Irish Budget 2027 – Implications for Irish and International Investors

Introduction

The Irish Budget for 2027 (“Budget 2027”) was announced by Minister Simon Harris on 6 October 2026. Budget 2027 contains a number of measures intended to support Ireland’s status as a leading financial and investment jurisdiction in Europe.

International investors will welcome the introduction of reforms for the taxation of Irish corporates, the introduction of new rules to accommodate the Pillar Two side-by-side agreement with the US and the extensions to Irish tax provisions for tax credits.

The strength of the Irish economy has facilitated tax reforms aimed at Irish entrepreneurs and retail investors.

The key Irish tax changes in Budget 2027 are outlined below and include:

(a) A significant reduction in the taxation rate for capital gains and investment products;
(b) The introduction of a tax advantaged Irish savings account, which is aimed at Irish resident individuals;
(c) Reform of Ireland’s corporate tax regime on borrowing to fund lending and investment;
(d) Improvements to the R&D tax credit regime and an extension to the Knowledge Development Box;
(e) The introduction of new legislation to align Ireland’s Pillar Two (“the Global Minimum Tax regime”) with the US “Side-by-Side Package”;
(f) Reductions in the personal tax burden for employees and self-employed individuals; and
(g) Taxes on derelict properties to encourage housing supply and regeneration.

Capital Gains Tax (CGT)

The standard rate of CGT is reduced from 33 per cent to 31 per cent. This is the first reduction in the main CGT rate in nearly 30 years. It applies to disposals made on or after 7 October 2026. This raises questions for those who have signed, but not completed, contracts prior to 7 October 2026. We expect investors to focus on whether they have signed a “conditional” contract, in which case the new rate would apply if the conditions were satisfied after 7 October 2026. However, as recent case law has demonstrated, the identification of a conditional contract can be a difficult area and merits close examination.

The new rate of tax is relevant to Irish resident investors, but also to non-Irish resident investors who hold interests in Irish land, directly or indirectly. Importantly, the new rate does not apply to disposals of Irish development land, which remains subject to the 33 per cent rate.

The 31 per cent rate remains subject to existing exceptions. CGT exit tax on company migrations remains at 12.5 per cent, although the anti-avoidance rate that applies where the exit forms part of an actual disposal has been reduced to 31 per cent.

The Minister noted that the reduced rate was being introduced “to encourage … entrepreneurship, reward risk and facilitate the scaling up of home-grown Irish firms …”. No further enhancements were announced to entrepreneur relief. However, the rate reduction, coupled with the €500,000 increase to the lifetime relief limit (to €1.5 million) in last year’s budget represents a consistent trend in favour of reduced taxes on sales.

Investment Products and Funds

Irish retail investors and managers will welcome the reforms to the taxation regime for retail investment in funds.

Budget 2027 announced a reduction in the rates of tax that apply to Irish investors in Irish and equivalent offshore funds, and Irish and foreign life assurance products from 38 per cent to 35 per cent. It is important to note that this change only applies from 1 January 2027.

The industry will be disappointed that no immediate announcement was made on reform for the wider regime, including the Irish deemed disposal rules (which require tax to be paid every eight years) and the related administrative burden facing investors.
However, Budget 2027 does indicate that further work will be undertaken on these issues in the near future.

New Personal Investment Account

The introduction of a new tax advantaged personal investment account is a key measure in Budget 2027. This has been long-heralded. The outline of the proposed account includes key details:

(a) A maximum contribution limit of €12,000 per annum, with no minimum contribution. The account is likely to be only available to Irish resident adults, with only one account per individual; and
(b) A tax-free threshold of €50,000, with a flat tax of 1 per cent on the value of the account above that threshold.

The scheme is intended to offer a simplified savings product for Irish retail investors, and there will be no requirement for people to engage with Revenue when it comes to the administration of the account. That responsibility will fall to the provider.

The flat rate of tax is expected to be measured based on an annual average of the value in the account. Importantly, the account will be free of Irish tax, including CGT, withholding tax and investment undertaking tax.

In specie contributions will not be possible and investment choices will be limited to listed shares, bonds, Exchange Traded Funds (“ETFs”) and other funds suitable for retail investors. It is possible that in later years, the range of investable assets will be extended to unlisted growth companies and other forms of assets.

Intensive engagement is currently ongoing between the Department of Finance and service providers, including banks, investment firms and insurers. It is aimed at ensuring that accounts will be operational by 1 July 2027. A Technical Forum will be established between Revenue, representatives of the account providers and in house teams, as well as any third-party software companies engaged by providers to build the necessary technology infrastructure. This is expected to begin immediately.

Corporate Tax Reforms

The Department of Finance has been involved in a consultation on the taxation of interest. The outcome of this consultation is now beginning to emerge. Budget 2027 indicates that several targeted amendments will be included in the upcoming Finance Bill to simplify the existing provisions governing interest relief on borrowings taken out for certain lending and investment activities.

These measures are expected to apply to so called “section 247” provisions, which apply where Irish companies borrow to acquire interests in other companies, or lend to other affiliates. The provisions are likely to simplify the treatment necessary to secure a deduction for interest on such borrowings. These will be welcomed as positive initial steps towards a simpler corporate tax system in this area.

As expected, the Government confirmed the intention to legislate new and extended safe harbours from the Pillar Two global minimum tax rules, in accordance with the OECD’s administrative guidance. Most notably, these include the exemption from certain top-up taxes for US parented groups, recognising that the US international tax rules operate as a “side-by-side” system with Pillar Two.

