You have just described a race to the bottom fueled by a tragedy of the commons. The textbook solution is exactly what has been suggested: coordination among players so that the overall welfare is maximized.

Sure, if Ireland chooses to pass on this revenue it should be able to do so, but this should not stop France from taxing a Google that is doing business in France from an Ireland PO Box. The philosophy of the common market predates the global digital market and is no longer adequate.