The joint letter from Chancellor Merkel and President Sarkozy to the President of the European Council has put Corporation Tax centre stage again in proposed actions to resolve the Euro area crisis. However, “Corporation Tax receipts are not as significant in the overall tax receipts for either France or Germany as they are for any other European Member State. It is far easier for countries to call for tax reform in an area which is of lesser significance to their overall national finances”, according to Chartered Accountants Ireland Director of Taxation, Brian Keegan.
From the most up-to-date statistics from the European Commission, France and Germany are respectively 26th and 27th in the league table of European Member States in terms of the amount of money they collect in Corporation tax, relative to the size of their economies.
Not only that, in France, Corporation Tax accounts for only 3% of total French tax receipts. In Germany, Corporation Tax accounts for 1.7% of German tax receipts. Here in Ireland, Corporation Tax makes up 8.8% of tax paid to the Exchequer. The European average is 7.8%.
The call for convergence and harmonisation of the corporate tax base by the French and German leaders needs to be understood in this context. “The debate for Ireland is not merely about the continued existence of our Corporation Tax rate of 12.5%, but also about the significance of the contribution of our corporate sector to the public finances. ” said Brian Keegan.
Ends. 8 December 2011
Notes for Editors
- The statistics cited above are taken from Taxation Trends in the European Union 2011, which is prepared by the Directorate-General for Taxation and Customs Union and Eurostat, the Statistical Office of the European Communities. The figures cited relate to 2009, the most recent year for which statistics are available.
- Although both Germany and France have higher rates of Corporation tax than Ireland, their tax systems mitigate the amounts collected through the use of allowances and reliefs. Comparable allowances and reliefs for companies are not available within the tax system of this country.
- A thought leadership piece, arguing that taxation and expenditure policies cannot be isolated in efforts to support the Euro, will be published by this Institute next week. Advance soft copies are available to any journalist from Brian Keegan, details below.
Reference – Brian Keegan, Chartered Accountants Ireland Director of Taxation – 087 2347 329,