Tuesday, January 9, 2024

Ireland’s growing population of young adults

Using the results of Census 2022, the CSO estimated that Ireland’s population in April 2023 of young adults aged 25 to 34 was 645,000.  If we go back five years to 2018, using Census 2016 as the benchmark, the CSO estimate that the population then of young adults aged 20 to 29 (the same cohort) was 575,000. 

Between 2018 and 2023 the population of this cohort grew by 60,000, or a little over 10 per cent.

Using the CSO’s estimates of the population by single year of age we can get the population of this group back to 1998 (when the youngest, now 25, would have been born).  After 1998, migration is the main driver of changes in the population of this cohort.

Population of Cohort Aged 25 to 34 in 2023 1998-2023

We can see that from 1998, the population of the cohort increased, likely as the parents of children moved to Ireland with them.  There was then a fall after the 2008 crash.  For the last ten years the size of the group has been increasing but this time, because the group is older, it is likely due to the autonomous decisions of young adults in their twenties.

We can see this pattern if we look at the estimated annual change in the population of this cohort.

Population of Cohort Aged 25 to 34 in 2023 Annual Change 1998-2023

In the years immediately preceding the pandemic, the size of this group was growing by an average of 10,000 per year.  Since then there has been volatility in the series due to COVID and, more recently, the war in Ukraine.

Of course, these changes are the net outcome of inward and outward migration.  We don’t have published estimates of migration by single year of age but the CSO do provide migration flows by age group.  Here is what they show for people aged 15 to 24 and for those aged 25 to 44.

Migration Flows of Population Aged 15-24 1987-2023

Migration Flows of Population Aged 25-44 1987-2023

In both cases, we that the estimated net flows in the past ten years have generally been positive.  Over the period since 1987 there is, though, a noticeable change in the age profile of migration.

In the late 80s and early 90s, migration, which was mainly emigration, was larger in the younger age category.  In 1989, negative net migration of 15 to 24 year olds was more than twice as large as that of 25 to 44 year olds.  By the turn of the millennium there was very little emigration of 25 to 44 years olds, while immigration of this group had become much stronger.

In the last 15 years, migration flows – both directions –  in the 25 to 44 age group have been larger than those in the 15 to 24 age group.  In the five years, pre-Covid, net migration of 25 to 44 year olds averaged +20,000 a year.  The impact of Covid and the war in Ukraine make identifying the underlying trends for the last couple of years difficult.

To conclude here are two additional snapshots of Irish migration flows:

  1. Migration flows of Irish citizens (available from 2006)
  2. Migration flows with Australia (available from 2008)

Migration Flows of Irish Citizens 2006-2023

Migration Flows with Australia 2008-2023

The estimated net migration of Irish citizens was positive from 2017 to 2021 and was negative in each of the last two years: –2.200 in 2022 and –900 in 2023.  And of the past eight years, Ireland has had one year (2022, -800) of negative net migration with Australia.

Finally, we use the Census results to assess how Ireland’s population of young adults has changed in recent years.  From Census 2016 we have the population by nationality for the 20 to 29 age group.  We roll that forward six years for Census 2022 and get the population by citizenship for the 26 to 35 age group.

Population of Young Adults by Citizenship 2016 and 2022

There was a 76,500 increase in this cohort in the inter-censal period.  Census 2016 recorded 554,000 people aged 20 to 29, and six years later, in Census 2022, there was 630,500 people aged 26 to 35

By country, the most significant change is for India, which shows an increase of 19,000 over the period.  No other country had a five-figure increase. The next largest increases were Brazil, Romania and Italy.  There were modest declines for Lithuania and the UK, with Poland showing the largest decline.

Over the period we can see that the number for Ireland increased slightly over the period – unsurprising as these are the benchmark for the estimated migration flows shown above.

Tuesday, January 2, 2024

Just how expensive has housing become?

Nominal House Prices

Back in October, the CSO produced a publication to mark 50 years of Ireland and the EU.  Included in this was a series of annual average house prices from 1970 to 2019.  The values in the table are charted below and they show the average annual house price rising from €6,700 in 1970 (when converted to euro) to €295,700 in 2019.

