Irish tax receipts exceed predicted levels, so where is extra money coming from?

The Republic of Ireland's finance minister says the increased tax receipts area a reflection of a broad-based recovery and improved trading conditions

The news keeps getting better for Ireland's economic recovery with tax receipts far above their predicted levels, but where is the extra money coming from?

Official figures released this week suggest that the amount of tax collected by Irish exchequer this year will be 3bn euros more than expected.

The vast majority has come from a big spike in corporation tax receipts - that's the tax that companies pay on their profits.

Ireland of course has a famously low rate of corporation tax and the rate has not been touched, remaining at 12.5% throughout the crisis and the recovery.

What is going on is that some companies have made bigger profits and so have a bigger tax bill.

'Real recovery'

The Republic of Ireland's finance minister says this is a reflection of a broad-based recovery and improved trading conditions.

And there is no doubt that Ireland has staged a real recovery and is growing strongly. But it's not just as straight forward as that.

Ireland's economy was one of the hardest-hit by the eurozone's financial crisis

The University College Cork economist Seamus Coffey has been having a dig into the figures and points to a very large chunk of this extra corporation tax coming from just 10 big companies.

These companies are highly likely to be big American multi-nationals which have a tax presence in Ireland.

Mr Coffey thinks these big firms are likely to be reorganising their tax structures and activities ahead of possibly stricter international taxation rules.

So, simply put, it may be that these mega companies have decided to play nice and pay a bit more tax before they are forced to.

Optimism

The big question for Ireland's finance minister is if this means a sustainably higher corporation tax take on which future spending plans can be based.

The Irish tax authorities have said that they expect the surge will continue into next year at least.

The chair of the country's Fiscal Advisory Council, John McCale, has struck a customarily cautious note warning that there is "limited understanding" of what's going on with corporation tax.

The unexpected windfall means the country is likely to close its budget deficit earlier than the 2018 target date - maybe as early as next year.