THE FRENCH government has opened the door to a compromise in the stand-off over Ireland’s corporate tax rate, saying it will take into account Ireland’s “singular situation” in deciding its stance.

Amid signs that Paris and Berlin are waiting for a gesture from Ireland, government spokesman François Baroin said no decision had been taken on whether to maintain French opposition to Ireland’s request for a reduction in the interest rate on its bailout loans.

“The discussions are continuing. We’re in favour of harmonising European taxes eventually, while taking into account, naturally, the singular situation in which a number of countries, including Ireland, find themselves,” Mr Baroin, who is also the budget minister, said during a briefing in Paris.

Pressed on whether France wanted Ireland to meet any conditions before securing a lower interest rate, Mr Baroin said: “For now, we’re discussing it.” By hinting at some flexibility on the French side, he signalled there may still be room for a deal that would see Ireland retain its corporate tax rate while perhaps making gestures elsewhere.

French officials say talks will continue up until the next meeting of EU finance ministers and the European Council meeting on June 23rd and 24th.

Mr Baroin’s remarks appear at odds with the pessimistic tone from Dublin about an alleged hardening of the French position. Earlier this week, Taoiseach Enda Kenny said Ireland was now seeking a smaller reduction in the interest rate than the 1 per cent originally sought. This followed a warning from Minister for Finance Michael Noonan that he would “not be waltzed around by any member state” of the EU to increase corporate tax. German officials say they are puzzled by these remarks. “People are barking at something that isn’t there,” said one German government official, saying Berlin is waiting for Dublin to present an alternative to raising corporate tax. “Other things might work if pertinent to solving the specific problem Ireland has. Something on the fiscal side, something on the structural side to boost growth, save money or solve the bank problem.”

Germany has already indicated its readiness to step back from the full corporate tax revolution of a common consolidated corporate tax base (CCCTB) in favour of a more modest compromise.

Berlin’s enthusiasm for the theoretical benefits of CCCTB has always been tinged with the nagging doubt that, in EU practice, it would ever see the light of day. Its interest in the “big bang” ended when, a month ago, the finance ministry warned the full-blown CCCTB system carried with it a “risk of considerable, sustained risk of tax revenue shortfall”.

Now German officials say they back a “CCTB” solution, dropping the “consolidated” aspect in favour of a single EU tax rule book to assist companies reduce compliance costs.

“We are sceptical regarding the complete project of common consolidated corporate tax base,” said Martin Kotthaus, finance ministry spokesman, describing the project as “like flying to the moon and then immediately want to continue to Mars”.

“We would be satisfied with a flight to the moon – as in, if we could achieve a common [tax] base,” he said.

Irish tax experts have welcomed the German position as unexpectedly useful for Ireland’s interests.

“For once the interests of Ireland and Germany on corporate taxation are fully aligned and for exactly the same reason, said Feargal O’Rourke, head of tax and legal services at Price Waterhouse Coopers.

“The bonus for Ireland is that it can now stand back and let Germany bring down the proposal in Brussels without having to lead the charge.”