Back to Top

 Skip navigation

Redomiciled PLCs in the Irish Balance of Payments 2018

Open in Excel:

Background

Beginning in 2008, in reaction to proposed changes to corporate tax rate changes in the United Kingdom and the United States, a number of multinational corporations relocated their group headquarters to Ireland.

Conducting little or no real activity in Ireland, these companies hold substantial investments overseas. By locating their headquarters in Ireland, the profits of these PLC’s are paid to them in Ireland, even though under double taxation agreements their tax liability arises in other jurisdictions. These profit inflows are retained in Ireland with a corresponding outflow only arising when a dividend is paid to the foreign owner.

Treatment

The statistical treatment regarding profit inflows and outflows is adhered to. A direct investor is entitled, in proportion to its equity share, to the income generated by its subsidiaries, associates and branches, irrespective whether the income is distributed in the form of dividends (or branch profits) or retained as reinvested earnings. (Reinvested earnings are calculated as the difference between the company’s earnings and distributed dividends.) Profits of the overseas subsidiaries are recorded as ‘direct investment – income on equity – inflows’. The effect of these profits on the Primary Income1 of the Irish Balance of Payments is shown in Table 1 below.

Table 1 Net Income of Redomiciled PLCs € million
 20082009201020112012201320142015201620172018
Total2921,5945,2605,5487,0976,4746,8514,6635,7804,4575,001

Users often refer to Primary Income as ‘repatriated profits’ of multinationals based in Ireland. This group of PLCs reduce that outflow in the Balance of Payments as shown in Figure 1.

Primary IncomeExcluding Redomiciled PLC Income
2008-26-26
2009-28-30
2010-26-32
2011-32-38
2012-33.939-41.036
2013-28.069-34.543
2014-30.341-37.193
2015-60.785-65.447
2016-49.912-55.693
2017-61.063-65.52
2018-69.731-74.733

The foreign assets of these enterprises are classified as ‘Direct Investment Abroad’ in the International Investment Position (IIP) statistics. These PLCs have had a significant effect on the stock of Irish FDI abroad, as shown in Figure 2.

Total Redomiciled PLCsRemainder of FDI
200824100
200980125
2010115139
2011122134
2012148126
2013210123
2014324169
2015472454
2016443428
2017347406
2018391442

As none of the shareholders own more than 10% of the equity in these companies, their liabilities are classified in the IIP as ‘Portfolio Investment – Equity’. Proportionally they have a smaller impact on this sub-heading as Portfolio Investment liabilities are dominated by investment funds. Redomiciled PLCs data, compared to Ireland's total Portfolio liability, is shown in Figure 3.

Redomiciled PLC LiabilitiesPortfolio Investment Liabilities
2008211281
2009801465
20101231668
20111251728
20121491917
20132051934
20143272365
20154742798
20164422910
20174053143
20184133146

1‘Primary Income’ less ‘Other Primary Income’ equals ‘Net Factor Income’ in the National Accounts.

  • Christopher Sibley    (+353) 1 498 4305

  • John Flanagan    (+353) 1 498 4054

  • Email: bop@cso.ie

Why you can Trust the CSO

Learn about our data and confidentiality safeguards, and the steps we take to produce statistics that can be trusted by all.