Paschal Donohoe: 'No reason' to change tax receipt forecasts despite trade war escalation 

Government is sticking to its Budget 2025 forecasts as the first impact of the Trump tariffs will be felt in taxes relating to consumption

Public expenditure minister Jack Chambers and finance minister Paschal Donohoe. Ireland's exchequer surplus grew 4% to €331m during March as higher Vat returns offset a drop in income tax receipts. It brings the quarterly surplus to €4.1bn. Picture: Sam Boal/Collins

The Department of Finance sees no reason to change its forecast on the amount of tax it expects to take in this year despite the US imposing tariffs on EU goods and upending international trading arrangements, finance minister Paschal Donohoe has said.

In its Budget 2025 documents, the Government forecasted revenue of €110bn during 2025 comprising €37.5bn in income tax, €34.25bn in corporation tax, and €22.5bn in Vat.

Mr Donohoe’s comments come as the latest exchequer returns show the Government recorded a surplus of €331m during March, a 4% increase compared to last year, as higher Vat returns offset a drop in income tax receipts.

During March, the Government took in just over €3bn in Vat, an increase of €188m, while income tax receipts fell by €23m to €2.56bn.

Corporation tax increased by €88m year-on-year to just under €1.94bn.

The continued positive exchequer returns come as the global trade environment was upended on Wednesday night when US president Donald Trump announced tariffs on countries around the world including a 20% tariff on EU member nations.

The EU Commission president Ursula von der Leyen has said that they are preparing further countermeasures against the US tariffs.

Ireland, as a small open economy that relies on trade and is the European home for US multinationals, is significantly exposed to a trade war between the US and EU. It could have a significant impact on corporation taxes and foreign direct investment as well as increasing prices for consumers.

Speaking following the publication of the returns, Mr Donohoe said tariffs from the US, and retaliatory tariffs from the EU, will increase the cost of living as well as the cost of doing business.

When asked when the impacts of tariffs will start to be seen in tax receipts, Mr Donohoe said it will depend on whether the tariffs are permanent and whether some can be negotiated down or removed. He said: 

It is more likely that we would see the impact being felt first on taxes that relate to consumption, because of the effect of uncertainty on how people might spend and how businesses may indeed also invest.

Mr Donohoe added that the tariffs could impact payroll taxes in the medium term while the impact on corporation taxes depends on what happens in the global economy and whether there is any engagement with the US.

“I do want to emphasise at this point in the year we have not seen any of those signs. We certainly have no reason at the moment now, to change our forecast regarding how much tax we will collect,” he said.

Mr Donohoe said it is the Government’s view that the EU should negotiate with the US to “get to a settlement on this that will be less harmful” than the current situation.

During the first three months of the year, the exchequer recorded a surplus of €4.1bn — compared to the €300m surplus recorded during the same period in 2024.

However, that surplus drops to around €900m if the money the Government received from the Apple tax case ruling in September is excluded.

Income tax receipts of €8.2bn in the quarter were up by €289m, while revenue from corporation tax stood at just over €3bn, up €607m year-on-year. Vat receipts in the first quarter of the year stood at just over €7.6bn — up by €487m.

The total amount collected in excise duties came to €1.5bn while stamp duty receipts rose to €437m.

Total expenditure during the first three months of the year stood at €27.2bn.