Three Chartered Accountants weigh in on how the outcome of the US presidential election might impact the future of foreign direct investment in Ireland, exploring potential economic shifts and changes to the corporate tax regime
Paraic Burke
Head of Tax
PwC Ireland
Despite international uncertainties, Ireland’s economy continues to be one of the best-performing in Europe.
Employment remains at a historic high, our fiscal position is strong and inflation is easing. Global companies here continue to see the opportunities Ireland presents as a gateway to Europe and further afield, with a highly skilled workforce in a stable business environment.
The impact of the US election on Ireland’s FDI from a tax and business perspective is two-fold:
1. The US election should determine how the US responds to the stalled element of global tax reforms led by the Organisation for Economic Cooperation and Development. While Ireland and EU member states have enshrined Base Erosion and Profit Shifting Pillar Two into their domestic law, the US has not.
Depending on a complex series of political factors, we could see increasing tensions between the US and Europe, which could have big implications for Ireland.
Under a clause in the Pillar Two agreement called the undertaxed profits rule (UTPR) – a way of ensuring that multinational companies pay the globally agreed 15 percent corporate tax rate on their profits – the Irish Government, like others across the EU, could find itself having to tax US profits.
This would not sit well with the US Government. If it is not dealt with, it could have serious trade implications for multinational companies exporting from Ireland. The outcome of the election will very likely have a significant impact on the US approach in this context.
2. This US election will also determine who deals with the potential expiration in 2025 of the individual tax rate cuts introduced by Donald Trump in 2017.
As part of the overall strategy in this context, Democratic candidate Kamala Harris has outlined a plan to raise the US corporation tax rate to 28 percent (currently at 21 percent), but this is likely to be politically impossible.
On the other hand, if elected as US President for a second term, Trump has mentioned a reduction in the US corporate tax rate to 15 percent – although, again, this is likely to be impossible given the overall US fiscal position.
In addition, Trump has regularly stated that he may adopt a policy of applying tariffs on all US imports, a move that could greatly disrupt global trade, including Irish exports.
Cormac Kelleher
International Tax Partner
Forvis Mazars
The upcoming presidential election in the US, due to take place in November, is delaying US companies in making their foreign direct investment (FDI) decisions.
Uncertainty over upcoming trade policy is causing new and existing US businesses to pause decision-making. However, it has not stopped firms from exploring and readying themselves for investment decisions in 2025.
If the US introduces or strengthens existing tax repatriation programs post-election, as seen in the Tax Cuts and Jobs Act of 2017, it could incentivise US companies to bring profits and operations back home, possibly reducing FDI in Ireland.
However, given Ireland’s low corporate tax rate (12.5%) and status as a key EU hub for the technology and pharmaceutical sectors, US firms might still find Ireland an attractive location for their European operations.
It will be interesting to watch the level of US engagement with the OECD’s BEPS 2.0 tax proposals.
This year has delivered probably the most significant level of tax reform practitioners are likely to witness.
The effective 15 percent rate has caused multinational groups to grapple with a plethora of complex and challenging legislation. Despite initial positive soundings from the US Treasury, achieving sufficient political appetite for the introduction of BEPS 2.0 (Pillar Two) has proved elusive.
The rules, however, will result in US-headquartered groups being affected by the global minimum tax rules from 2026 onwards.
If Pillar Two plans continue to have momentum, commentators will watch with interest to see how the US will react and whether retaliatory measures will be introduced.
While tax policy is an important feature of Ireland’s FDI offering, there are many other features that are equally attractive and important to organisations when seeking to establish an international presence.
This is particularly important for firms establishing their first presence outside the US.
Ireland will continue to be an important cog in the global international tax expansion plans of US-based multinational groups. Fundamentals – including making Ireland an attractive location for people to relocate to – will play a greater role in years to come.
Catherine Drysdale
Consultant
Barden
Ireland's job market is highly interconnected with global trends and events. There are a number of key factors impacting the employment industry in Ireland at present, including the upcoming US election and potential impact on FDI, geopolitical conflicts, climate initiatives, uncertainty regarding policy and regulatory changes and interest rates and inflationary impacts.
How these directly impact talent looking for opportunities within US companies headquartered in Ireland will be sector dependent. Certain sectors, for example, will be impacted more significantly by policy and regulatory changes including technology, pharmaceutical and financial services industries.
The challenges for acquiring talent may include:
- Changes in visa policies and global mobility restrictions;
- Cautious spending that could result in longer, more complex hiring processes coupled with the risk that companies will prioritise hiring local talent in the US due to shifting labour policies or cost-saving measures;
- A shift to contract opportunities, a trend we have already witnessed, reflecting employers’ desire for flexibility and a cautious approach to permanent hires; and
- Increased competition among jobseekers for a reduced number of opportunities, potentially leading to longer lead time to secure new roles.
The stance companies are taking on hybrid and remote working arrangements remains in flux. We saw the recent announcement from Amazon CEO Andy Jassy regarding a mandatory full-time return to office. Whether others follow suit remains to be seen.
Organisations could adopt permanent remote working policies. While this may open up opportunities for a broader talent pool and flexible working arrangements, professionals in the Irish market would likely face increased competition from the global talent pool, potentially leading to downward pressure on salaries as companies seek cost-effective labour.
With potential changes in the US economic environment post-election, given their established presence in Ireland, US companies with operations here may need to adjust their salary structures to remain competitive in attracting top talent, particularly if remote work opportunities expand.
A focus on enhancing their existing localised talent acquisition strategies, coupled with a strong emphasis on employer branding to showcase corporate culture and values, will help to make positions more attractive in a competitive market.
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