Investing in Ireland
Issue 19 June 2014
Welcome to the 19th edition of PwC’s newsletter on foreign direct investment (“FDI”) in Ireland. Reflecting its consistent recognition as a leading FDI location, Ireland has recently been named the best country in Western Europe to invest in - for the third year in a row. Moody’s and Standard & Poor’s have also both recently upgraded Ireland’s debt rating for the second time in six months. This issue highlights a range of positive FDI announcements across a variety of sectors, provides an update on Ireland / US international trade and highlights Ireland’s attractiveness to companies in the Med Tech sector.
Remember to visit our FDI website for more updates and detailed information (http://www. pwc.ie/fdi). Also available here is our recently updated ‘Why Ireland?’ publication. Please do not hesitate to contact myself, any member of our team, or your usual PwC Ireland contact at any stage. We would be happy to tell you more about the topics raised in this issue or to include any interested parties on our mailing list. Liam Diamond +353 1 792 6579 +353 86 405 6965 liam.f.diamond@ie.pwc.com
Recent FDI announcements
AbbVie has announced an €85 million investment at its expanded manufacturing facility in Sligo. The investment will create greater manufacturing capacity to deliver new medicines for patients. Airbnb, the world’s leading communitydriven hospitality company, announced plans to significantly increase its presence in Ireland with the creation of 100 new roles, doubling its current workforce to 200 employees in 2014 Alexion Pharma has announced its plans to expand its operations in Ireland following the acquisition of a new site in west Dublin. This expansion will create approximately 200 new jobs as part of an investment of €75 million in this new site over the next two years. BD (Becton, Dickinson and Company), a leading global medical technology company, recently celebrated the 50th anniversary of its plant opening in Drogheda, Co Louth, with an announcement of a €16 million investment in new equipment to expand its production of BD PosiFlush™ syringes and create up to 20 additional jobs in Drogheda
ConnectIreland has announced 48 jobs in three separate projects under the ConnectIreland programme. The jobs being created are with energy consulting firm Sure Power Energy and Utilities (25), helicopter leasing company Lobo Leasing (15) and PR and marketing agency Wired Island (8). capSpire, a global consulting and solutions company serving the energy industry, is opening its first international office which will allow the firm to better serve its existing European clients. The company will create 20 new jobs in business consultancy and software development. Cathx Ocean, an underwater technology company, is to expand with the creation of 50 new jobs in Kildare after signing a new deal to supply equipment to the US DMS Offshore Investment Services Ltd is to create 50 new roles in fund governance and risk management at its European operations centre in Dublin Ericsson is to create 120 new highly skilled ICT jobs in Ireland in 2014 at sites in Dublin and Athlone. The roles will range from software developers to programme managers and consultants. ENERCON, Europe’s leading supplier for wind energy turbines, are to employ 22 people at their new Irish office in Dublin, with future growth expected
Ethicon Biosurgery, part of the Johnson & Johnson family of companies, plans to develop an €80 million state-of-the-art manufacturing facility providing 270 jobs and 150 temporary construction jobs at the National Technology Park, Plassey, Limerick Eli Lilly have launched a new recruitment campaign to hire 100 people in Ireland. The company has existing Irish operations in Dublin, Sligo and Cork and the vacancies are expected to include scientific, engineering and operational roles.