The R&D tax credit is being enhanced, including by:

(a) Increasing the existing limits on scope for subcontracting to third-level institutions and third parties, from 15 per cent to 20 per cent, and from €100,000 to €200,000;
(b) Increasing the first-year payment threshold from €87,500 to €105,000, to provide cashflow support to smaller R&D projects;
(c) Introducing a new enhancement in respect of qualifying R&D wage costs; and
(d) Providing that if a clinical trial is regulated, this fact may be used to satisfy the science test, to reduce administrative burden and recognise R&D work undertaken by Irish companies as part of global trials.

The Knowledge Development Box (“KDB”) regime, which was due to expire on 1 January 2027, will be extended by five years, to accounting periods beginning before 1 January 2032.

(a) The KDB is Ireland’s OECD-compliant “patent box”. It provides an effective corporation tax rate of 10 per cent on profits from qualifying intellectual property, such as patents, developed through a company’s own R&D. Under the OECD “modified nexus” approach, relief is proportionate to the company’s own qualifying R&D expenditure.
(b) For the first time, existing claimant companies may elect out of the KDB regime in respect of all qualifying assets. The election will be available for a limited period and subject to conditions, which have yet to be announced. Further detail is expected in Finance (No. 2) Bill 2026, due for publication on 15 October 2026.
(c) Industry had hoped for a credit for R&D carried out by subsidiaries of multinationals outside Ireland. No such measure was announced.

Personal Tax

Budget 2027 announced several increases to the income tax band thresholds and personal tax credits. The standard rate band (20 per cent) is increased and personal, employee (“PAYE”) and earned income tax credits are also increased. However, with no change to the 40 per cent higher rate of income tax, the combined marginal rate for many employees remains above 52 per cent.

The rate of Capital Acquisitions Tax (“CAT”) remains unchanged at 33 per cent. CAT applies to gifts and inheritances. There is now a divergence between the rate of CAT and CGT (31 per cent). When CGT and CAT arise on the same event, the recipient of the transfer could claim a credit for the CGT payable by the transferor. Given that the rate of CGT has now decreased, the recipient is potentially exposed to a larger CAT liability on gifts or inheritances.

There were marginal increases to the thresholds above which CAT applies for gifts and inheritances taken on or after 7 October 2026:

(a) The Group A threshold (child from parent) is increased from €400,000 to €420,000;
(b) The Group B threshold (close relatives, including siblings, nieces and nephews) is increased from €40,000 to €44,000; and
(c) The Group C threshold (all other persons) is increased from €20,000 to €22,000.

The changes did not address the large gaps between those inheriting from parents and those in Groups B and C.

Real Estate

There were limited provisions relating to real estate, with the measures principally aimed at increasing housing supply. The “Help-To-Buy” tax refund for buyers of newly constructed property is extended. When aggregated with last year’s reduction in the VAT rate for newly built properties, these represent meaningful steps towards improving affordability.

Measures to incentivise people to rent-a-room in their house were also extended, retrospectively from 27 July 2026. It is now possible to benefit from the scheme through renting a “Garden-Flat”, being a small dwelling built in the garden or environs of a house. The rental tax credit has also been increased.

Budget 2027 provides a further opportunity for landowners to make a submission requesting a change in the zoning of land appearing on the Revised Residential Zoned Land Tax (“RZLT”) map for 2027. In certain circumstances, for example where the rezoning reflects genuine economic activity being carried out on the land, a successful submission may support an exemption from RZLT for 2027. Affected landowners should review the revised map and consider making a submission once the details are published in the Finance Bill.

As noted in last year’s Budget, the new Derelict Property Tax will replace the Derelict Sites Levy. The new tax will be overseen by Revenue, rather than local authorities. From 2027, local authorities will identify derelict properties (residential and non-residential) and record them on registers of dereliction. Preliminary registers of dereliction will be published on 1 September 2027, final registers on 1 March 2028, and the first pay and file deadline will be 23 June 2028. The rate of tax will be 7 per cent of the self-assessed value of the property. In its first year, the tax will apply in towns and cities with a population of 4,000 or more, expanding to towns with a population of 2,000 or more in its second year. Owners will be entitled to seek a review of their inclusion on a register. Given the substantial rate, owners of vacant or dilapidated property should review the condition and use of their property well in advance of the publication of the preliminary registers.

No changes were announced to the Irish Real Estate Fund (“IREF”) rules, which apply to Irish regulated property funds, or to the Real Estate Investment Trust (“REIT”) regime.

Employers

Employers will welcome changes to the reporting of employee benefits. Enhanced Reporting Requirements, which were introduced in 2024, oblige employers to make certain reports to Revenue on an ongoing basis. From January 2027, employers will be able to choose to continue to operate in real time, or make monthly returns.

Small Business and Start-Up Measures

With the reduction in the rate of CGT, it is unsurprising that there were no new measures to benefit startup companies. However, Budget 2027 did announce the extension of various schemes, including the Employment Investment Incentive (“EII”); the Start-Up Capital Incentive (“SCI”); the Start-Up Relief for Entrepreneurs (“SURE”); and the Relief for Investment in Innovative Enterprises, also known as Angel Investor Relief. These are subject to EU State Aid approval in each case.

Further Information

For further information, please liaise with your usual Maples Group contact or any of the persons listed on this page.