€4bn of corporation tax receipts transferred to Reserve Fund

'There are future costs which we must be prepared for including the consequences of an ageing population, the digital transition and climate change.' Minister for Finance Michael McGrath

The government has transferred €4bn into the state's National Reserve Fund (NRF) from the country's surging corporation tax receipts.

The Minister for Finance Michael McGrath TD announced the transfer this evening, as a consequence of the Dáil’s approval of a motion brought by the previous Minister on Budget night in September.

It brings to €6bn the amount that has been transferred to the NRF and comes after the €2bn transfer made in 2022. The decision to replenish and further bolster the Fund following the withdrawal of €1.5bn from it in October 2020 towards the Government’s pandemic response. Its aim is to improve the resilience of the public finances and allow the State to deal with future crises.

The state has been repeatedly warned that surging corporation taxes from large multinationals posed a risk to the country's finances. Corporation tax receipts amounted to €22.6bn last year, nearly 50 per cent higher than a year earlier. For the first time ever, this is the second-largest source of tax revenue. 

The corporation tax receipts are further concentrated amongst a small number of large companies. It means €1 in every €8 collected by the State in tax is sourced from just 10 highly profitable firms. 

The approach of capitalising the reserve fund using these tax receipts is endorsed by the Department of Finance in its analysis entitled “De-Risking the Public Finances – Assessing Corporation Tax Receipts” published in September 2022. It is also supported by the Irish Fiscal Advisory Council and all other institutions that provide economic advice to Government.

"On Budget day, the Government committed to putting aside additional resources, from excess corporation tax receipts to prepare the public finances for future challenges," Minister McGrath said.

"While we have acted to deal with this immediate challenge, there are future costs which we must be prepared for including the consequences of an ageing population, the digital transition and climate change. Recent history has taught us that we must also be prepared for unforeseen challenges, which are becoming more frequent and increasingly impactful."