DUBLIN: The fist net outflow of foreign direct investment (FDI) from Ireland since 2011 has been linked to the restructuring of balance sheets amid the current clampdown on multinational tax avoidance.
The OECD’s latest analysis of FDI trends and developments shows the flow of foreign investment into Ireland fell to minus $0.4 billion in the first half of 2016, driven by a $19 billion outflow in the second quarter. This compared to the record $150 billion inflow reported during the first half of 2015 and reflects the enormous distortions caused to Irish figures by multinationals.
The OECD linked the Irish outflow to intercompany debt, whereby money or debt is shifted between multinational subsidiaries for investment purposes.
“It is normally difficult for us to understand what is going on with intercompany debt as it is often driven by factors specific to the company, but it is especially tough for the Irish data this time as much of the detail is confidential,” an OECD spokeswoman told The Irish Times.
However, another expert linked the Irish outflow to the transfer of assets out of Ireland in the wake of the EU’s clampdown on tax avoidance and its investigation into Apple’s tax arrangements here.
During the six-month period, Dublin-based drugmaker Shire also acquired US rival Baxalta in a so-called mega-merger worth about $32 billion (€29bn).
The deal went ahead despite US efforts to clamp down on inversion transactions which allow companies move addresses overseas for tax purposes. The OECD spokeswoman noted that Ireland would have recorded a marginal FDI inflow of about €0.6 billion during the period but this turned negative when the euro figure was converted to dollars.
