'Digital Infrastructure for the Future We Want': ICT Sector Contributes €107.5 Billion to the Economy, Report Finds
- Digital Infrastructure Ireland
- 2 days ago
- 9 min read
A study commissioned by Digital Infrastructure Ireland highlights the vital role data centres play in supporting Ireland’s economy
Dublin, 27th May 2026 - An economic study on the data centre industry has revealed the critical role the centres play in Irish corporate tax windfalls and in the €107.5 billion in taxes paid here by the ICT industry. The study by economist Jim Power and statistician Gerard O'Neill from Amárach Research has also sounded a warning bell that the ongoing limitations on the development of datacentres are now posing a considerable risk to Ireland’s attractiveness as a location for foreign direct investment.
Speaking at the launch of the report, Minister of State at the Department of Climate, Energy and the Environment, Timmy Dooley, said: “Ireland’s data centre ecosystem is and will continue to be a critical driver of national economic performance, underpinning high‑value sectors, foreign direct investment, digital competitiveness, operational resilience, and export growth, while supporting tens of thousands of jobs.”
Maurice Mortell, Chairperson of Digital Infrastructure Ireland added: “Ireland has a long history of attracting investment and has positioned itself as one of Europe’s leading locations for digital infrastructure. Sustaining Ireland’s taxes and its role as a leading investment hub requires a National Digital Strategy that integrates digital infrastructure, energy, planning and industrial policy to support long term competitiveness. The Government’s announcements must now translate into tangible actions. With a renewed approach, Ireland can lead the next generation in developing sustainable, high performance digital infrastructure – but delivery is essential. The reality is that considerable taxation is paid where IP assets are located and this has been instrumental to the strong growth in corporation tax revenues since 2015. The risk is that if data centres are going to be built in other locations, because they cannot be built in Ireland, the IP assets could follow the data centres, with very negative implications for Irish corporation tax revenues. Ireland is losing business and global companies are moving their investment pipelines elsewhere.”
The study, “Digital Infrastructure for the Future We Want”, says there has been €18 billion in investment from Ireland’s data centre ecosystem, spanning across 105 facilities and 35 operators. It finds that the economic significance of data centres is greater than the direct employment they create and the vital element of critical infrastructure that they provide. “Data centres are essential for the Government’s AI and digital strategy, the modernisation of the public sector and the indigenous business economy,” the report notes.
“Ireland has a high dependence on foreign-owned companies in terms of employment, corporation and income tax receipts, and general economic activity. Given this high level of ‘concentration risk’ there is considerable pressure on Ireland to preserve its status as a good country in which to do business. That is now under considerable pressure,” the authors say.
The report highlights that a lot of global intellectual property is stored in Ireland and is a major contributor to tax revenues. “Many of the largest corporations in Ireland are in high-tech industries like pharmaceuticals or information technology that rely heavily on IP. Unlike a building or a machine, it is very easy to move Intellectual Property into or out of a country. There is a lot of Intellectual Property held in Ireland. Some of it has been produced here, while much is imported between different arms of the same multinational corporation.”
“The location of IP in Ireland makes a significant contribution to exports of goods and services from Ireland. In 2024, exports of computer services reached €278.7 billion, equivalent to 57.7 per cent of total service exports. Ireland has carved out a specialist niche in supporting companies with their IP requirements and is now seen internationally as a knowledge-based economy, with high-tech smart businesses increasingly treating IP as an asset. IP is increasingly at the forefront of the growth strategy of many companies, and Ireland is at the forefront.”
“Ireland is very proactive in promoting R&D. There is an R&D tax credit of 30 per cent for R&D conducted anywhere in the European Economic Area. R&D expenses are usually tax deductible at 12.5 per cent, meaning the effective tax relief is 42.5 per cent. If this R&D subsequently generates an income stream, an effective tax rate of 6.25 per cent is applied under the Knowledge Development Box regime. Ireland has a well-developed IP regime that adds to the country’s attractiveness as a location for R&D and FDI. As part of this overall package, enabling those companies to develop/utilise datacentres are crucial. The risk is that if data centre development is curtailed, it could damage Ireland’s reputation as a country in which to locate IP assets and general investment. This would have negative repercussions for future investment, employment, and tax revenues,” the authors warn.
