What is Irexit

Irexit is a term that refers to Ireland's hypothetical exit from the European Union. It is based on the term "Brexit," which refers to the UK's decision to leave the EU in a 2016 referendum; unlike Britain, though, Ireland has taken no concrete steps towards leaving the bloc. A vote to do so seems unlikely, since according to a December 2016 poll conducted by Red C, 80% of Irish citizens would vote to stay in the EU.

Irexit is still used in the press, however, due to the remote possibility that an ongoing dispute over Ireland's corporate tax regime would lead it to consider abandoning the EU.


Irexit follows on the heels of Brexit. Britain's decision to leave the European Union, also known as Brexit​, a process due to be completed by April 2019 but which may take longer, put significant economic and political pressure on Ireland. Britain bought $18.9 billion worth of Irish exports in 2015, 12% of the total. While that share is dwarfed by exports to the U.S. and remaining EU countries, the imposition of customs barriers along the border with Northern Ireland could significantly dent Ireland's economy. 

Trade is not all that is at stake along the U.K.-Ireland border, however; for much of the 20th century, from Ireland's independence from Britain in 1921 to the Good Friday Agreement in 1998, sectarian violence plagued Northern Ireland. The most intense fighting, which began in the late 1960s, was known as "The Troubles." For decades, the border was marked by military checkpoints.

Following the 1998 treaty, the border is nearly invisible (the speed limit signs switch from miles to kilometers), but tensions remain. The terms of an eventual Brexit agreement could potentially aggravate these tensions by reimposing border controls. Few have put forward Irexit as a solution to this dilemma, however.

Tax Disputes

Irexit is usually mentioned in the context of Ireland's low corporate tax regime, a policy that has contributed to the country's rapid economic growth. In 1970, Ireland's GDP per capita lagged behind Britain's and was just over half the U.S.'s. A streak of rapid growth in the 1990s and early 2000s saw the "Celtic Tiger" outstrip both.

EU officials have begun to lose patience with Ireland's tax policies, however, pointedly demanding in August 2016 that Apple Inc. (AAPL​) pay Ireland €13 billion in back taxes for the period from 2003 to 2014. According to the European Commission, Apple's effective tax rate on European profits was just 0.005% in 2014, due to a sweetheart arrangement with Dublin that the EU has called illegal state aid. Ireland's corporate tax rate is 12.5%. (See also, Double Irish With a Dutch Sandwich.)

Ireland, which has attracted multinationals using such arrangements, did not want the tax money and appealed to the European Commission. The appeal passed the Dáil, Ireland's parliament, by 93 votes to 36. The country's largest parties, Fine Gael and Fianna Fáil, supported it; the third-largest, Sinn Féin, was opposed. Cross-party backing for the current corporate tax regime shows how tensions between Ireland and the EU over tax policy could escalate, though Irexit remains unlikely.