequentially since June, according to the latest edition of the Morgan McKinley Employment Monitor.   The recruitment firm also found that there was a 5% increase in the number of professionals seeking jobs in Ireland in July compared to the same month a year ago. This is seen as an indicator of continuing employee confidence, mobility, and a willingness to consider opportunities.   While there are fewer professional jobs coming onto the market, we have seen a much busier period of recruitment in the first half of 2017 than in any year since the economic crisis so some level of seasonality is to be expected.   There have also been similar substantial dips in each of the economic recovery years since 2009, so the current reduction in professional job vacancies in July should be seen in that context. It is likely to carry through August, followed by a period of stability to year-end. Talent acquisition The market for talent acquisition is very competitive. We are seeing an elongation of hiring timelines including an increase in assertiveness by employers where there is a trend of counter offers being made to retain employees. This is predominantly for critical functions in the ICT and financial services sectors. Employers are also deliberately enhancing their career progression, succession planning and employee retention strategies.   Accountancy and finance recruitment has, in many respects, become an employee-led market, although we still see a good balance of supply and demand and a positive mix of opportunity which encourages employee mobility. There is a continually strong requirement for experienced and newly qualified accountants across the management, financial and audit disciplines. This is in addition to funds management specialists, risk and compliance experts, data analysts, consumer protection and credit control specialists, and fintech and cyber security professionals. Foreign direct investment Foreign direct investment (FDI) interest in Ireland is consistently strong, and includes interest from multinationals considering Ireland as a European hub and those who have already ruled out other European locations in the context of Brexit. This is due largely to Ireland’s perceived overall competitiveness, skills availability and supportive business climate. UK activity The UK Government’s announcement that March 2019 would see an end to freedom of movement for EU nationals coincided with a series of major financial services institutions announcing a reduction or relocation of their London positions. The two events combined made for uncharacteristically high jobs activity during a month traditionally marked by summer holidays, where people are scrambling to make the most of the UK’s time left in the EU. In particular, EU nationals who want to stay in Britain have a shrinking window of opportunity to get a job and permanent residency, and many are seizing it.   In the City, July marked the fourth consecutive month of growth in both jobs and job seekers, but grounds for optimism remain elusive. In part, concerns linger because the actual rate of growth has been slow. In addition, the year-on-year trends paint a more worrying portrait: an 11% decrease in professional jobs available and a 33% decrease in job seekers. While there is some seasonality built into these figures, the City appears to be haemorrhaging talent because of Brexit.   July saw a series of announcements from leading financial services institutions that have opted to relocate a portion of their staff or open to European hubs, which would normally have gone to London, in other locations within the EU. The language has changed there. Employers and employees used to talk about “if” they had to leave London. Now they’re talking about “when” they leave London.   Headline moves included Bank of America selecting Dublin as its European hub; HSBC announcing it would move 1,000 employees to Paris; and Lloyds selecting Brussels for its insurance company operations. Until recently, it had been assumed that the financial services industry was hub dependent, either remaining in London or moving to a specific new location. A multitude of locations picking away at City jobs, however, suggests that a conglomeration of institutions may soon be a thing of the past. Technology is enabling the fragmentation of the financial services industry as close proximity of institutions becomes increasingly unnecessary.   Internationally owned financial services organisations are continuing to expand in Ireland, although this is not necessarily being portrayed as a result of Brexit. It remains to be seen how potential tax reforms in the US will influence investment decisions by US multinationals – particularly in the R&D space. However, FDI sentiment towards Ireland remains very positive.   As we seek to maintain and enhance Ireland’s competitiveness, infrastructure must remain a key concern including housing and rental availability, sustainability, telecommunications, commuter transport, educational investments and training opportunities to ensure that we maintain and grow Ireland’s appeal to international companies while also supporting indigenous enterprise growth.   Trayc Keevans is Global Director of Inward Investment at Morgan McKinley.

