Profits up at IFSC as corporate tax take reaches five-year high

Profitability at Ireland’s international financial services companies rose in 2015, as corporation tax revenues soared to a five-year high.

According to provisional figures from the Revenue Commissioners for 2015, companies that were formerly licensed under the International Financial Services Centre’s 10 per cent corporate regime contributed some €621.4 million in corporation tax in 2015, up by 12.3 per cent on 2014.

Based on a tax rate of 12.5 per cent, this would roughly correlate with profits of almost €5 billion among companies formerly part of the IFSC regime, which expired in 2005.

While substantially down from the peak of €1.1 billion reached in 2006, the figures were recalculated in 2011 and are up by 27 per cent on the low point reached in 2012.

Overall, the provisional figures from Revenue show that the broader financial and insurance sector paid €1.6 billion in corporation tax in 2015, up from €1 billion in 2014, as banks turned the corner and swapped losses for profits. For example, Bank of Ireland reported half-year profits of almost €725 million last year, while AIB made pre-tax profits of some €1.2 billion for the six months to June 30th 2015.

IFSC companies now account for about 38 per cent of all financial services corporation tax revenues, and 13.5 per cent of the €4.6 billion in total corporation tax revenues collected by the exchequer in 2015.

IFSC strategy

The boost in profitability for IFSC firms comes against a background of a new strategy for the sector. Last year, the Government launched IFS 2020 – a strategy with a target of creating a further 10,000 net new jobs by 2020. Already it’s making some impact; employment grew by 7.4 per cent to 38,056 in 2015 after some 2,600 jobs were created in the sector.

It also ushered in a new banner brand for the sector, “IFS Ireland” and another action plan for 2016, launched last month, includes promoting this new brand in order to unify efforts overseas to promote Irish financial services.

Tax take at Ireland's international financial services companies Year Corporation tax take

2015: €621.4 million

2014: €545 million

2013: €497 million

2012: €456 million

2010: €625 million

2009: €642 million

2006: €1.1 billion

Source: Revenue Commissioners