VCE, the innovative technology company, plans to create up to 150 new R&D positions at its international headquarters in Cork ZeniMax Online Studios, the company behind fantasy game The Elder Scrolls, is to create 250 jobs at its customer support centre in Galway
INDOS Financial Ltd, a provider of depositary services under the Alternative Investment Fund Managers Directive (AIFMD), plans to expand its Irish office based in Enniscorthy, Co. Wexford with the creation of up to 10 jobs Kemp Technologies has announced that 50 new high end technology based positions will be created over the next 3 years at its EMEA HQ in Limerick, bringing its current Irish workforce to 80 Lenovo, the Chinese tech giant, is planning to double its workforce by the end of the year with the creation of 35 new jobs in Dublin One Big Switch, the Australian headquartered consumer network, is to create 20 new roles in its newly established European HQ in Dublin Oxford International, a division of On Assignment, announced a new €16 million investment at its Cork-based European headquarters which will result in the creation of more than 50 new jobs over the next 18 months
IDA Ireland has agreed contracts for delivery of two new building developments in Athlone and Waterford which will be suitable for future IDA client investments from a number of potential sectors. The advanced technology buildings will facilitate the full spectrum of manufacturing and technology activities
SurveyMonkey, the world’s leading online questionnaire platform, announced that it will open an office in Dublin, employing more than 50 people in the first twelve months. The operation will support the company’s many existing Irish and European customers.
Ireland – 1st in Western Europe for ‘Best to Invest’
SAP is to increase its investment in its Irish Development Centre located at their facility in Citywest Dublin, creating 60 highly skilled R&D roles in Predictive Analytics. SAP is also currently recruiting in its Business Suite and Cloud Support organisations and expects to fill over 200 roles in 2014.
Mark Arend, Editor in Chief, Site Selection magazine, May 2014
“Capital investors only invest where they are confident they will earn a meaningful return, and these locations deliver that confidence”
Ireland set to outperform Eurozone The latest OECD figures show that the Eurozone is expected to return to positive growth this year. Projected GDP is 1.1% this year and 1.4% in 2015. Ireland is forecast to perform better than the Eurozone average, with projected GDP growth of 1.7% this year and 2.5% in 2015. This forecast is also reflected in the PwC June 2014 Economic Outlook which expects that Ireland’s GDP growth will be well in excess of the Eurozone for both years. Unemployment in Ireland has fallen to 11.8% in May. This is on the back of steady employment growth, as reflected in positive exchequer returns for 2014 just recently announced. Eurostat figures show Irish unemployment levels are among the quickest to fall in the EU.
Why Ireland for FDI… • Gateway into Europe (500m consumers) for North America and Asia • Member of the EU and Eurozone • Only English speaking Eurozone member • No 1 European FDI location across a wide range of metrics • Export-orientated and open economy with a pro-business environment • Low tax regime (12.5%) • Common law regime, stable political environment • Youngest population in Europe (50% under the age of 35) • Highest share of third level qualifications in 15-34 year olds compared to US, UK and OECD average
Ratings increase for Irish bonds Irish Government bonds were raised to investment grade in January after the country exited its bailout programme. Moody’s recently upgraded Ireland’s debt rating (to Baa1) for the second time in six months, while Standard & Poor’s became the first of the big three ratings agencies to return Ireland to the ‘A’ category with a rating of A-. Reasons for the improved ratings are cited as faster than expected debt reduction, sharp reduction in contingent liabilities and improved credit position relative to other Euro area countries with the same rating. Ireland’s “economic dynamism and growth prospects” were factors also. The new Moody’s rating of Baa1 is equivalent to the BBB+ rating assigned by Standard & Poor’s and Fitch. Ireland’s borrowing costs instill confidence also, with Irish yields dropping below UK yields for the first time in six years during May 2014. Ireland’s long-term costs of borrowing are also on course to fall below those of the US.
Best Country to invest in Western Europe – 3rd year in a row! Ireland has been named the best country in Western Europe to invest in by Site Selection in their sixth annual rankings. The rankings represent investment activity in 2013 and were released in May 2014. This is the third year in a row that Ireland has been awarded first place in this category.
Why Ireland for Med Tech Ireland is a leading player on the global Med Tech stage, as evidenced by the statistics below: • 12 of the top 15 global medical device companies • 15 of the top 20 Med Tech companies in the world • In total, 250 Med Tech firms • 25,000 employees in industry • 33% of all contact lenses are manufactured in Ireland • 50% of all ventilators in acute hospitals worldwide are manufactured in Ireland • 100% of the world’s Botox is manufactured in Ireland Irish Med Tech exports have an annual value of €7.2bn and Ireland is the second largest exporter of medical technology in Europe. A growing number of Med Tech companies have a dedicated R&D function in Ireland which is particularly attractive in the context of Irelands R&D tax credit regime. Financial and other support is available from IDA Ireland, Enterprise Ireland (EI), Science Foundation Ireland (SFI) and Sustainable Energy Authority Ireland (SEAI).