“Corporation tax will have a key role to play in funding Irish society into the future. In turn, the foreign-owned component will have a key role to play in driving corporation tax revenues. Consequently, it is essential that the operating environment for multi-national corporations remains as favourable as possible. Data centre development will be a crucial ingredient in that regard. In a very competitive global environment for mobile investment, the countries that will succeed are those that offer a complete solution.”
“The danger is that if Ireland cannot facilitate data centre requirements, other areas of investment could also move elsewhere. This is not sending the correct message to those who control mobile investment.”
“Data centres are demonised in some quarters in Ireland. However, the reality is that data centres are a vital ingredient in the FDI ecosystem but are also vital for public bodies and domestic companies. Data is the new oil. Those countries who grasp the challenge will be the winners. The fact is that many of the big global players in technology and digitalisation chose Ireland as their location for their IP assets, and they also located their EU headquarters in the country. This has reaped rich dividends for Ireland in terms of employment, tax revenues and general economic activity. It is now of deep concern that many of those are now bypassing Ireland for data centre development due to energy restrictions. Unless this situation is addressed, those companies will not expand any further and could decide to relocate IP assets and other investment in other more favourable locations. The opportunity cost for Ireland of not being able to allow the level of data centre and digital infrastructure development that is required in an AI-driven data world could be very significant. This opportunity cost includes future investment, and ultimately the loss of existing investment.”
The report welcomes recent important policy developments by the Government which set out a roadmap for data centre development and future requirements. “The Government’s digital strategy outlines ambitious targets that will require significant investment in data centres. This is particularly true in the context of the rapid growth in AI investment. The CRU Decision Paper establishes a framework to allow for continued connection of data centres to the national grid, while also balancing Ireland’s climate objectives, promoting renewable energy targets, maintaining security of supply, and sustaining economic growth. The Large Energy User Action Plan outlines the Government’s strategy to facilitate future investment in energy intensive sectors, including data centres. The approach is intended to be plan-led approach to the location of energy intensive development, while exploiting Ireland’s renewable energy opportunity.”
“Having a high quality and comprehensive digital infrastructure will be essential to achieving these ambitions. Data centres are the backbone of modern digital infrastructure, and data centre capacity will have to be increased significantly,” the report highlights.
Addressing the power and infrastructure challenges in Ireland, the authors say it is imperative to accelerate the construction of new renewable power plants to fulfil data centre demand, which would result in zero marginal emissions. “Data centres are generating the pressure to speed up the delivery of offshore wind and other renewable energies and give energy developers certainty by providing steady and predictable demand for increased renewable power generation. The possibility of integrating heat and power from data centres is also an important consideration that policy makers should explore, as they could have the potential to serve as components to support the transition toward a lower carbon emission economy.”
ENDS
Full Conclusions of the Report
High quality infrastructure such as roads, schools, hospitals and transport links is an essential ingredient for sustained economic progress. Digital infrastructure should be viewed in the same manner, namely as critical infrastructure vital to the future sustained success of the Irish economy. Since the 1960s Ireland has progressed as a digital economy, from mainframes, to software exports, to data management. AI is bringing this 60-year journey to a whole new level, and if Ireland does not invest in high-quality digital infrastructure, particularly data centres, then it will risk missing out on a major global megatrend.
Ireland has a very successful data centre ecosystem and has developed an international reputation for data centre development, as evidenced by the number of Irish firms engaged in data centre development outside of Ireland. This ecosystem is under threat due to the significant infrastructure constraints currently challenging the country. This is most apparent in the context of electricity and the capacity of the grid network. Global investment in AI-driven digital infrastructure is massive, with hyper-scalers projected to spend $750 billion on data centres in the US alone in 2026 and considerably more at a global level.
