“Drop in exchequer surplus is due to transfers to investment funds, a positive strategic move from Government”, says Daryl Hanberry, Head of Tax & Legal at Deloitte Ireland.

While there appears to be a significant drop in the exchequer surplus, excluding receipts from the Court of Justice of the European Union, it is all due to the transfers to the investment funds. It is therefore not really a deficit but shows investments are being made for the future which is a positive strategic move from the Government.

In the last exchequer return before Budget, corporation tax continues to contribute significantly to Ireland’s exchequer returns. €1.8 billion was collected in September, which brings the total amount of corporation tax collected three-quarters of the way into 2025 to €18.2 billion. This is nearly double the Budget package, showing the incredible strength of Ireland’s corporation tax position. 

September is also a month for VAT receipts, which were up by €160 million on September 2024, reflecting buoyant consumer confidence is continuing.

It appears that Budget negotiations are coming down to the wire and the high level of corporation tax collected is a timely reminder that corporation tax receipts cannot be taken for granted.

They must be invested wisely in key areas such as infrastructure, housing, businesses and entrepreneurs, digitalisation and sustainability to convert a volatile, concentrated windfall into durable competitiveness and broad-based prosperity that balances fiscal responsibility. Investing in these areas will convert cyclical revenues into structural growth, protect living standards, and will keep Ireland an agile, high-value location for global and home-grown firms, while strengthening public finances for future generations.

Today we saw significant volatility in corporate tax receipts and with the Government’s Budget a little over a month away, this should be treated as a cautionary note and encourage a focus on the future in Budget 2026.

Corporation tax receipts to the end of August are €177 million or just over 1% ahead of the same period in 2024. The monthly comparison is down €1.6 billion but August 2024 was an exceptional month due to a technical timing factor. The August 2025 receipts (€2.1 billion) are significantly ahead of the equivalent receipts in 2023 (€1.8 billion) which was a more normalised period. August is not a key month for corporation tax month returns, and whether there is a levelling of corporation tax receipts remains to be seen. September will give a clearer picture. 

Despite the EU and US agreeing a trade framework, Ireland’s economy is still exposed to global shifts in trade and geopolitics. As a result, Budget 2026 is generation defining and there will be an impetus to ensure we are using our existing resources to future-proof our economy.

It’s difficult to say for certain if the corporation tax receipts reflect an early tariffs impact as the exchequer statements don’t break down the corporation tax figures.

Income tax, VAT and capital receipts are continuing to be strong and are ahead of 2024 figures. The income tax receipts in August were 10.6% ahead of the same period last year which is a very good sign of a strong labour market.

Capital taxes, while relatively smaller, are performing exceptionally ahead of the prior year which does indicate increased economic activity.

Budget Day is a little over a month away, and this time is essential for careful planning of a Budget that must be strategic and targeted.

In a month where corporate tax receipts typically make up a small proportion of overall receipts, a high-level of corporation tax was collected this month. I won’t be the first or last person to say this, but we must use this capital to invest and insulate from challenges we face as a country. It’s why it’s welcome to see that spending on capital infrastructure is up by 21% compared to last year.

It’s more common to focus on VAT in July and it is still important as it’s a bell-weather of consumer confidence. All things being equal, higher VAT receipts tend to reflect more money being spent in the economy at a particular time and that’s what we’re seeing today.

VAT receipts account for 3.3 billion in July, and €14.85 billion in the year to date (€684 million or 4.8%  more than the same period last year). This continued rise is a positive sign of resilience in consumer spending despite an uncertain trading environment. It is also supported by income tax receipts rising and corporation tax remaining high.

VAT will likely feature prominently in Budget conversations as the hospitality sector look to confirm the rate cut for their industry to 9%. The Government’s focus on fiscal cautiousness is commendable and it’s worth noting that a cut in the rate would cost up to €1 billion, or up to two-thirds of the overall €1.5 billion Budget 2026 tax package. The latest Deloitte insolvency data also highlights that due to a range of challenges facing the sector from high energy costs to issues sourcing staff, that a VAT rate cut would likely make little difference to insolvency rates in the hospitality sector.

Capital taxes are also performing strongly both in July and year-to-date, which is a positive sign that suggests an increased level of activity in the economy.

At the end of July, the EU and US announced a framework of a trade agreement which will provide some certainty for planning but at the cost of 15% tariffs, which will have implications for the Budget. We also know that the Summer Economic Statement, the blueprint for the Budget, came with the caveat that it would need to be re-assessed in the event of an increase in tariffs above the baseline 10%. With recent commentary from the US suggesting a 15% tariff rate for pharmaceuticals may not be locked in, Ireland may not have the certainty it would like to frame Budget 2026. In a world spinning fast, a week is a long time in both politics and economics. 