Ireland’s tax regime
“The decision to manufacture EVARREST™ Sealant Matrix in Ireland was due to the unique clustering of medical device manufacturing, automation and biomanufacturing skill sets across the Johnson & Johnson companies already operating in Ireland.” Dan Wildman, Worldwide President, Ethicon Biosurgery
• 12.5% corporation tax rate • 25% R&D tax credit (refundable) • Attractive holding company regime • Transparent tax and legal framework • Extensive double tax treaty network and access to EU directives • Extensive withholding tax exemptions • OECD based transfer pricing system
Investment in Life Sciences & Med Tech The Irish Government has unveiled a $172m venture capital fund for Irish companies in the Life Sciences sector. The investment comes as part of a partnership between Lightstone Ventures, Enterprise Ireland and the National Pension Reserve Fund and is the third investment by the Department of Jobs, Enterprise and Innovation through Enterprise Ireland under the Innovation Fund Ireland Programme. Ireland is also leading a €9m EU research programme aimed at creating assistive technologies to enhance the quality of life for people with autism and intellectual disabilities. The research is co-funded by the Irish charity RESPECT and the EU Marie Curie ASSISTID fund. The ASSISTED research fund is the first of its kind in Europe and represents the most significant investment into assistive technologies research to date.
Ireland leads the way! 1st in the World for best place to do business1 1st in Western Europe for ‘best to invest’2 1st in the World for investment incentives3 1st in Europe for protecting investors4 1st in the World for availability of skilled labour3 1st in the World for flexibility and adaptability of workforce3 1 in the World for human capital – Dublin city5 st
1st in the World for inward investment by quality and value6 1st in Europe for number of inward investment jobs per capita6 1st in the World for attitudes towards globalisation3 1st in Europe for paying taxes4 1st in Europe for attaining third level education7 Forbes - The Best Countries for Business 2013 Site Selection 2014 3 IMD World Competitiveness Yearbook 2014 4 The World Bank - Doing Business 2014 5 Economist Intelligence Unit Ltd, Benchmarking Global City Competitiveness 2012 1 2
6 7
IBM Global Location Trends Report 2013 Eurostat EU Labour force survey 2013
Connecting Silicon Valley to Ireland Aer Lingus have launched a new direct flight route between Dublin and San Francisco. The new route, operating five times per week, has significantly improved access for those traveling from the US west coast to Ireland. It is estimated that there are 179 companies employing over 36,000 people in Ireland from the West Coast of the US.
Trade missions to the US The Irish Minister for Jobs, Enterprise and Innovation, Richard Bruton TD, took part in a 5-day, 6-city trade and investment mission to Texas and the US Mid-West in May. Two days of the mission were spent in Texas and involved a delegation of 27 Irish companies. Three days were spent in the Mid West and involved a series of one on one meetings with major multinational companies, in particular pharma, medical devices and technology companies. Ireland’s prime minister, Taoiseach Enda Kenny TD, also took part in a three day trade mission to San Francisco and Silicon Valley in early June. A key focus was strengthening the economic, trade, investment and tourism links between Ireland and California.
Ireland – US relationship Trade links between Ireland and the US remain strong in Summer 2014. The US is the largest source of FDI in Ireland, with over 700 companies operating in Ireland and directly employing 115,000 people. Ireland now ranks as the number one export platform in the world for US affiliates based on the latest available data (US firms had exports of €93 billion from Ireland into world markets). Collectively, US companies have invested $204 billion in Ireland. During 2009-2012, Ireland accounted for 14% of US investment in the EU which equated to more than the total invested in the BRIC economies (Brazil, Russia, India, China) or all of South America. Irish companies are responsible for the direct employment of over 130,000 people in the US (227 Irish companies are operating in the US with 2,600 locations across all 50 states with an investment of $25 billion).