House Prices Nominal 1970-2023 CSO

The chart takes all the values as published by the CSO with the additional values for 2020 to 2022 taken from the CSO’s databank. The series closely follows other nominal house price series for Ireland (such as Fred’s) except for 2010 to 2015, with the chart above understating the post-2008 fall in house prices (which continued to 2012) shown by other indices – including the CSO’s own Residential Property Price Index

The average for 2023 is likely to be around €370,000 and this estimated value is also shown above.  Here are the CSO’s notes on the original table:

Note that 1970 – 2009 data is based on mortgage data whereas the 2010 – 2019 CSO data is based on Stamp Duty returns from Revenue. Figures for 1970 to 1977 are new prices only while all others are for new and second-hand properties in Euro or Euro equivalent.

The methodological change in 2010 and the low level of transactions, impacting the composition, likely explain the larger nominal fall of around 60 per cent) shown elsewhere.  We will proceed with the values as given in the table.  Our primary interest is a comparison of current prices to what they were in the 1970s, 80s and 90s rather than to what they were in the depths of the post-2008 recession.

In nominal terms, house prices are far higher than they were in the 1970s, 80s and 90s.  In simple nominal terms, at €370,000 houses prices now are almost ten times higher than the average price from 1970 to 1995 (€38,700).

Indeed, the latest estimates are a record high for the series exceeding the previous peak of €350,000 from 2007.  The chart also shows that in the last 50 years, Ireland has had just one period of nominal house price declines: 2008 to 2012.

But these numbers are of their time. Just how does €6,700 from 1970 compare to €370,000 in 2023?  The price of everything has changed in the interim. Just how can we tell which year had more expensive housing?

Inflation-Adjusted House Prices

We can try to put the prices in terms of other products. The CSO collect national average prices for a range of items. Since 1983, they have been publishing a national average prices for 567ml of draught stout in a licensed premises.  Using this, and some additional sources to extend the series back to 1970, we can put the average house price in any given year in terms of the number of pints that could be bought that year for the same sum.

In 1970, the average price of a pint was 21c and with an average house price of €6,700 the equivalent price of a house was 31,900 pints.  For 2023, the average price of a pint is put at €5.48 and our estimated average house price of €370,000 puts 2023 house prices as equivalent to 67,500 pints of stout.  Pint glasses mightn’t make good lenses but using them points to average house prices being about twice as high than they were 25 to 50 years years ago and not the ten times higher as the unadjusted nominal house prices suggest.

House Prices Pints of Stout Equivalent 1970-2023 CSO

Using pints, we can see that houses were at their most expensive in 2006/7 – equivalent to over 90,000 pints.  And the pints equivalent for 2023 is pretty much where it was back in 2002.  Nominal house prices are well up on where they were in 2002 (€213,000 versus €370,000) but so too is the price of a pint (€3.21 versus €5.48).  The current level is about twice as high as the 34,700 it averaged from 1970 to 1995.

Now maybe recent house prices are flattered by putting them in pints equivalent – due maybe to the impact of Excise increases. The CSO’s 50 years in the EU publication also gives us some other prices to use.

For example, a white sliced pan was 15c in 1973 and is €1.66 now.  Taking the same approach as above shows that average house prices have gone from the equivalent of 60,100 sliced pans in 1973 to an estimated 222,400 now.

House Prices Sliced Pan Equivalent 1970-2023 CSO

Perhaps for reasons for interest, it is harder to track down the full series for the national average price of a sliced pan.  The pattern is as before and again we see that the peak level was seen back in 2006 – when the average house price was equivalent to over 300,000 sliced pans.

Real House Prices

While messing about with pints and sliced pans is useful for showing that nominal prices now are not the same thing are nominal prices from the past, it is whimsical at best.  A much better approach would be to take a much broader set of prices such as the Consumer Price Index (CPI).

Figures from the CSO, show that prices as measured by the CPI in 2023 are around 1,420 per cent higher than they were in 1970.  This means that spending €6,700 in 1970 (the nominal average house price) would be equivalent to spending 6,700 x 15.2 =101,900 if faced with the 2023 prices in the CPI.