Aug 21, 2017
News

Will the UK leave the EU customs union at closing time, or will there be room for one more? Eoin O’Shea FCA takes a look. Author’s note: for those readers not acquainted with the Irish language, “deoch an doras” means, literally, “a drink for the door” or, more loosely translated, “one for the road”. Recent commentary from members of the British cabinet on the issue of customs union transition arrangements has been akin to the discussion, held nightly in Irish pubs, as to when (and not whether) the evening might come to an end.   First, Chancellor Philip Hammond spoke on 20 June at London’s Mansion House and foretold a transition arrangement involving “current customs arrangements remaining in place, until long-term arrangements are up and running” and an “early agreement on transitional arrangements, so that trade can carry on flowing smoothly, and businesses up and down the country can move on with investment decisions”. All going well, the chancellor even predicted that “a collective sigh of relief will be audible.” Deoch an doras.   Next, by way of a joint article in The Telegraph newspaper on 13 August, Liam Fox (international trade secretary) and Chancellor Hammond appeared to say that that any Brexit transition period after March 2019 would not involve the UK remaining in the EU customs union or the EU single market and that the UK would, from March 2019 onwards, be a third country in relation to the EU. No deoch an doras.   Finally, on 15 August, the UK Government published a position paper entitled ‘Future Customs Arrangements – A Future Partnership Paper’. The paper called for “time to fully implement the new customs arrangements” and presaged a “model of close association with the EU customs union for a time limited interim period”. The paper even spoke of the UK not implementing trade deals with third parties during the period of any such “close association”. The clearest exposition of the UK’s transition idea is perhaps that set forth at paragraph 48 of the document, calling for a “new and time-limited customs union between the UK and the EU customs union, based on a shared external tariff and without customs processes and duties between the UK and the EU.” Deoch an doras.   The British position paper of 15 August ought to be welcomed by the EU business community. Although not ideal, the proposal (if acceptable to the EU) will mean that the UK will remain in the EU customs union in all but name during a transition period. Although not writing with Brexit in mind, Shakespeare perhaps put it best when writing lines for Juliet to deliver to Romeo from her balcony: “A rose by any other word, would smell as sweet”.   Eoin O’Shea FCA is a practising barrister, specialising in tax and commercial law.

Aug 21, 2017
News

While your view of Ireland’s tax regime will depend on your perspective, it is in need of improvement argues Barry Flanagan. As someone who deals with tax regulations on a daily basis, what is your view of the current tax landscape? It’s difficult to view the current landscape as anything but unbalanced. So much depends on the perspective you’re coming from. If you’re a large firm with a good track record in compliance and a responsive Large Cases Division (LCD) contact, you probably have a favourable view given the expertise available to you. Less so if you’re a small firm struggling with a Foreign Tax Credit (FTC) claim and on hold with a regional tax office. In most instances, the issue lies not with legislation but with the interpretation being taken by the tax office you’re dealing with. Too often, this is impacted by a lack of experience and the process of escalation is opaque and time consuming in practice. Good Revenue contacts are worth their weight in gold. Has the prospect of Brexit already impacted on global mobility, in your experience? Yes. We’ve seen a large increase in the number and complexity of enquiries – especially those coming from UK-based firms considering international relocation. Comparative gross-to-nets for Ireland, Germany and Holland are a frequent request as well as queries on employment law requirements and standard benefit packages. It’s yet to puncture the numbers on assignment and we’re still seeing healthy growth in new starts. Many seem to be adopting a wait-and-see approach, which is unsurprising given the lack of clarity around any of the issues. With Brexit and US tax reform both on the cards, what does the future hold in your view? US Tax Reform has been promised for well over a decade. Given the difficulties the Republican majorities are experiencing with repeal of Obamacare, it’s not expected that a wholesale bipartisan reform to the tax code will sail through the Houses. Much depends on how aggressive the proposed changes are. President Trump has yet to earn a reputation for consensus building. The likelihood is that tax changes face a delay until after the healthcare question is decided. If no repeal/replace is achieved, tax reform may need to be watered down to ensure safe passage and is likely to focus on repatriation of existing offshore funds rather than dis-incentivisation of foreign operations. For Brexit, the only truism to date is that the more confident the prediction, the less informed the commentator. Given the role of technology in the success of Immedis, are you concerned about the rise of artificial technology in the areas of tax and accountancy? Not in the slightest! Tech will play an increasingly vital role in consolidation and standardisation of (especially) payroll but also tax and financial reporting. It’s a central component in our offering. We see more and more clients coming to us for advice. They may have bought a software platform to help manage their processes better, but there is still a need for a tax expert to review data and make sense of it all. At Immedis, we have developed our own proprietary tools to assist companies with global tax and payroll operations and the feedback we’ve had is that it will change the global payroll market forever, but the industry is miles away from replacing human expertise with algorithms. The nuance associated with statutory and legislative interpretation is too great. The landscape shifts too quickly internationally – there is always a disruptive change happening somewhere. Having worked across a range of jurisdictions, what would you change about the Irish tax system if you had the opportunity? In respect of legislation, we’re moving in the right direction but too slowly. The Special Assignee Relief Programme (SARP) is too restrictive and the Knowledge Development Box has yet to catch fire. It’s very easy to talk blithely about simplifying the tax code but it is needed. Transparency is the main requirement for any system and this has been complicated here by the Apple ruling. Revenue has lost a lot of expertise in the last number of years and is working hard to replace this. If I could borrow from other jurisdictions, I’d remodel SARP along the lines of the Dutch 30% rulings, and swipe the responsiveness and clarity offered by German tax offices to all queries.   Barry Flanagan ACA is Senior Tax Manager at Immedis.

