Reliance on multinationals extends beyond corporation tax

New research has found that almost €1 out of every €5 collected in income tax, USC, PRSI, and VAT comes from foreign-owned firms in manufacturing, tech and financial services.

The research from the Irish Fiscal Advisory Council shows that Ireland's reliance on foreign-owned multinationals extends far beyond corporation tax.

Foreign-owned multinationals here pay the bulk of the country's corporation tax receipts and paid 87% of them last year.

But the budgetary watchdog said these companies also contribute to the Exchequer in other ways. As major employers, they provide high paying jobs, which result in substantial payroll taxes and social contributions.

Their spending on goods and services also generates sizeable VAT receipts, it added.

According to the Fiscal Council, the reliance on foreign-owned firms in three key sectors has also grown over time.

In 2017, these firms accounted for 11% of the total payroll taxes and VAT collected, but by 2024, this share had reached 18%.

It also said the scale of the state's growing reliance on these foreign-owned firms becomes even clearer when the corporation tax they pay is added to their VAT and payroll tax payments.

In 2017, foreign-owned multinationals directly accounted for 16% of all tax and PRSI receipts but by 2024, that figure had almost doubled to 28%.

This means that almost €3 in every €10 collected by the State in tax and PRSI now comes from foreign-owned multinationals operating in these three sectors.

Today's research also shows that workers in the top ten corporation taxpayers are paid well above average. In 2025, the average annual income was €119,000, more than three times greater than the average across all companies.

But Ifac economist Brian Cronin said that payroll taxes and VAT associated with foreign multinationals in Ireland as "likely to be less volatile" than the corporation tax they pay.

"Many of these firms have made substantial long-term investments in Ireland over several decades," he said.

"In the manufacturing sector, in particular, physical investments in plants would not be easily moved to another jurisdiction," he added.

He said that Ireland is often deeply embedded in their global business models, serving as a base for sales across the EU and other international markets.

The economist said that these firms are unlikely to significantly scale back activities in Ireland in the short term, the long-term downside risks are clear.

"Multinationals could restructure their activities and gradually reduce their footprint in Ireland. And artificial intelligence could displace some high-paying jobs," he cautioned.

One way to mitigate these risks is to continue to make Ireland an attractive location for investment, he advised.

"Ireland's infrastructure shortcomings are frequently cited as a major concern for large employers. Given known shortages in housing, water, energy and transport infrastructure, there is a clear case for public investment to help resolve these issues," he said.

"This could not only support existing employers but also improve Ireland’s ability to attract new investment," he added.