The total package for Budget 2026 has been confirmed as €9.4 billion with the tax package in Budget 2026 rising to €1.5 billion, up from €1.4 billion last year. This signals continued fiscal support despite global uncertainty and, while welcome, it lands in a context of significant structural risks.

Ireland’s tax base remains highly concentrated. Just three taxes, income tax (36%), corporation tax (29%), and VAT (23%), account for around 90% of total revenues last year. Critically, 84% of corporation tax receipts come from foreign-owned multinationals, and over half is paid by just ten companies. This level of concentration risks leaving the public finances exposed.

As global trade becomes more fragmented, the priority must be to broaden and future-proof the tax system. ensuring it remains resilient in the face of shifting economic value and rising fiscal pressures. It is encouraging to see the government leaning into structural planning, capitalising long-term savings vehicles like the Future Ireland Fund (FIF) and the Infrastructure, Climate and Nature Fund (ICNF) while committing to headline budgetary surpluses.

But the key question remains, is the current tax framework broad and future-focused enough to keep pace with a world where digitalisation, AI adoption, decarbonisation and demographic change are fundamentally reshaping the nature of economic value?

The proposed €9.4 billion budgetary package for 2026, €1.5 billion of such earmarked for the tax package, is rightly framed around investment rather than consumption, a smart move in a world of increased economic fragmentation. There were no details of what might be contained in the tax package but while last year’s summer economic statement contained a reference to helping shield workers from higher taxation, no such reference was made this year. It is also worth noting that if, for example, the VAT rate for hospitality was reduced to 9% as previously indicated, that would constitute half of the available Budget 2026 tax package.

Global protectionism is the new reality, and tax policy must now serve as strategic infrastructure, not just revenue collection. With over half of corporate tax coming from just 10 firms, resilience must become the new cornerstone of fiscal planning and a focus must be placed on Domestic Direct Investment to broaden our tax base.

We welcome the prioritisation of competitiveness in the Government’s Summer Economic Statement 2025. Managing risks and investing in infrastructure now matter more than ever.

Overall, tax receipts were very positive in June, including income tax and indirect tax. After corporation tax receipts fell by 30.2% in May, June’s corporation tax receipts, with a 25% increase, show this was a once-off, rather than a trend.

€7.4 billion of corporation tax receipts were collected in June, up by €1.5 billion compared to June last year which is a 25% increase and in line with IFAC’s predictions last month. Based on past trends, good June receipts suggests we'll see positive receipts in November and overall for 2025.

While this is good news, with just days to go before 9 July, the EU-US trade deadline, it looks likely that a 10% tariff will remain in place, a reality that may impact our corporation tax receipts in future years.

Today’s figures are more than just a month’s worth of receipts, it’s an early signal of how resilient our biggest taxpayers are in an uncertain global climate and a timely reminder of just how exposed Ireland is to shifts far beyond our shores.

This is exactly why we need to double down on both foreign direct investment and domestic drivers of innovation. To insulate Ireland from global shocks, the upcoming Budget must back our entrepreneurs and strengthen the resilience of indigenous Irish businesses.

Ireland’s tax receipts for May are a reminder of why we need to discuss the upcoming Government's Budget 2026 now. It may seem like a while away, but with so much global uncertainty and change, this Budget may be one of the most important ones we've ever experienced.  

What we can and should focus on in Ireland is how we use these so-called windfall taxes to insulate against stormy conditions and to power bold decisions. In that regard, while it is slightly concerning to see the rate of growth in current expenditure outstripping the growth rate of underlying tax receipts, the significant increase in capital expenditure of almost 30% is to be welcomed. We have consistently stated that these receipts need to be invested strategically in Ireland’s infrastructure and to grow Domestic Direct Investment. 

Tax receipts in May also give us an insight into consumer spending, and the increase in VAT is good news. This reflects continued strong levels of employment and the fact that consumers are continuing to spend. We can’t take this for granted, and we need to invest further for our growing population.   

Tax returns are also one of the indicators we can use to assess how businesses have been impacted by tariffs. While it’s still early days, and May’s receipts are not as relevant in this regard, next month’s corporation tax receipts will be important, as it will indicate how strong the corporate tax receipts will be for 2025 and we may begin to see some of the impact of tariffs.  

Last year's Budget wisely invested in two long-term funds, and we need to see that level of ambition again this year. Our strong tax receipts can't be used for once-off measures or for business as usual. 

Now is the time to invest, now is the time to make bold decisions.