Another swipe from Europe at Ireland’s tax pile, another forecast upgrade from the Department of Finance. Plus ça change.
As French finance minister Roland Lescure took aim at Ireland’s tax regime – suggesting the State was eating too much of Europe’s tax “cake” – the department signalled corporate tax receipts would exceed its current €35.3 billion projection and by “a wide margin”.
What that “wide margin” means has everyone guessing. The department marked up this year’s corporate tax forecast to €35.3 billion from the €34 billion forecast at the time of last year’s budget.
Corporate tax receipts are fast approaching income tax as the Government’s chief tax channel. Income tax is expected to generate just under €39 billion this year.
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What’s going on under the bonnet of corporate tax is difficult to assess, but we can perhaps make some educated guesses.
The August returns were better than expected with the business tax generating roughly €700 million more than the same month last year. Cumulatively, receipts were €17.8 billion by the end of August, up by €1.4 billion (8 per cent).
“August was a good month and it seems like that month plus early weeks of September is causing it,” an insider said.
June’s corporate tax receipts are usually a good indicator of the full year. That said, companies can base their tax payments on what they paid in 2025 as opposed to having to estimate 2026 profits half way through the year.
“However for the second preliminary tax payment in November, you have to base it on expected 2026 profits so it’s possible the department is sensing better 2026 numbers and hence higher tax in November,” the insider said.
This year will also see the first “top up” payments arising from the new global minimum rate of 15 per cent, agreed as part of an Organisation for Economic Co-operation and Development (OECD) agreement on international tax in 2021.
Those payments may be bigger than the department anticipated hence the upgrade. Either way, Ireland’s corporate tax cake just keeps getting bigger.
[ French minister wants Ireland to share its technology tax billionsOpens in new window ]