We can use this to convert the nominal house price series into real prices using a constant price deflator.  We can choose any year as the base. We will use 2023, thus the 2023 nominal and real figures are the same.  The real figures for all other years are found by determining what the nominal house price for that year would be equivalent to if faced with the 2023 prices in the CPI.

House Prices Real CPI Deflated 1970-2023 CSO

The general pattern is roughly in line with what we got using pints and sliced pans.  As expected using pints flatters current house prices: the price of a pint is around 26 times higher than it was in 1970 compared to a 15 times increase for the CPI.  Sliced pans did the opposite as their price is around 11 times higher.

Anyway, using the CPI-deflated house prices we can see that Ireland had two sustained periods of real house price declines: the first from 1978 through to 1986 and the second from 2007 to 2012.  Again 2006/07 shows as the peak.

Thinking in constant price terms isn’t always that intuitive and the numbers can be a bit messy.  A better way to present real house prices is as an index: select a base year – typically set to 100 – and get values for all other years relative to that.

House Prices Real Index CPI Deflated 1970-2023 CSO

The shape of the charts are exactly the same.  There was an extraordinary run-up in real houses from 1996 to 2006 when they more than trebled.  When CPI adjusted, house prices in Ireland now are just over three times higher than what they averaged from 1970 to 1995.  Why is this?

There are lots of reasons.  One reason is that buying a capital good such as housing is not the same as buying consumption goods.  Income may play a different role in the demand for housing compared to the demand for individual goods for consumption.

House Price to Income Ratios

To see whether house prices have become more expensive we can check how they have changed relative to income.  Again, we can turn to some long-term series provided by the CSO.  One such  is the historical series published for the Average Industrial Wage (AIW) which goes all the way back to 1938. 

We just need it from 1970 and this shows that the AIW now (€856 per week) is 22 times higher than what it was in 1970 (€23.20 per week).  One simple thing we can do is divide the average nominal house price for each year by the annual Average Industrial Wage for that year. This gives:

House Prices Real AIW Equivalents 1970-2023 CSO

In 1970, average house prices were around 5.5 times the annual average industrial wage.  By the depths of the recession of the 1980s this has fallen to 3.6 in 1987.  It remained around four up to 1994 and then exploded, with average house prices reaching almost 11 times the annual industrial wage in 2006 and 2007.  It has remained on a rollercoaster and recent figures put average house prices at over eight times the AIW.

  • 1970: €23.28 x 52 = €1,210           ;            €6,700 / €1,210 = 5.5
  • 1990: €286 x 52 = €14,866           ;            €63,900 / €14,866 = 4.3
  • 2006: €601 x 52 = €31,262           ;            €339,500 / €31,262 = 10.9
  • 2023: €856 x 52 = €44,512           ;             €370,000 / €44,512 = 8.3

Relative to consumer prices, we saw that house prices in 2023 were around three times higher than what they averaged from 1970 to 1995.  Relative to the average industrial wage, we see that house prices are around two times higher than what they averaged over the same period.

Before moving away from income we note two things:

  1. The share of workers earning the AIW has declined
  2. Housing is bought by households, not earners.

The AIW is useful because we have a long-run series for it.  However, the weekly earnings of “production, transport, craft and other manual workers” in industry sectors (NACE B to E) may not be as representative of earnings as they previously were.  Workers in many services sectors will earn less than the AIW.  The share of workers earning more may have also have increased.

We also note that recent decades have seen a significant shift to more dual-income households.  Thus a measure of household income may be more appropriate than the individual-level earnings data.

To get household income we turn to the national accounts. Definitions matter but here we will just note that we are using Gross Household Disposable Income. In national accounts, ‘gross’  means it is before depreciation and ‘disposable’ means after taxes and transfers.  Data from 1995 on is available from the CSO and we will use the nominal growth rates in Stuart (2017) to extend the series back to 1970.  We also need the number of households and these are taken from the Census and interpolated for the intra-Census years.  This gives us figures for disposable income per household.

For 2022, CSO data puts gross household disposable income at €138.2 billion.  With the Census reporting 1,841,152 households for the same year that gives us a figure of just over €75,000 for disposable income per household.  With an average house price of €357,000 in 2022, the ratio of house prices to household disposable income is €357,000 / €75,050 = 4.76.

