Irish Tax Row Erupts as Web Summit Founder Turns Up the Heat

(Bloomberg) -- Paddy Cosgrave is opening a new front in his war on Ireland’s tax system.

Late last week, Cosgrave, one of the best-known figures on Europe’s technology scene, tweeted that he could show “how I and many of Ireland’s wealthiest people can legally reduce taxes on their personal wealth to close to zero.”

With that, the co-founder of the hugely successful Web Summit opened “chapter two” of his campaign to highlight what he sees as the injustice of Ireland’s tax system. It’s been a divisive crusade. On one hand, he’s drawn plaudits for shining a light on some opaque funds operating out of Dublin. On the other, even some who share his concerns about Ireland’s tax system are uneasy with his tactics.

Legitimate Concerns

In his opening salvo, Cosgrave, 36, financed a Facebook advertisement advising viewers on how to cut their tax bills by routing cash through Ireland. The advert carried many of the hallmarks of an official government campaign. Facebook pulled the Irish Tax Agency page, which promoted the ad, for breaking impersonation rules when it discovered who was behind it.

Irish Tax Row Erupts as Web Summit Founder Turns Up the Heat

The concerns raised by Paddy “are legitimate -- the corporate tax system badly needs reform,” said Jim Stewart, adjunct finance professor at Trinity College Dublin, who has long argued that Ireland displays characteristics of a corporate tax haven.

Yet Stewart questions Cosgrave’s tactics.

“Campaigning or advocacy should be transparent, in that who or what group are advocating on behalf of a particular issue should be known,” said Stewart. “It often is not transparent on political and tax issues. But I think in the public interest it should be.”

‘Civil Disobedience’

Cosgrave is unrepentant.

“In the long ranks of civil disobedience, this ranks low,” he said in an interview.

In Ireland, Cosgrave is a polarizing figure. He’s admired for co-founding the Web Summit, which drew figures like Elon Musk, Jack Dorsey and Bono to Dublin. That honeymoon with Ireland ended in a falling out with authorities over Dublin’s capacity to handle the event, prompting him to move it to Lisbon.

He’s been accused of having a grudge against Ireland, something he laughs off, pointing out he’s long-harbored concerns about the tax system, stretching back to his student days.

Cosgrave’s fire has focused on a set of tax structures, or funds vehicles, which he says allow foreign property funds to operate virtually tax-free in Ireland. Many of these operate out of the International Financial Services Center, on the banks of the River Liffey.

EU Pressure

He labels such structures “reputationally reckless.”

“Everywhere I go in the world, and people figure out I’m Irish, it’s rare that tax doesn’t come up as a dinner-table conversation, whether it’s German CEOs or French politicians,” Cosgrave said in an interview. “The mood music is changing.”

His campaign comes at a sensitive time for Ireland. The European Union is cracking down on efforts by global companies to limit their tax burdens. While Ireland has helped fend off an EU-wide digital tax for now, the government is appealing a finding that it gave Apple Inc. a sweetheart tax deal.

‘Spraying Bullets’

As Cosgrave’s campaign unfolded, he called a press conference in an alley beside local cafes, Nick’s Coffee. There, he agreed he was open to a perception of hypocrisy, given he had used U.S. tax-efficient structures, the Irish Times reported. Cosgrave said he’s “no saint,” the newspaper reported. On Tuesday, he declined to elaborate on this.

Aisling Donohue, partner with Andersen Tax in Dublin, says the issues Cosgrave raises are valid, but adds some of the structures Cosgrave highlights were closed or tweaked when authorities woke up to their unintended consequences. Others are offered elsewhere in the EU.

The IFSC “has a huge amount of issues around tax,” said Donohue. “Paddy is spraying bullets all over the place. Some in theory we could deal with. Some issues I don’t see how we can.”

These structures “definitely exist,” Cosgrave tweeted last week and suggested he had “set up” some to show how they might work. He declined to give any additional detail.

BritishFinance

Meanwhile, Irish authorities have also been fighting a rearguard action against a Wikipedia contributor called BritishFinance. Starting around St. Patrick’s Day last year, the contributor has made over 44,000 edits to Irish finance pages, according to IDA Ireland, which seeks to win overseas investment.

“They have gone to extraordinary lengths to create and link Ireland and its stakeholders to negative stories, particularly on economics, taxation and Brexit,” the IDA said.

Cosgrave said he has no links to BritishFinance, and calls any such suggestion “pretty wild.”

Still, he leaves little doubt he’s far from done. Who cares if he’s likable, he says in response to some of the criticism he’s drawn.

That’s “irrelevant,” he tweeted.

©2019 Bloomberg L.P.