page_title: Leprechaun economics
section_title: Pre-2015 distortions
hierarchical_section_title: Leprechaun economics / Introduction of GNI* (2017) / Pre-2015 distortions
caption_attribution_description: English: OECD Data of GDP and GNP data showing how for most countries GDP and GNP data are almost identical, with Ireland being an exception
context_page_description: Leprechaun economics was the 26.3 per cent rise in Irish 2015 GDP, later revised to 34.4 per cent, in a 12 July 2016 publication by the Irish Central Statistics Office, restating 2015 Irish national accounts. The term was coined by Nobel Prize–winning economist Paul Krugman to mark the fact that the long-term distortion of Irish economic data by tax-driven accounting flows had reached a climax; by 2020, Krugman said the term was a feature of all tax havens.
  While the event that caused the artificial Irish GDP growth occurred in Q1 2015, the Irish CSO had to delay its GDP revision, and redact the release of its regular economic data in 2016–2017 to protect the source's identity, as required by Irish law. Only in Q1 2018 could economists confirm Apple as the source and that leprechaun economics was the largest ever base erosion and profit shifting action, as well as the largest hybrid–tax inversion of a U.S. corporation.
  Leprechaun economics marked the replacement of Ireland's prohibited BEPS tool, the Double Irish, with the more powerful Capital Allowances for Intangible Assets tool, or "Green Jersey".
context_section_description: From early academic research on tax havens by James R. Hines Jr. in 1994, Ireland has been noted as a tax haven (one of Hines' seven major havens).  Hines would go on to become the most-cited author in the research of tax havens, recording Ireland's rise to become the 3rd largest global tax haven in the Hines 2010 list.  As well as identifying and ranking tax havens, Hines, and others, including Dhammika Dharmapala, established that one of the main attributes of tax havens, is the artificial distortion of the haven's GDP from the BEPS accounting flows.  The highest GDP-per-capita countries, excluding oil and gas nations, are all tax havens.
  In 2010, as part of Ireland's ECB bailout, Eurostat began tracking the distortion of Ireland's national accounts by BEPS flows.  By 2011, Eurostat showed that Ireland's ratio of GNI to GDP, had fallen to 80% (i.e. Irish GDP was 125% of Irish GNI, or artificially inflated by 25%).  Only Luxembourg, who ranked 1st on Hines' 2010 list of global tax havens, was lower at 73% (i.e. Luxembourg GDP was 137% of Luxembourg GNI).  Eurostat's GNI/GDP table (see graphic) showed EU GDP is equal to EU GNI for almost every EU country, and for the aggregate EU–27 average. A 2015 Eurostat report showed that from 2010 to 2015, almost 23% of Ireland's GDP was now represented by untaxed multinational net royalty payments, thus implying that Irish GDP was now circa 130% of Irish GNI (e.g. artificially inflated by 30%).
caption: GNP as a % of GDP: Recreation of OECD data (1970 to 2013).[77]