EU's 'ghost revenue' rules could send Ireland back to the old Viking Empire
Published 13/04/2016 | 02:30
Contrary to popular belief and mythology, the Vikings were not a blonde, blue-eyed, Dark Ages version of Isil, raping, pillaging, terrorising and subjecting infidels to unspeakable degradations.
The reality is that the Vikings were extraordinarily successful because they were an amazingly well-organised and highly centralised commercial entity.
At its zenith, their trading network stretched from the Black Sea to Iceland, revealing a sophisticated level of boardroom preparation, meticulous planning and mercantile reasoning behind their specific conquests, combined with a finely tuned degree of diplomacy which allowed their future leaders to learn in the great courts of Constantinople and Baghdad, before coming back to Scandinavia to rule the Vikings.
The reason I'm getting all Viking this morning is that I am writing from Oslo looking at a statue of perhaps the greatest Viking of them all: Harald Hardrada.
Harald eventually came a cropper at the Battle of Stamford Bridge, which (for Chelsea fans) was not an irrelevant, mid-table dogfight but a battle that marked the end of the western Viking Empire and the beginning of the new era of the Normans.
For me, the fascinating aspect of the Viking Empire was its economics. Dublin was a slave centre. Don't be fooled by our history books: the Vikings didn't come to Ireland to rob a few manuscripts from the monks. They came for one of the most valuable commodities of the Dark Ages, and that was slaves, particularly women and children. Ireland was full of them, typically undefended and easy to corral in Dublin for export. We know this because of the abundance of skeletal remains of people with our Celtic DNA found in Baghdad, modern day Iran, and around the Black Sea.
These poor wretches were transported from Ireland to Scandinavia, then through the Baltics and down the great rivers of Russia. They would have passed the huge Viking trading city of Kiev, in long ships navigating the Dnieper River towards the Black Sea and out to what is now Istanbul, where they were exchanged.
Other Irish slaves, probably originally from Wicklow, Kildare and Meath, were taken by the Vikings right down the Volga river to the Caspian Sea and down to what is now Iran but was then the great Kingdom of the Persians.
This traffic explains why deposits of coins from the ancient cities such as Baghdad and surrounding Arab empires have been found in Viking settlements in Scandinavia, York and, of course, Dublin.
In tandem with this trade, the Vikings had their own sophisticated monetary system of coinage - the first trademark of empire - and a highly efficient, centralised tax system. After all, what is the purpose of an empire if not to tax the subjects? And it was critical to tax them evenly, extracting an equal amount or proportion from all. The Vikings had this down to a tee. Not for the Vikings one part of the trading system going off on a solo run with its own tax policy. They wouldn't stand for that.
Obviously, the reputation for ferocity and cruelty was a good marketing and branding tool. It brought your enemies to the table faster. The Vikings used this fear of crazed warriors, marauding up the rivers in their long-ships as a negotiating tactic - the implicit under the table threat - for distant parts of the empire that didn't obey the central rules.
Stretched right across the known world, the Viking Empire didn't last for 300 years because of constant war and volatility. Obviously, that's not a recipe for longevity. Rather stability, diplomacy, agreement, peace and organisation are the recipes for durability. Most empires are run this way, which brings me to the modern European empire, known as the EU. All empires have their rules, and that's probably why the detached Norwegians decided to stay firmly outside the EU. One of the rules is taxation. No empire can tolerate "beggar my neighbour" tax policies indefinitely.
Now the EU has Ireland's corporate tax policy and tax regime in its sights.
Yesterday, the EU announced formally that it wants multinationals to undertake 'country-by-country' reporting, where they'd have to make public their revenues, profits and taxes paid in each country where they operate. This is a strike against Ireland. It is aimed at no other country. Let's not cod ourselves otherwise. I'll give you an example of what this is all about.
Take the case of Facebook in the UK. In 2014, it was revealed that Facebook, one of the richest companies in the world, paid just £4,327 in corporation tax. This ridiculous sum is less than a single British worker on an average salary of £26,500 (€33,000) would pay (£3,180 in income tax and £2,213 in national insurance contributions).
When you dig a bit deeper into the figures, Facebook suggested that it had British revenues of £105m (€131m). This is a company with global profits of $2.9bn (€2.5bn) and revenue of $12.5bn (€11bn).
Could it be plausible that operations in the fifth largest economy in the world, with a rich population of 65 million people and internet usage among the highest on the planet, could account for less than 1pc of Facebook's global revenues?
The problem for Ireland is that the revenues were being diverted from England to Ireland. We were party to it by accepting what might be called 'ghost revenues'. These are revenues booked in Ireland, which were not generated in Ireland.
Many years ago, this column coined the phrase 'ghost estates', referring to estates that were being built that would never be occupied. Now we have ghost revenues. These are revenues that are being booked here, but which could never have been generated here.
The EU wants to stamp this out by demanding this "country by country" rule. It is a game-changer for us because obviously our domestic market is tiny in comparison to the declared profits of multinationals operating here.
According to the US regulators, American multinationals generated profits (not turnover) of $100bn in Ireland. How much of this activity is generated abroad and funnelled through Ireland in the form of ghost revenues?
And if the EU comes after us, in the year that the British exit, will the case of Ireland in a much more French or much more continental EU be compelling? Could it be, like the battle of Stamford Bridge, the end of one era and the beginning of another?
Might we look to Norway rather than Berlin as our geo-political model for the next 30 years? Maybe the next 50 years for Ireland might not be one wedded to continental Europe but one in a loose gathering of nations that looks more like the old Atlantic Viking Empire of Ireland, Iceland, Norway, Denmark and Sweden - after all the Brits, the Danes and the Swedes have already opted out of the Euro and are semi-detached already.
Stranger things have happened.