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Ireland is expected to be a net contributor to the EU budget for some time to come thanks to our relative economic strength and the lingering impact of Brexit, according to Ireland’s member at the EU Court of Auditors.
Tony Murphy also suggested that the impact of US multinational profits on Ireland’s economic performance has also influenced the size of Ireland’s net contribution to the EU budget.
Last year Ireland paid € 229 million to the EU budget more than it received, an amount that represents 0.08% of Ireland’s gross national income (GNI).
Murphy, Ireland’s representative on the court since 2017, said that with the loss of the UK’s annual contribution, Ireland’s net contribution is likely to rise further.
The higher the GNI of a member state, the greater the contribution to the EU budget.
“[Ireland’s] Gross national income was € 241 billion in 2017 and € 267 billion in 2019. Therefore, it is increasing and is likely to increase. If we remove the UK contribution, that means everyone’s contribution will go up. “
According to the annual report of the Court of Auditors, the overall EU budget in 2019 was € 164 billion, of which Ireland contributed € 2.3 billion.
Most of Ireland’s contribution came from the state coffers, while customs duties of € 380 million on third-country goods entering Ireland, as well as VAT contributions from third countries of € 380 million. 275 million euros made up the remainder.
The size of Ireland’s net contribution to the EU is understood to have increased since 2016 thanks in part to the presence on the Irish books of earnings recorded by US multinationals.
This relates to the fiscal anomaly in 2015, when Ireland’s GDP figures soared from 7.8% to 26% after several US multinationals reclassified their assets by re-domiciling to Ireland to reduce their taxes.
As a result of this phenomenon, which the renowned economist Paul Krugman called “goblin economics”, the Central Statistical Office (CSO) developed a new indicator known as Modified Gross National Income – also known as GNI * – that stripped the profits associated with the “reorganized” corporations in order to give a more realistic reflection of the size of the Irish economy.
However, it has emerged that when calculating Ireland’s net contribution to the EU budget, the EU bases its calculations not on the modified GNI, but on the standard GNI approach applied to all member states by the statistics agency of the EU. EU, Eurostat.
Figures compiled by the CSO show that in 2016, Ireland’s modified GNI was 174.7 billion euros, but the standard GNI was the highest figure of 220.7 billion euros.
In other words, the higher figure retains the impact of multinational profits and intellectual property.
The same effect is observed in the years 2017 to 2019, according to the figures.
In 2017, the modified GNI was € 186.2 billion, while the standard GNI was € 239.2 billion; The following year, the modified GNI stood at € 198.7 billion, while the standard GNI indicator stood at € 257.5 billion.
In 2019, the modified GNI was € 213.7 billion, while the standard GNI stood at € 275.5 billion.
Due to the higher GNI figure, the knock-on effect is a higher net contribution to the EU budget.
The Irish Member of the Court of Auditors acknowledged the impact of the multinational profits recorded in Ireland on the question of the country’s net contribution to the EU budget.
“That’s true, there was an impact in terms of the ‘goblin economy.’ The GNI that was used as the basis for the [net] The contribution would have included those things you are referring to, “he said via video link from Luxembourg.
Mr Murphy added: “Eurostat calculates GNI based on current statistical standards and guidelines. Therefore, the budget is calculated on that basis. If there are anomalies within that, it is another matter. We are simply following a system.”
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