A Peek into the "Internet Capital of Europe"

Nov 28, 2011

Article ImageIreland, once seen as country with an economy based solely on manufacturing, has blossomed into what some call "the Internet capital of Europe." Many of the top tech companies, such as Google, Facebook, Zynga, PopCap, IBM, Microsoft, Apple and HP, have international offices in Ireland, an otherwise relatively small country. In September Twitter announced its plans to locate an international office on the green isle, tweeting "Ireland is trending. Twitter to establish international office in Dublin. #idairl". According to Emmanuel Dowdall, global department manager for content, consumer and business services for the Industrial Development Agency Ireland (IDA), that announcement was re-tweeted over 650,000 times.

What is it about the home of James Joyce, U2, and Colin Farrell that attracts such tech giants? Well, Ireland provides foreign investors "unparalleled incentives and support," says Dowdall, who has seen Ireland transition over the past two decades from its reputation as a purely manufacturing base to a leader in service-oriented environment. "[Ireland] used to be an agrarian or low level manufacturing environment but has now become an environment of high-value manufacturing, high-value services, and research and development for the digital economy." It is through these three industries IDA has transformed Ireland into a mecca for foreign-based digital business. 

Perhaps Ireland's most attractive feature is its location. Many of the internet big wigs use the country as a gateway to Europe, Asia, and the Middle East. The country's position allows them substantial in-roads into these communities, as well as access to a diverse talent pool. "Ireland's a great location for [businesses] looking to provide services to a new customer base," says Dowdall.

One of the most substantial incentives Ireland offers is its supported 12.5% corporate tax rate (12.5% for trading, 25% for non-trading). The United Kingdom, for example, offers many of the same benefits of Ireland as an English speaking country close to the diverse hiring pool of Europe and Asia, but with the significantly higher corporate tax rate of 20-26%. Germany, which boasts a strong economy despite the current euro-debt crisis, its corporate tax rate is currently at 33%.

However, Ireland's tax benefit might extend beyond the low rate. According to Dowdall, many of Ireland's foreign investors are involved in ways that would be impossible in larger countries. "Because of its size, individual companies can have a significant impact on shaping policy." Ireland, in partnership with IDA, supports investors by assisting them with the many tax credits and grants available. The country offers grants for creating jobs, and for researching and trouble shooting difficult technological problems. Ireland also offers tax credits that can compensate up to 25% of a research project's total cost.

Ireland's success in recent years relies on its keen eye for a company's future. "We came to talk to [Zynga] when they were probably less than a hundred in total employees," says Dowdall. "They were not in a stage where they were looking to internationalize." One of IDA's key strategies has been to partner with these kinds of companies early to develop a company's identity for the international market. Because of the recruitment strategies Ireland has seen a 200% growth in the gaming industry over the past five years thanks to corporations like Zynga and PopCap.

IDA also aggressively supports companies' employment needs. With the country's proximity to Asia and the Middle East, and with around forty languages spoken, Ireland boasts a diverse and ever-growing workforce. "We support applications for visas," says Dowdall. "Companies tell us what they need and we support by finding that skill-set, and a possibly lengthy process becomes very streamlined." For businesses looking to set up a permanent international presence Ireland's promise of a streamlined green card process can be seen as the country's biggest incentive.

Ireland's dedication to foreign investors might stem from the country's dependence on them. According to IDA over 80% of Irish exports come from foreign-based companies. This boost to the Irish economy has spawned nationwide acceptance and the government has no plans in the near future to change its incentives for businesses. "Because of the recognition of the contribution made by foreign direct investment to the Irish society, the support levels that are enjoyed... are unassailable," says Dowdall. "It is absolutely guaranteed into the future."

Photo courtesy of NASA Goddard Photo and Video, Flickr Creative Commons.