Every 4 July, Dublin pours out its affection for America. Speeches about “Ireland Inc” and the transatlantic bond are at their loudest, and the Irish Times columnist Cliff Taylor noted that on the eve of this year’s celebrations the latest tax figures arrived with perfect timing. Another strong year of corporate tax revenue was on its way, the vast bulk of it from giant US firms with operations in Ireland.
Taylor expected the exchequer to collect over €35 billion in corporation tax in 2026, a sum that would pay for nearly the whole health budget and the bulk of education. Receipts of every tax together had passed €50 billion by the end of June.
How the windfall happened
Rewind to 2015, when receipts were close to €7 billion. OECD reforms then required companies to pay tax where they had real operations, and the “double Irish” arrangement that parked profits in the Caribbean was dismantled. For many multinationals the answer was Ireland. Then a second OECD deal, signed by Ireland in 2021, raised the rate for the biggest companies, to 15 per cent from the old 12.5 per cent. The Council on Foreign Relations economist Brad Setser, writing about the run of events, called it a remarkable string of luck.
Submarines, and a spotlight
Setser notes that foreign multinationals declare close to €300 billion in annual profits within Ireland. The tax from the three largest payers, Apple, Microsoft and Eli Lilly, at around €16 billion a year, would buy four nuclear attack submarines, he calculated. TheJournal.ie reported that such receipts supply 23% of everything the government takes in. Speaking at the Kennedy Summer School in New Ross, he argued the money will become “a little hard for the US to ignore.”
Taylor warned that such figures bring danger. The Irish Times columnist described a country with no credible plan for the large bills ahead from investment, climate change and an ageing population. By September he was blunter: the tax edge from parking intellectual property in Ireland, a main driver of the bonanza, had disappeared. Donald Trump repeated in Ireland that America was being “fleeced.” France’s finance minister, Roland Lescure, told the paper that Ireland’s large revenues should be “redistributed” more fairly across Europe.
Central Bank research published that week put the contribution of multinational activity at 1.2 per cent a year to economic growth since 2022. More than tax is at stake.
Markets shrug, the watchdog does not
Investors are not worried. In October the Irish Times reported that short-term borrowing costs for the State had dipped below Germany’s, at just under 3.1 per cent for two-year money. Ten-year yields stood at 3.54 per cent against 3.37 per cent for Germany.
The Irish Fiscal Advisory Council takes a different view. “Markets are pricing today’s tax windfall, not tomorrow’s risks,” its chief economist, Eddie Casey, said. He went on: “If you strip out the corporation tax we can’t explain, the Government is heading for €20 billion deficits, with three firms paying nearly half of it and nobody knowing how long that will last.”
Sources
- Ireland's tax figures are so remarkable that the world is noticing, and this brings danger (The Irish Times)
- Ireland's corporate tax advantage is over. So what's the plan? (The Irish Times)
- International investors give Ireland the thumbs up, ignoring corporate tax warnings (The Irish Times)
- The Luck of the Irish (Council on Foreign Relations)
- Ex-Obama adviser warns it will be 'hard for White House to ignore' soaring Irish corporate tax receipts (TheJournal.ie)