Tax treaty update Ireland has signed double taxation agreements with 70 countries, 68 of which are in effect. The agreements cover direct taxes, which for Ireland encompass income tax, corporation tax and capital gains tax. Ireland has entered into new agreements with the Ukraine and Thailand. The legal procedures to bring these agreements into force are now being followed. A new agreement with Kuwait is now in force and effective from 1 January 2013. New agreements with Uzbekistan, Egypt and Qatar have now been signed. These agreements are now in force and are effective from 1 January 2014. Ireland has completed the ratification procedures to bring the protocol to the existing agreement with Malaysia into force. The protocol will enter into force when ratification procedures are also completed by Malaysia. A protocol to the existing agreement with Switzerland is now in force and effective from 1 January 2014. Protocols to the existing agreement with Luxembourg and Belgium have been signed and the legal procedures to bring them protocol into force are now being followed. Negotiations for new agreements with Azerbaijan and Jordan are at various stages while revisions to existing agreements with Pakistan and with the Netherlands are being negotiated.
Would you like to know more? Should any of the topics covered in the newsletter be of particular interest to you, please do not hesitate to contact any member of the FDI team, or your usual PwC Ireland contact. If any of your colleagues would like to be included on our mailing list, please let us know. Please click on our website www.pwc/ ie/fdi for additional information. Various topics of interest for foreign investors can be found in the publications link in the tax section, including: Why Ireland? Tax Facts 2013 Previous editions of “Investing in Ireland”
People matters Our upcoming Global Employee Mobility Workshop will take place on Tuesday 9th September 2014 at PwC, Spencer Dock. This full day event will cover a range of topics relating to globally mobile employees. Further information in relation to the workshop and how to register to attend can be found at http://www.pwc.ie/hrs shortly. In addition, our 2014 PwC reward trends snapshot survey is based on data provided by 122 organisations from across a range of industry sectors including banking, insurance, fast moving consumer goods, pharmaceutical & medical devices, technology, retail, construction and the public sector. It can be viewed at the following link: www.pwc.ie/survey/pwc-reward-trends-snapshot-survey.jhtml
Also of interest is our international tax services webpage www.pwc.ie/ international-tax and our corporate tax services web page www.pwc.ie/ tax/corporate-tax. Recent publications include: Tax Newsflash – EC proposes amendments to the Parent Subsidiary Directive Tax Policy Newsalert – OECD’s Action Plan published on BEPS
Contacts Jean Delaney +353 1 792 6280 jean.delaney@ie.pwc.com
Susan Kilty +353 1 792 6740 susan.kilty@ie.pwc.com
Terry O’Driscoll +353 1 792 8617 terry.odriscoll@ie.pwc.com
Liam Diamond +353 1 792 6579 liam.f.diamond@ie.pwc.com
Ronan MacNioclais +353 1 792 6006 ronan.macnioclais@ie.pwc.com
John O’Leary +353 1 792 8659 john.oleary@ie.pwc.com
Enda Faughnan +353 1 792 6359 enda.faughnan@ie.pwc.com
James McNally +353 1 792 6844 james.o.mcnally@ie.pwc.com
Feargal O’Rourke +353 1 792 6480 feargal.orourke@ie.pwc.com
Denis Harrington +353 1 792 8629 denis.harrington@ie.pwc.com
Joe Tynan +353 1 792 6399 joe.tynan@ie.pwc.com
Garrett Cronin +353 1 792 8807 garrett.cronin@ie.pwc.com
Mary Honohan +353 1 792 8609 mary.honohan@ie.pwc.com
Andy O’Callaghan +353 1 792 6247 andy.ocallaghan@ie.pwc.com
www.pwc.ie/fdi This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. © 2014 PricewaterhouseCoopers. All rights reserved. PwC refers to the Irish member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 05141