Mr. Seamus Coffey:

This is with regard to our attractiveness for foreign direct investment, which the Irish Fiscal Advisory Council does not assess. In my personal view, we are in a sweet spot when it comes to attracting foreign direct investment, particularly from the US. We are in a sweet spot in all areas with regard to investment, employment and tax being located in Ireland. We see this not only in the social media companies mentioned by the Deputy but also in companies manufacturing computer chips or pharmaceuticals. It is something that has been identified as a risk in recent years, with the emphasis on risk being a downside. What we have seen foreign direct investment holding up and, in many areas, increasing. A possible impact, as the Deputy has pointed out, would be on our EU contribution. IFAC identifies our EU contribution as a potential risk. We do not rate it as a high impact or a high probability but we identify it as something that could potentially have an impact.

Recently, the Taoiseach indicated his belief that over the next six years Ireland's EU contribution will rise by 45%. It is something that is there. There is the potential for it to increase even more if the bases on which the contributions are calculated change significantly. We are getting into the weeds. One of the bases for the calculation is a country's gross national income, which is a standard measure in international accounts. We have our own modified version in Ireland. Traditional gross national income is used at the base. If this intellectual property moves to Ireland it could substantially increase our gross national income and substantially increase our EU contribution.

We have made a change that means these impacts can be offset and paid for because the cap on the amount of the capital allowances that can be used in any given year against the profits linked to those intangible assets has been reduced to 80%. We have some of those profits in our corporate tax base and would collect corporation tax on an annual basis if those intellectual property assets were moved to Ireland, as seems likely. At least for assets that have come since October 2017 there would be additional corporation tax revenue to offset the potential initial EU contribution. There are other factors that could cause our EU contribution to increase, including the UK exit from the European Union and the fact that perhaps the EU budget could be increased. With regard to foreign direct investment, there is the risk that intellectual property could cause it to increase.

I would not necessarily say it is the social media companies that have moved their intellectual property to Ireland in recent years. They have been significant sources of employment growth and have purchased buildings throughout the city. Figures from the CSO suggests that most of the intellectual property moved to Ireland to date has been in manufacturing sectors, particularly pharmaceuticals. Much of the intellectual property linked to social media companies remains offshore. There is the potential for this to come to Ireland over the next 12 to 18 months. The two possible destinations are the US and Ireland. Ireland offers certainty but it might be that the companies move their intellectual property back to the US. There is potential for significant changes to our national accounts, our gross domestic product and our gross national income leading to increases in our EU contribution. We do highlight this as a potential risk but at least we now have the change from budget 2018 which means the cap has been reduced to 80% and we are collecting some additional revenue.