We can do this for all years since 1970 to get the following:

House Prices To Household Income 1970-2023 CSO

Again, we see the peak was reached in 2006, when average house prices were almost six times average household disposable income.  It is likely to come in around 4.6 times for 2023, which is around where it was in 2002.

For our long-term comparison, this ratio of price to income averaged 2.6 from 1970 to 1995.  The means the ratio is now 1.75 times than what it was over that period.  The increase is lower than what was shown using individual earnings but not hugely so.

Mortgages: Rates, Repayments and Deposits

Before concluding that housing is far more expensive than it was 25 years ago we must look at how most households pay for housing: mortgages.  This introduces interest rates which are hugely important for determining mortgage payments.  Consider two 25-year mortgages for €100,000 which only differ by the interest rate charged. Let the first have a rate of 4 per cent and the second a rate of 12 per cent. What will be monthly repayments be?

  • €100,000 25-year mortgage at 4% interest = €527.84
  • €100,000 25-year mortgage at 12% interest = €1,053.22

The difference in the interest rate leads to a monthly mortgage payment that is almost twice as high.  Interest rates matter!  And in Ireland mortgage interest rates have varied a lot.

The CSO have long-term data on average mortgage interest rates – see Table 10 of this 2003 publication marking 30 years of Ireland’s EU membership.  Data for recent years are taken from the interest rate statistics of the Central Bank of Ireland.  They give the following series of annual averages:

House Prices Mortgage Interest Rates 1970-2023

From 1970 to 1995, mortgage interest rates averaged 11.4 per cent. They are now around 3.6 per cent (though rising).

We can get indicative monthly mortgage payments with three parameters:

  1. The initial amount borrowed
  2. The length of the mortgage
  3. The interest rate charged

To make a comparison we will assume that the initial amount borrowed is 90 per cent of the average house price in each year.  We will use a term of 25 years in all cases and apply the interest rate for each year as shown above.  With these, we can get an indicative monthly mortgage payment and we will put that as a share of monthly average household disposable income. And this shows:

House Prices Mortgage Payment To Household Income 1970-2023

From 1970 to 1995, the indicative monthly mortgage payments averaged 29 per cent of household disposable income.  This is higher than the current estimate which is around 25 per cent of household disposable income.

The above shows that the peak for mortgage payments to income was 41 per cent back in 1982, exceeding the local maximum of 37 per cent from 2007.  As we have seen 2007 corresponds to the peak of real house prices. 1982 corresponds to the peak of mortgage interest rates which averaged 16 per cent over the year (which is also shown in this blog post from the Governor of the Central Bank).

It should be pointed out that this is very much a point-in-time assessment of mortgage payments to income.  Of the three parameters used, only one remains unchanged: the initial amount borrowed.  Key for determining the payment-to-income-ratio are the interest rate charged and the household’s disposable income.  Both of these will change over time for borrowers.  Interest rates trended down through the 80s and 90s while household income has trended up.  For individual borrowers this will reduce the ratio of the monthly mortgage payment to household income.

The point-in-time assessment is useful, though, for the initial payment burdens faced by prospective purchasers.  And as we have seen, this burden is now slightly lower than what it averaged over the period 1970 to 1995.

And this is before increased life expectancy and longer duration mortgages are taken into account.  The above analysis assumed a 25-year term for all mortgages.  In the last 20 years, mortgages with terms of 35 years have become prevalent.

Although the age of first-time buyers has increased this has been somewhat offset by increased life expectancy.  In the early 1970s, an Irish male aged 25 had a life expectancy of a further 46 years (i.e. to 71).  The detailed results based on Census 2016 give an Irish male aged 25 a life expectancy of a further 55 years (i.e. to 80).  It is likely to be now another year or two higher again.

It is not all a one-way street from lower interest rates though.  Present-day borrowers may benefit from lower interest rates but higher prices means they are required to have a bigger deposit. 

