A new European Commission ploy to tap into the corporate sector profits collected in member states to replenish the EU’s beleaguered budget is causing unease in Dublin. The proposal would be likely to increase Ireland’s financial contribution to the EU by 50% if passed.
The impact of war in Ukraine is doing serious damage to Brussels’ financial calculations after the European Parliament approved €75 billion worth of additional funding last week to fill the fiscal deficit caused by the recent international turbulence.
While the EU has traditionally been funded through member state contributions, customs duties, and fines, Eurocrats are now looking for new revenue-raising powers such as the ability to tax corporate profits directly from Brussels.
According to reports, EU diplomats are already being briefed on the plans to tax the “gross operating surplus” of the corporate sector with the matter expected to be raised at the European Council this month.
This is detrimental to the Republic of Ireland which is disproportionately reliant on the revenue raised primarily through American multinationals to the tune of €22.6 billion per year. The Irish government is now regularly clashing with the EU over the regulation of Big Tech and alleged tax dodging by Apple earlier this year.
Brussels’ proposed formula for taxing corporations would require member states to collect an additional 0.5% off corporate profits to direct back into the EU’s coffers. This would increase Ireland’s annual contribution to the union by €1.5 billion up from the current €2.5 billion.
A spokeswoman for the Irish Department of Finances described the EU’s plans as a form of an “additional national contribution” in correspondence with The European Conservative,—regardless of Brussels’s assertion to the contrary— adding that it would burden Ireland more than most member states and contravene earlier EU commitments.
It is highly unlikely that the new tax plans will be ratified before next year’s European Parliamentary elections with growing federalisation within the EU posing an increased existential question for Ireland’s economy.
The Republic formally ditched some of its previous corporate tax arrangements in 2021 under heavy international pressure from the European Commission and OECD. An estimated 1,000 multinational companies reside in Ireland, including Google, Apple, Meta, and TikTok.
The Irish government will outline its annual budget this week as the country’s ruling green and centrist coalition ponders what to do with a €10 billion surplus driven primarily by bloated corporate tax receipts.
