International agreement on a global minimum corporate tax could be finalised at the summit of the G20 in Venice next month. An historic breakthrough has come with stunning speed, in just two months since US President Joe Biden endorsed the plan.

French and Irish reaction to the accord, which still has no formal name and received initial approval at the meeting of G7 finance ministers in London last week, could not have been more different. There was joy at the French finance ministry in Bercy but consternation at the Irish Department of Finance in Upper Merrion Street.

Pierre Moscovici has done a great deal to promote fiscal harmonisation over more than two decades, as French minister for European affairs, as finance minister and then in a 2014-2019 stint as EU commissioner for finance. Moscovici often negotiated with Irish leaders and offers this explanation for divergent French and Irish attitudes: “France sees itself as the champion of fiscal justice, and Ireland sees itself as the champion of fiscal competition.”

The French obsession with tax justice is deeply rooted in history, says an adviser to President Emmanuel Macron: “The French revolution started as a revolt over fiscal injustice and privilege, because the nobility paid no tax,” he says.

The current French finance minister Bruno Le Maire hailed the accord as “the end of 20 or 30 years of fiscal dumping”. This correspondent first heard of “le dumping fiscal” when then taoiseach Bertie Ahern visited Paris in the late 1990s. A whole generation of Irish leaders have since been hectored by the French over Ireland’s low corporate tax rate.

Moscovici insists the argument was never about Ireland’s corporate tax rate of 10 and then 12.5 per cent, (compared to a current French rate of 31 per cent), but rather about Ireland’s practice of negotiating sweetheart deals with digital giants such as Apple.

“What we were asking was that the rate be effectively 12.5 per cent, and not less than 1 per cent.”

Moscovici says he was actually sympathetic to the argument he heard repeatedly from Irish finance ministers, which he summarises: “Thanks for the lecture, but we have no industry. We are a little country and our advantage is to be able to attract companies through the quality of our work force, our standard of living and our corporate tax rate. You have other advantages, and you want us to give up one of ours.”

‘Absolute obsession’

In the past, French officials accused the Irish of growing fat on EU funding, and then treacherously using low corporate tax to siphon off business from the rest of the bloc.

“It was an absolute obsession with them,” says an Irish official who negotiated with the French in the 2000s. “They thought a massively disproportionate share of foreign direct investment (FDI) was going to Ireland, that there was a gravitational pull toward Ireland, and that a significant amount of FDI would come to France if Ireland raised its corporate tax rate.”

More recently, there has been a suspicion on the part of some Irish officials that France would seek payback on the corporate tax front for its unflinching support for Ireland through the Brexit process. Moscovici denies there has been even an implicit link. “France would have supported Ireland in any case,” he says. “Implicit doesn’t carry much weight in politics, especially if the party concerned doesn’t hear or doesn’t want to hear.”

Franco-Irish relations have always been warm and friendly, but discord over corporate tax has been a constant irritant.

Moscovici travelled to Dublin in the mid-2010s to discuss in Dáil Éireann two EU directives he had pushed through on fiscal transparency. “I explained that the directives were not hostile to Ireland, and every single TD was against me. It was an extremely difficult session. There were a lot of questions about compensating Irish losses.



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