From 1970 to 1995, a ten percent deposit based on the average house price was 26 per cent of average annual household disposable income.  In 2023, a ten percent deposit is equivalent to 46 percent of average annual household disposable income.  Prospective buyers may also need even higher deposits due to the Central Bank’s macro-prudential rules on mortgage lending.  And that is what the evidence would appear to bear out.

Central Bank Household Credit Report H1 2019

The overview of new lending from the 2019 Household Credit Market Report shows that the deposits of FTBs in Dublin were just under 90 per cent of household income and they were 72 percent for Non-Dublin FTBs.  Higher deposits means it is harder to access those lower interest rates. And we haven’t even mentioned ever-increasing private rents which further add to the difficulty of gathering that deposit.


Here is a summary of the indicators presented:

House Prices Summary Indicators 1970-2023

By most metrics housing is more expensive than it was 25 to 50 years. Nominal prices are almost ten times higher compared to what they averaged from 1970 to 1995.  When adjusted for the general increase in the price level, real house prices are around three times higher now than the 1970-1995 average.  Using income we see that house prices are under two times higher than that average.

When looking at mortgages we see that the measures are lower. Mortgage rates now are around one-third of their level from 1970 and 1995 and though, house prices have increased, an indicative monthly mortgage repayment is now a lower share of average household income.  Moving in the other direction is the deposit required which is now almost twice as large as a share of average household income compared to what it was in the 70s, 80s and early 90s.

Compared to 2003, most of the indicators are actually little different.  Inflation-adjusted house prices and price-to-income ratios did rise, fall and rise again over the period but are back close to 2003 levels. Mortgage interest rates and the payment-to-income ratio are also close to 2003 levels.

The ratio of a 10 per cent deposit to income is also similar but the lending environment is much different. Back in 2003, borrowers were more likely to be lent more than 90 per cent of the purchase price and factors like parental guarantees were much more widespread. The Central Bank’s macro-prudential lending rules now restrict these with a greater requirement for borrowers to have the deposit to hand.

Wednesday, December 20, 2023

The Ongoing Trickle of Repossessions

The latest mortgage arrears statistics from the Central Bank provide an update for the end of September (Q3) 2023. They show there continues to be a trickle of repossessions.

PDH Repossessions to Q3 2023 - AREA

During the third quarter of 2023, there were ten court-ordered repossessions and ten abandonments/voluntary surrenders of primary dwelling houses.  During 2023, court-ordered repossessions have been occurring at a rate of around one per week.

We are now also provided with a more complete breakdown of repossession activity.  The number of repossessions shown above can be broken down into those carried out by banks and non-banks. Non-banks include regulated lenders such as Pepper and Start and also unregulated loan owners.  The chart below shows a split out of the maroon area in the opening chart.

PDH Repossessions by Banks and Non Banks to Q3 2023

In the last 15 years, there has been a total of 3,400 court-ordered PDH repossessions. Of these around 70 per cent have been undertaken for banks. However, the banks stalled their execution of repossession orders in early 2020 (likely pandemic related) and there has been no increase since.  In the year to the end of September, there were 57 court-ordered repossessions and 42 (nearly 75 per cent) were carried out for non-banks.

Figures on legal proceedings suggest that the banks have pretty much ceased using legal proceedings to obtain repossessions orders.  Here is the number of accounts with legal proceedings in progress.

PDH Legal Proceedings by Banks and Non Banks to Q3 2023

In early 2016, the banks had almost 12,000 PDH mortgage accounts with legal proceedings in progress. The last figures show that this had fallen to just 1,100 by the end of September. This is 0.2 per cent (1 in 500) of the 594,000 PDH mortgage accounts held by the banks.

Some of the reduction, of course, came about as the non-performing loans were sold to non-bank entities but the fall in the overall total is very clear. And it can be seen that the level of non-banks has been stable in recent years. In Q1 2019, non-banks had 4,400 PDH accounts with ongoing legal proceedings. The latest figure for these entities is 4,300.

That is not to say there has been an improvement in the mortgage accounts held by non-banks.  The arrears on these accounts is still very high.

PDH Mortgage Accounts with Non Bank Entities Q3 2023

Of the 710,000 or so PDH mortgage accounts in the latest update, almost 115,000 (16 per cent) were held  by non-bank entities.  And of those almost a quarter (27,300) were in some form of arrears.

