Ireland to support French EU presidency on 15% corporate tax rate

KPMG tax partner says Paschal Donohoe may be able to limit effect on Irish businesses

Minister for Finance Paschal Donohoe. Photograph: Alan Betson

Minister for Finance Paschal Donohoe. Photograph: Alan Betson


Ireland will support the French EU presidency in seeking agreement on the directive on a 15 per cent minimum corporation tax rate in the first half of next year, the Department of Finance said yesterday.

It said this is with a view “to proposing legislation to bring this into Irish law in Finance Bill 2022.” That means that the new minimum rate could apply from 2023 to major multinational and domestic companies with turnover in excess of €750 million.

The Department said in a statement that “aspects of this legislative proposal will be considered in detail by officials and we look forward to engaging in the Council discussions on this draft legislation which will commence in early January.” The directive will require unanimous support among member states.


Cillein Barry, tax partner with KPMG, said he expects the new directive would only apply to a small number of domestic Irish companies.

“I would expect there are no more than a small number of Irish groups within these rules – those with revenue greater than €750 million – that have totally domestic business,” he said.

“While the EU directive is slightly broader, in reality I don’t expect it will have any additional impact beyond the OECD proposals because all Irish groups of this size will likely have a foreign operation.

“Irish groups, while they could be caught by this, their effective tax rate in Ireland could already be 15 per cent based on the calculations under these rules because you get benefit for employing people and owning tangible assets in the national jurisdiction. So they may have no further tax to pay because of the nature of the formula under these rules.”

Mr Barry added that Minister for Finance Paschal Donohoe may also have it within his power to limit the effect on Irish businesses.

“It’s not clear how Ireland will implement the change in tax rate announced by Minister Donohue in October,” he said. “Is it a 15 per cent headline rate or is it a 15 per cent effective tax rate?

“All the rules from the OECD and the EU are based on an effective tax rate and therefore we have the opportunity to mirror the implementation of these rules here in Ireland and therefore focus on an effective tax rate of 15 per cent as opposed to a headline rate, and therefore the impact on Irish businesses should be reduced.”


Andrew Quinn, a partner with Maples Group who specialises in tax, said the French presidency is expected to push to get the directive agreed quickly and before the French presidential election next April.

“The measures are extremely technical and still subject to change because the OECD has promised a public consultation in 2022,” he said. “Also, US involvement is critical, which is still not certain given objections raised this week by key US Democratic Senator, Joe Manchin. ”

While the OECD Is implementing the global minimum tax through a cooperative framework, the EU approach of a legally binding directive was different, he added.

“It would be good to wait therefore to see how all that settles down before the Directive is finalised and for the Directive to cover only those parts that are essential under European law so that businesses in the EU are in a similar position to their competitors outside the EU.”