There is a significant risk that Ireland will miss out on this investment. The moratorium on new grid connections for data centres in the Greater Dublin Area lasted for four years. The new LEU policy has provided a degree of certainty to investors seeking a pathway to future growth. However, the regulatory and compliance standards for data centre projects are still extremely high.
Ireland is not alone in facing significant challenges in developing data centres. SynMax has pointed out that delays in delivering US data centres threatens to slow the rollout of AI by the big technology companies, with 40 per cent of projects estimated to be behind schedule. The delays are due to permitting hurdles, chronic shortages of labour, strained grid capacity, the shortage of equipment such as gas turbines and transformers, and development in remote locations is pushing up labour costs.
Ireland has a very high dependence on foreign-owned companies in terms of employment, tax revenues, and general economic activity. Given the inordinate dependence of corporation tax on a small number of multi-national companies, firm-specific profitability shocks present a significant risk to the Government’s future ability to generate sufficient income streams into the future. This is a crucial consideration in the context of the pressure on future government expenditure from climate change and ageing demographics.
Corporation tax will have to play a key role to play in funding Irish society into the future. In turn, the foreign-owned component will have a key role to play in driving corporation tax revenues. Consequently, it is essential that the operating environment for multi-national corporations remains as favourable as possible. Data centre development will be a crucial ingredient in that regard. In a very competitive global environment for mobile investment, the countries that will succeed are those that offer a complete solution.
Knight Frank points out that Dublin’s supply remains flat at 1.9 GW, as power scarcity defines the market. While approvals remain possible but now face tighter conditions.
The danger is that if Ireland cannot facilitate data centre requirements, other areas of investment could also move elsewhere. This is not sending the correct message to those who control mobile investment.
It is essential that policy become more focused and aligned to balance a few priorities:
• The achievement of Ireland’s climate commitments.
• Achieving renewable energy targets.
• Ensuring security of energy supply.
• Sustaining economic growth and ensuring future economic and social development.
Data centres are demonised in some quarters in Ireland. However, the reality is that data centres are a vital ingredient in the FDI ecosystem but are also vital for public bodies and domestic companies. Data is the new oil. Those countries who grasp the challenge will be the winners.
The fact is that many the big global players in technology and digitalisation chose Ireland as their location for their IP assets, and they also located their EU headquarters in the country. This has reaped rich dividends for Ireland in terms of employment, tax revenues and general economic activity. It is now of deep concern that many of those are now bypassing Ireland for data centre development due to energy restrictions. Unless this situation is addressed, those companies will not expand any further and could decide to relocate IP assets and other investment in other more favourable locations. The opportunity cost for Ireland of not being able to allow the level of data centre and digital infrastructure development that is required in an AI-driven data world could be very significant. This opportunity cost includes future investment, and ultimately the loss of existing investment.
It is important to recognise that while data centres are critical for the ICT sector, they are also essential for all businesses, particularly the non-ICT multinationals in sectors such as pharmaceuticals, life sciences, medical devices, and financial services. However, the digital infrastructure requirements inherent in the Government’s digital strategy for the public sector; the requirement to move patient medical records on to digital platforms; the increased data requirements of households and individuals; and the indigenous business sector requirements all point towards the need to push the energy agenda in order to facilitate the development of adequate digital infrastructure. O’Neill argues that ‘the intersection of data centres, climate, and energy should be looked upon as a competitiveness opportunity for Ireland. And that it remains possible for Ireland to retain its position as a leading data centre hub while also meeting its climate commitments, if policy, regulation, and investment are aligned with this dual objective.’
In a world where technological innovation is reaching a new level with the evolution of AI, it is imperative that Ireland invests in and builds on its reputation as a centre of data excellence.
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