The arrears ranged from relatively small (less than 90 days arrears) to incredibly large (over 10 years arrears).  It is bizarre that we have to produce figures for such significant arrears.  Non-bank entities had 21,000 PDH mortgage accounts that were more than 90 days in arrears.

Included in that are 4,500 accounts that are more than ten years in arrears.  The total balance outstanding on these loans is €1.3 billion, giving an average balance of €280,000.  There have been €833 million of missed payments on these giving an average level of arrears of just under €185,000.   That is an incredible amount of missing payments.

It is worth noting again that arrears is not a good measure of current loan distress. It does not tell us when the payments were missed.  An account that had two years of missed payments a decade ago but has had every payment made since will be counted as being two years in arrears.

Also, the measurement of arrears in terms of days past due is impacted by the repayment required.  If an account has had €6,000 of historical missed payments and the required monthly payment is €1,000 then that account will be 180 days (six months) in arrears.  If the required monthly payment rises to €1,200 – due to. say, interest rate increases – and there is no new arrears, then the €6,000 of historical arrears becomes the equivalent of 150 days (five months) of arrears. 

This measurement issue won’t impact a count of the total number of accounts in arrears.  There has been no rise in the total number of accounts in arrears.

PDH Mortgage Accounts in Arrears Q3 2023

As shown above, there remains around 29,000 PDH mortgage accounts which are more than 90 days in arrears.  Of these 21,000 are held by non-bank entities.  The banks have 8,000 such accounts but this represents just 1.3 per cent of the total PDH mortgages they hold (594,000).  The banks do not have a problem with a long-term mortgage arrears.

In some cases this will have occurred with the borrower getting back in track either with or without a cure or modification. In other cases it is because the banks have simply sold the loans.  There were plenty of claims that these sales would lead to a surge in repossessions. All we have seen so far is a trickle.

Wednesday, December 6, 2023

No Surprise in November CT Receipts

When the June figures were published the €4.2 billion of Corporation Tax collected in the month pointed to receipts of around €6 billion in November.  The year-on-year declines for August, September and October were attributed to largely idiosyncratic volatility in such a concentrated source of tax revenue. 

And so it proved, with the monthly receipts for November coming in broadly in line with expectations at €6.3 billion or five percent above the crude projection based on the June figure.  With November being the most important month of the year for Corporation Tax, November 2023 was a record month, surpassing the €5.0 billion collected in the same month last year.

November CT

In year-to-date terms, November was enough to push 2023 back up above the equivalent total for 2022.  The difference looks small on the chart but the €22 billion collected so far in 2023 is almost €1 billion higher than what was collected in the same period last year.  The difference to 2014 is staggering.

CT Cumulative

The recent volatility in the receipts can be seen with the 12-month sum.  If December 2023 just matches what was collected last December then the total for the year will be €23.5 billion, up on the €22.6 billion from last year.

CT 12 Month Sum

The volatility is highlighted in the annual changes from the above chart.  This shows some extraordinary changes. 

CT 12 Month Sum Change

Towards the end of 2022, CT was growing at an annual rate of over 60 per cent – exhilarating but unsustainable. This growth plummeted during 2023 and approached zero in October. The November numbers mean that the annual change in the 12-month sum rebounded a little and rose to 2.8 per cent – and such is the scale of these receipts now that even such a small relative increase is a pretty significant sum.

It is hard to say if the December returns will garner much attention, and as a standalone month there is no discernible pattern.  2022 was a boom year for CT but December 2022 was actually lower than December 2021 – that volatility thing again.

December CT

Corporation Tax is a highly volatile source of revenue. While there can be some information in the monthly changes there is also an awful lot of noise.  Here the year-on-year comparisons of monthly CT receipts since January 2016 – and note that the chart excludes some of the volatility as the vertical axis is cut off at +100.  The final point shown is November 2023 which was was 27 per higher than November 2022.  Missing values are used when the calculation of the annual change involved a negative number (three instances since 2016: January 2019, April 2019 and April 2021).

