Big chunk of exchequer’s income could 'vanish' if handful of US companies change their tax profile

A video grab from footage circulating on social media of protesters on the streets of Tehran. Economists warn that, in an already fraught geopolitical situation, events in the US, Iran, Venezuela, or Greenland could plunge the world into recession. Picture: UGC/AP

Continued over-reliance on corporate tax receipts from US multinationals remains one of the biggest threats to Ireland’s financial stability in 2026, leaving the country in “big trouble if it dries up”, economists have warned.

A sudden shift in the geopolitical scene outside the country could plunge Ireland into recession.

The situation in Venezuela, Donald Trump’s aggressive rhetoric around Greenland, and the combustible internal situation in Iran could all spell trouble for an economy beholden to corporation tax from US companies, they said.

An escalation in the simmering global volatility could pierce Ireland’s ability to maintain its growth, especially with thousands of hard-pressed households already having to absorb rising food, health, and other prices, they added.

Grant Thornton’s chief economist Andrew Webb described the State’s heavy reliance on corporation tax as “nerve-wracking”.

Grant Thornton’s chief economist Andrew Webb said Ireland is 'vulnerable' to economic shocks. File picture

He said that while most forecasts point to continued growth through 2026, Ireland is “vulnerable” to shocks.

Higher-for-longer interest rates, a turn in the global tech or pharma cycle, or “a wobble” in consumer confidence would all bite harder when households and firms are already under cost pressure, he said.

If even a handful of multinationals change their tax profile, a big chunk of the exchequer’s income can vanish quickly. 

"Windfall revenues have boosted Ireland’s coffers, but those receipts are highly concentrated and volatile.”

Institute of International and European Affairs chief economist Dan O’Brien said he was largely confident about the year ahead, but conceded: “Could things go wrong? Of course they could.

“The idea that you’re just going to grow forever, or at least not ever have a recession again, is just not what economic history tells us.

“There’s the possibility that if the US decides to do something specific towards Ireland or towards the pharmaceutical sector, that will affect Ireland disproportionately.

“There’s absolutely no question the Government has allowed itself to become addicted to corporation tax revenues. That is something that should never have happened.

“These are windfall revenues; that is absolutely clear. They may go on for one to five years for sure, but they won’t last forever and we’re not going to be an outlier on it forever.”

Ireland should have treated corporation tax the way that Norway treats its fossil-fuel tax intake, Mr O’Brien said, running up a much bigger sovereign wealth fund, and not being locked in major infrastructure spending commitments. He said: 

If that money dries up, we’re going to be in big trouble.

Revenue’s preliminary results showed the exchequer received €106bn in taxes and duties in 2025. Some €36.57bn came from income tax, with €34.66bn coming from corporation tax. US multinationals account for around three quarters of corporation tax, according to Irish Fiscal Advisory Council estimates.

Independent economist Jim Power, former chief economist at Friends First, told the Irish Examiner: “The biggest threat to Ireland is our massive concentration risk.

We are just so inordinately dependent on foreign direct investment for corporation tax receipts, for employment, and for general economic activity. That is the big challenge.

"And that’s where a bust in the economy would come from, not from a domestic overheating situation.”

Greenland could prove to be potentially sticky if Mr Trump dials up the rhetoric on taking over the Danish territory.

The US president has not backed down from his contention that the US wants Greenland to become US territory. 

He has not ruled out using military force if the US decides to plough ahead with the move that would jeopardise the relationship with his allies in Europe and Nato.

Mr O’Brien said: “We live in a very unstable world. If Europeans get into some sort of retaliatory situation with the US over Greenland, that would have an impact because Ireland is so plugged into the US economy.”