Budget 2027: What We Would Like to See

Key Contacts: Michael McGivern – Head of Tax |

Budget day is set for Tuesday 6 October 2026. While still a few months away, we have set out below a brief recap of Budget 2026 and our wish list for Budget 2027.

Budget 2026 Recap

Economic overview 

  • Budget 2026 delivered a package of tax and expenditure measures worth €9.4 billion. The Government continued to build Ireland’s long-term reserves through the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, which were projected to accumulate approximately €24 billion by end-2026.

Housing

  • Housing dominated the tax agenda. The VAT rate on the sale of completed apartments was cut from 13.5% to 9%. A €5 billion capital investment programme was committed for housing delivery, alongside €200 million in additional external funding channelled through Home Building Finance Ireland.
  • Other supply-side measures included a corporation tax exemption for rental income from properties within the Cost Rental Scheme, enhanced corporation tax deductions for apartment construction and for the conversion of non-residential buildings, improvements to the Residential Development Stamp Duty Refund Scheme, a three-year extension of the income tax deduction for small landlords who retrofit rental properties, and the replacement of the Derelict Sites Levy with a new Revenue-administered Derelict Property Tax.

Cost of Living

  • Household measures were comparatively modest. The USC 2% band ceiling was adjusted to keep full-time minimum wage earners outside the higher rates.
  • The Rent Tax Credit was extended to end-2028, Mortgage Interest Tax Relief was renewed for a further two years, and the reduced 9% VAT rate on gas and electricity was extended until 31 December 2030.

International Tax and R&D

  • The R&D tax credit rate was increased from 30% to 35%, with a commitment to publish an R&D compass exploring further targeted reforms.
  • The participation exemption regime for foreign dividends was simplified, and an Action Plan was published to reform Ireland’s interest taxation regime.
  • Various enhancements to the visual effects and digital games incentives were also announced, subject to EU State Aid approval.

Jobs, Investment and Financial Services

  • Targeted measures included enhancements to the CGT Revised Entrepreneur Relief regime (with the lifetime limit raised from €1 million to €1.5 million), extensions to the Special Assignee Relief Programme, the Key Employee Engagement Programme and the Foreign Earnings Deduction.
  • The VAT rate for food and catering businesses and hairdressing services was reduced from 13.5% to 9% from 1 July 2026.
  • The tax rate on Irish and equivalent offshore funds and foreign life assurance products was cut from 41% to 38%, and a new Stamp Duty exemption was introduced on the acquisition of shares in Irish listed companies with a market capitalisation below €1 billion.

Budget 2027 Wish List

The question for businesses and individuals is whether the Government will build on Budget 2026 or pivot in response to the evolving economic landscape.

We have set out below some of what we would like to see in Budget 2027.  

A More Competitive Capital Gains Tax Rate

  • A reduction in the headline CGT rate would be welcome. Our current standard rate of 33% remains one of the highest in Europe.
  • For owner-managed businesses in particular, the current standard rate can act as a disincentive to exit, creating a lock-in effect that delays succession and restricts reinvestment. Any reduction would also have knock-on implications for retirement relief planning and how founders time their exits.

CGT Entrepreneur Relief

  • We call on the Minister for Finance to further increase the lifetime limit on Revised Entrepreneur Relief from €1.5 million to €5 million.
  • For founders and owner-managers building businesses with a view to a future exit, any enhancement here would significantly improve the after-tax outcome of a qualifying disposal.
  • For individuals who have already used part or all of their existing lifetime limit, a further increase in the limit to €5 million may stimulate further entrepreneurial activity.

R&D Tax Credit

  • The R&D tax credit was increased from 30% to 35% in Budget 2026, which was welcome.
  • The focus now should be on structural reform, particularly in relation to the restrictive rules on subcontracting.
  • The credit should be available where R&D is outsourced to connected parties, and the limits on university collaboration should be eased. In addition, expenditure incurred on agency and temporary staff should be treated as qualifying expenditure on a statutory basis.
  • These changes would be particularly significant for clients who operate within multinational groups or who rely on external expertise for specialised research.
  • We would also welcome the introduction of a new complementary incentive for innovation activities, such as digitisation and process transformation, that fall outside the strict definition of R&D.

Personal Taxes

  • While the emphasis in Budget 2026 was on investment rather than income tax changes, the pressure for personal tax relief has not gone away.
  • The standard rate income tax cut-off point has not kept pace with wage growth, meaning that an increasing number of employees, and by extension the employers competing for them, are feeling the squeeze.
  • In this context, we would like to see an inflationary indexing of tax bands and credits, and the abolition of the 3% USC surcharge on self-employed income above €100,000.

Tax Simplification and Compliance

  • There is a general recognition in both government and business that urgent tax simplification is required in certain areas.
  • The payroll based Enhanced Reporting Requirements should be switched to periodic reporting for SMEs in particular, and a simplified corporation tax return for SMEs should also be designed.
  • For clients running businesses day to day, the cumulative compliance burden is real and growing. Any simplification measures would reduce costs and administrative friction, freeing up time and resources to focus on business.

Housing and Construction

  • While Budget 2026 contained significant housing related measures, there is more that can be done.
  • We would welcome the introduction of tax based incentives to promote modern methods of construction.
  • The government should also consider tax incentives to stimulate the conversion of obsolete commercial property to into residential use.

The Green Agenda

  • We endorse calls for an enhanced R&D credit rate of up to 50% for green technology development, new incentives for renewable energy infrastructure and supports for business decarbonisation.

Savings and Investments

  • By now most of us are familiar with media reports that Irish households hold around €160 billion in cash deposits and current accounts, with the vast majority of these funds sitting in instant-access or low-yield current accounts, earning little or no interest, thereby losing value to inflation.
  • We therefore welcome the proposed introduction of an Irish savings and investment account (“SIA”) scheme.
  • In our view the scheme should be designed to encourage long-term saving across as many people as possible, and enable savers to invest in a wide range of products, with different risk ratings.

Key Contacts