CT YonY by Month

Monthly figures that are lower than the same month of the previous year are not uncommon, though some occur in months that are not important from a CT perspective. Around one-third of months in the chart above have negative values – and this was a period when aggregate CT revenues grew at an extraordinary rate.

Four of the six months from December 2022 to May 2023 were negative in year-on-year terms.  The run of three negative figures in a row that was seen from August to October this year was a bit unusual – we have to go back to early 2021 to see such a run, when the pandemic would have had an impact, and the only other instance shown of three negative values in a row was in early 2017. 

The proximity of the recent three-month negative run to the key month of November also likely contributed to the focus. Those negative outturns will also have been seen as an opportunity to try and dampen expectations. Who knows what December will bring. Probably more volatility but structural shifts remain absent for now.

Saturday, November 4, 2023

Volatility to the fore in Corporation Tax revenues

For almost a decade now, the year-to-date revenues from Corporation Tax have exceeded the equivalent amount from the previous year (with early 2021 being the only minor exception).  We can see below that the 2023 year-to-date figure for October has dipped below the 2022 line.  The €15.7 billion collected so far in 2023 is €0.4 billion (3%) below the amount collected to October 2022.

Exchequer Corporation Tax Cumulative by Year 2014-2023

We can also see that this is a reversal of the position seen only a few months ago. By July, 2023 was running nearly €2 billion ahead of 2022 (€10.9 billion versus €9.0 billion).  The reversal since means that this year’s Corporation Tax receipts for August, September and October have been around €2.3 billion lower than the equivalent months from last year.

These three months last year saw €7.2 billion of Corporation Tax collected, this year they brought in €4.8 billion - a fall of one-third, which does appear to be dramatic. 

Exchequer Corporation Tax August to October 2009-23

As seen above, this year was still the second-highest on record for these three months but is the fall just volatility that can be expected in such a concentrated revenue source or a harbinger of a more systematic decline?  For the time being volatility seems the more likely landing spot.

To put the recent declines in context we can look at the 12-month rolling sum of receipts.

Exchequer Corporation Tax 12-Month Rolling 2012-2023

The change in direction in the past three months is pretty clear.  November is the most important individual month for Corporation Tax and a one-third drop there relative to November 2022 certainly would be alarming.

The recent falls have put the 12-month sum back close to where it was this time last year, with the annual change in the 12-month sum having plummeted towards zero in recent months. Annual growth rates of 40 per cent plus while exhilarating are not sustainable.

Exchequer Corporation Tax 12-Month Rolling Annual Change

In the 12-months to October 2022, €21.9 billion of Corporation Tax was collected. The 12 months to October 2023 have seen revenues of €22.2 billion – an increase of 1.25 per cent.

To assess the concern that could be raised after the falls in recent months we go back to the Revenue Commissioners guidance on when large companies need to pay their Corporation Tax.

Large companies

Large companies can pay their preliminary CT in two instalments when their accounting period is longer than seven months.

The first instalment is due on the 23rd of the sixth month of the accounting period. The amount due is either:

  • 50% of the CT liability for the previous accounting period
  • 45% of the CT liability for the current accounting period.

The second instalment is due on the 23rd of the eleventh month. This will bring the preliminary tax up to 90% of the final tax due for the current accounting period.

The key months are month six and month 11 of the company’s financial year, by which time 90 per cent of the estimated tax due for the current year must be paid.  Any remaining tax due will be paid when the company files it tax return.

A company must file its return and pay any tax due nine months after the end of the accounting period. The company must make this payment on or before the 23rd of the ninth month.

Clearly any individual month can be any of these deadlines: month six, month 11 or month plus nine.  The likely candidates for the months we are looking at are:

  • August: month 11 for companies with a September year-end
  • September: month +9 for companies with a December year-end
  • October: month 11 for companies with a November year-end


Here are the monthly receipts for August since 2009.  There was an exceptional increase in August 2022 which was up 167 per cent on August 2021.  Some of this was reversed in 2023 but August 2023 was still significantly higher than all years prior to 2022.

Corporation Tax August Receipts 2009-2023

The impact of payment timings can be seen if we combine the receipts for March and August – month six and month 11 for companies with a September year end.

