Ireland is number 1 destination for FDI by US Tech firms, new analysis finds

Ireland is currently the number one destination in the world for foreign direct investment (FDI) by US technology companies, according to an analysis carried out by Smart MBS.  Altogether they invested a massive $54 billion in the country. To put some context on the scale of this investment, the Gross Domestic Product for Croatia and Belarus that year were the same amount each.

The success of the global technology giants Google, Facebook, Microsoft, Intel and others has clearly created a blueprint that the US tech industry has been following.

At present on these shores there are:
nine of the top ten global software companies
nine of the top ten US technology companies
the top three enterprise software companies in the world
four of the top five IT services companies

The UK followed in second place with $51.1 billion. However, with Brexit looming large in 2019, it’s highly likely this figure will reduce if and when the UK withdraws from the EU.

The Netherlands was a distant third with $33.8 billion.

For those companies that invested in Ireland, they were rewarded handsomely. The average return on investment was a whopping 11.7%, the fifth highest in Europe.

The Irish corporate tax rate of 12.5% is usually one of the first benefits of moving to Ireland people will mention. While it is a huge incentive to establishing a presence here, there are many more attractive features that help seal the deal.

All data was taken from the “Direct Investment by Country and Industry” series by the US Bureau of Economic Analysis. Data only covers countries that were explicitly covered in the data and excludes aggregated totals for groups of countries, e.g. “Other Europe”.

““Tech Investment” was calculated as the total US direct investment position on a historical-cost basis in two industries: “Manufacturing of Computer & Electronic Products” – a subset of Manufacturing – and “Information”, which includes software publishers and data-related activities.”

“Income from Tech Investment” was taken as a total “Direct Investment Income Without Current-Cost Adjustment” for the same two industries.

ROI was calculated as Income from Tech Investment divided by Tech Investment, as per the guidelines laid out in the “Return on FDI” publication by the Irish Central Statistics Office, and expressed as a %.

All figures represent known amounts of investment and income, excluding the amounts that might have been suppressed by the Bureau of Economic Analysis to avoid disclosure of data or the amounts that round to “0”.

All figures appear in billions USD and cover the year 2017, latest available.

Why Ireland?

1 – Long established sector
IBM was the first tech giant to land in Ireland in 1956. Microsoft and Intel came in the 1980s with many more of the biggest names coming in the 1990s and 2000s.

2 – Young, highly qualified workforce
The WEF Global Competitiveness Report for 2016-2017 and the IMD Competitiveness Yearbook for 2017 rank Ireland in the top 10 globally for the quality of the education system.

At present, 30% of students in third level institutions are taking courses in science, technology, engineering and maths (STEM).

3 – EU Membership
One huge advantage to setting up in Ireland is the free trade agreements that comes with our membership to the European Union (EU). This gives companies access to over 500 million potential consumers.

4 – Research, development and innovation
Ireland has several initiatives that help company develop and protect research, development and innovation activities. These include tax credits, intellectual property development tax incentives and centres of excellence.

Corporate Tax
The Irish corporate tax rate of 12.5% is usually one of the first benefits of moving to Ireland people will mention. In addition to the favourable rate, Ireland has an extensive tax treaty network with 78 countries thanks to its membership of the EU including  Australia, Canada, China, Republic of Korea, Mexico, Japan, Russia and Saudi Arabia. These treaties help secure a reduction or, in some cases, a total elimination of withholding tax on dividends, royalties and interest.