Aug 21, 2017
News

One in every 23 people in Ireland (aged 18-64 years) is a new business owner according to the Global Entrepreneurship Monitor (GEM) 2016 Survey of Entrepreneurship in Ireland. These figures are similar to the US and high compared to European countries. Enterprise Ireland, supported by the Department of Jobs, Enterprise & Innovation, sponsored the GEM survey, which is the world’s foremost study of entrepreneurship.   Commenting on the GEM Survey, Niall O’Donnellan, Head of International Services & Software, Strategy & Leadership, Enterprise Ireland said: "Ireland is one of seven countries that scores above the European average for both the rate of entrepreneurship (new business owners) and rate of intrapreneurship (employees engaged in entrepreneurship for their employer). "The latest GEM survey shows strong global ambition amongst nascent entrepreneurs and new business owners with almost four in five expecting revenues from international customers. In 2007, more than 40% of entrepreneurs were focused exclusively on the Irish market. This figure had dropped back to just 20% by last year demonstrating Irish companies increased willingness and ability to do business and operate internationally. "Enterprise Ireland is committed to supporting entrepreneurs and start-ups to grow and expand their reach in overseas markets, helping them to compete on a global scale."   Download the full report here: Global Entrepreneurship Monitor 2016 Survey of Entrepreneurship in Ireland. Source: Enterprise Ireland.

Aug 18, 2017
News

Tánaiste Frances Fitzgerald has commissioned a major study of global trade opportunities to help Irish business expand abroad and face the challenge of Brexit. Tánaiste and Minister for Business, Enterprise & Innovation, Frances Fitzgerald, T.D., has commissioned a major examination of the economic opportunities and impacts for Ireland arising from EU Free Trade Agreements (FTAs). The objective of this study is to deepen the understanding of how Ireland can best take advantage of the opportunities under existing and prospective free trade agreements, and ensure that businesses are prepared to access new markets and compete internationally. Commenting on the study, the Tánaiste stated that, with a small domestic market and in light of the challenges presented by Brexit, diversification into new markets and growing Irish exports in existing markets is now more critically important than ever before. "This study will demonstrate how Ireland can best benefit from the opportunities presented by EU Free Trade Agreements, explore how they impact our economy across a wide range of economic sectors and explore the role of Brexit. The EU trade agenda is moving ahead swiftly, with preparations for the opening of trade talks, for example, with New Zealand and Australia well underway. I want to ensure that Ireland has a sound evidence base to work from in other upcoming trade negotiations," she said.

Aug 18, 2017
News

The Financial Reporting Council’s (FRC) consultation on amendments to its Guidance on the Strategic Report, published last Tuesday, encourages businesses to consider the interests of stakeholders.   These proposals reflect the FRC’s desire to improve the effectiveness of Section 172 of the Companies Act 2006. This section requires a director to have regard to a number of matters including the long-term impact of any decisions, the interests of stakeholders; and non-financial matters in pursuing their duty to promote the long-term success of the company. The FRC is therefore encouraging companies, to provide better information on how companies have fulfilled this duty to improve accountability to shareholders and other stakeholders.   The proposals reflect the enhanced disclosures that certain large companies are required to make in respect of the environment, employees, social matters, respect for human rights and anti-corruption and anti-bribery matters. The guidance also encourages all companies to disclose information on how boards have considered broader stakeholders when taking decisions to promote the long-term success of the company.   The Guidance on the Strategic Report was first issued in 2014, following the introduction of the requirement for companies to produce a strategic report. It is being amended now to take account of the new regulations for non-financial reporting that are effective for financial periods beginning on or after 1 January 2017. In line with the FRC’s Clear & Concise initiative, the guidance continues to encourage companies to produce a cohesive annual report that provides information that is relevant for an understanding of the development, performance position and impact of the company’s activity.   Paul George, the FRC’s Executive Director of Corporate Governance and Reporting, said: "High-quality reporting enhances transparency and trust in business. The proposed amendments to the Guidance on the Strategic Report encourage business to consider the impact of their activities on stakeholders and the factors that contribute to the success of the company over the longer term. We encourage all companies to make non-financial reporting an integral part of the annual report and to provide information which helps shareholders and the wider community to understand how directors have had regard to their obligations under Section 172 of the Companies Act 2006. The FRC is committed to improving reporting in this area since it believes that it provides an important insight into the culture of a company."   Comments and feedback on the FRC's exposure draft are invited by 24 October 2017. Source: Financial Reporting Council.

Aug 18, 2017