Corporation Tax March and August Receipts 2009-2023

Across the two months of March and August there was no fall at all in 2023.  This points to a company having a large increase in its tax liability in 2022 and paying most of this in August 2022 (when it needed to have 90 per cent of its preliminary tax paid).  For 2023, the payments were more balanced as the March payment would have been based on 50 per cent of the 2022 liability with a smaller amount due in August this year to bring the payments up to the required 90 per cent.

The fall in August 2023 seems mainly volatility due to concentration and the timing of payments.


The fall in September was small which also points to volatility.

Corporation Tax September Receipts 2009-2023

September 2022 was pretty much double September 2021 (€2 billion versus €1 billion). Some of this increase was reversed in 2023 but it is hard to point to anything systematic that might be going on. 

It could just be that companies with December year-ends that filed their 2021 tax returns in September 2022 had more of their final tax payment outstanding than when they filed their 2022 tax returns in September 2023. With lots of companies having December year-ends we can’t point to any company-specific factors but it could be just a general timing issue.


The monthly figures for October seem particularly volatile and it is hard to discern anything that might be going on. 

Corporation Tax October Receipts 2009-2023

There was a local peak in October 2018 of €1.6 billion.  This fell to €1.0 billion in 2019 and pretty much collapsed to just €200 million in 2020.  This put October 2020 as one of the lowest Octobers in the last 15 years. 

There was a strong bounceback in 2021 and a further increase to €2.3 billion in 2022.  Relative to that there was a large fall in 2023, back to €1.3 billion (which was also lower than both 2018 and 2021). 

It is because of this fall in the October receipts that the year-to-date total for 2023 is running behind the 2022 level.  As we have seen, the August fall was offset by a rise in March, and the September fall was pretty modest.  So, the October fall could be significant – if we could link it to something.

We could try to link the October payments to those made the previous May, which are month 11 and month six for companies with November year ends, but that doesn’t reveal a lot.  May is also also month 11 for companies with a June year end.

Corporation Tax May and October Receipts 2009-2023

The monthly receipts for May have actually been pretty stable over the past four years.  This could mean rising payments from companies with June year ends and falling payments from companies with November year ends but there is no way of telling that. 

For companies with November year ends we can see the October (month 11) payments but as noted above, outside of being especially volatile, there is no discernible pattern.  It is possible that a company with a November year end (for the purposes of paying Irish Corporation Tax) has had volatile profits over the last few years and this has likely been driving the volatility in the October Corporation Tax receipts.

This again points to the concentrated and volatile nature of these Corporation Tax receipts with a company-specific factor driving changes in the aggregate figures.  It does not point to a structural shift in the overall pattern of receipts.


November is a month that could be a bell-weather for such structural changes.  It is the most important month for Corporation Tax.  November is month 11 for the most common year-end: December. Last November saw €5 billion of Corporation Tax collected – the highest monthly total ever, and higher than the annual total for 2014. 

The data back to 2009, show a strong relationship between the June and November receipts.

Corporation Tax June and November Predicted 2009-2022

June 2023 was the highest June ever with receipts of €4.3 billion.  If the above relationship holds, this points to record receipts again in November, this time to the tune of €6 billion.

One aggravating factor could be the rise shown above for receipts in August.  August is month 11 for companies with September year ends.  These companies’ tax returns and their final payments will be due nine months later – the following June.

Corporation Tax June Receips 2009-2023

Up to recently, very little Corporation Tax was collected in August (and also in March).  This would translate into very little final tax due the following June.  Now however, the combined receipts for March and August exceed €4 billion.  This can be expected to lead to additional tax payments the following June when companies with September year ends file their tax return and make their final payments. 

The above relationship between June and November was almost exclusively based on the June payments been the first preliminary payments for companies with December year ends so they were a strong predictor of the second preliminary payment in November.  This relationship may no longer be as clear cut as more of the June receipts could be due to companies with September year ends. 

Even with this we would still expect this November’s receipts to be strong. Talk of structural decline in Ireland’s booming Corporation Tax seems premature – for now. But we can certainly expect them to be volatile.