Introduction
Budget 2027 includes an overall package of €8.5bn, comprising €7bn in additional public expenditure and €1.5bn in new taxation measures, with a focus on rewarding work, boosting competitiveness and investing for the future.
In terms of tax measures, key areas of focus include a €1.3bn personal income tax package, encouraging retail investment through the introduction of the new state-backed Personal Investment Account, increasing housing supply, and promoting investment and innovation through enhanced tax reliefs and incentives.
We summarise the tax measures and budget highlights relevant to the international business community below.
Financial services
- Further to the October 2025 Action Plan for Reform of Ireland's Taxation Regime for Interest, the Minister announced that several targeted amendments will be included in Finance Bill 2026 to simplify the existing provisions governing interest relief on borrowings taken out for certain lending and investment activities. The Action Plan sets out a phased roadmap to modernise the corporate tax treatment of interest and provide for administrative simplification and enhanced international competitiveness.
- In a welcome move for retail investors, the tax rate that applies to investments in Irish domiciled funds (ICAVs, ETFs, authorised investment companies and unit trusts) will be reduced from 38% to 35%. The reduced rate of tax will also apply to Irish life assurance policies, certain foreign life assurance policies and investments in offshore funds which are considered equivalent to Irish domiciled funds. The reduced rate will apply from 1 January 2027.
- The Government announced earlier this year that a new state-backed Personal Investment Account (PIA) will be introduced to encourage transfers from bank deposits into market investments and provide individuals with a simplified, tax efficient investment product. The PIA will benefit from a tax-free threshold of €50,000, with a tax charge of 1% on the value of the account above that threshold, and a maximum contribution limit of €12,000 per annum (with no minimum contribution or holding period). Investments held within the account will fall outside the scope of existing taxes on retail investments. A wide range of investments (including shares, bonds, insurance-based investment products and investment funds) will be eligible through banks, investment firms and insurers. The product provider will handle tax reporting and calculations which will simplify the process for account holders. The PIA will be launched by providers on 1 July 2027 and will be legislated for in Finance Bill 2026.
- The Minister confirmed that work will continue on reforming the broader framework for retail investment and removing barriers to investment. This review includes examining the rate of taxation, the 8-year deemed disposal rule and the current administration burden for investors.
- The Bank Levy will be extended for a further year to the end of 2027, with a target yield of €200m.
Business / FDI measures
- The Minister outlined changes to the Research and Development (R&D) regime which are aimed at improving cash flow for businesses and simplifying how companies claim relief on qualifying expenditure. Existing limits on payments to third party subcontractors and third-level institutions will increase from 15% to 20% and from €100,000 to €200,000. The first-year payment threshold of the R&D tax credit will increase from €87,500 to €105,000. A new enhancement will also be introduced for qualifying R&D wage costs.
- The rate of Capital Gains Tax will be reduced from 33% to 31% from 7 October 2026 to encourage entrepreneurship, reward risk-taking and facilitate the scaling-up of Irish firms. The 33% rate applying to disposals of development land will remain unchanged.
- Subject to compliance with EU state aid rules, the Employment Investment Incentive, Start-Up Capital, and Start-Up Relief for Entrepreneurs incentives which were due to expire at the end of 2026 will be extended. These provide income tax relief for capital investments in qualifying SMEs.
- Amendments will be made to the preliminary corporation tax rules to improve flexibility and reduce the administrative burden on companies. This includes an increase from €200,000 to €350,000 in the threshold used to determine whether a company is regarded as a small company.
- The Ireland Strategic Investment Fund is launching a €1bn three-year investment programme aimed at scaling Irish companies and supporting domestic economic growth.
- The Knowledge Development Box (KDB) regime will be extended by five years to 1 January 2032. An option will be provided for existing claimant companies to opt out of the KDB regime in respect of all qualifying assets, subject to specific conditions being met.
- Amendments will also be introduced to Ireland's Pillar Two legislation to give effect to the OECD Side by Side Package from January of this year. These amendments include a number of safe harbours and should simplify the Pillar Two rules for in scope MNE groups. Changes will also be made to reflect further agreed OECD Administrative Guidance and to update penalty and filing provisions.
Housing
- The Minister for Finance acknowledged that 'housing has been this Government's number one priority'. This year will see spending of over €9bn in capital investment for housing delivery over the next year.
- Local Authorities, central to the delivery of social and affordable housing, will be allowed to spend more of their own resources or borrow an additional €200m per annum on capital projects consistent with Government priorities.
- The income tax exemption under the Rent-a-Room relief will be increased from €14,000 to €16,000 per annum. The relief will also be extended to newly installed detached auxiliary dwellings of between 32 and 45 m2, with retrospective effect from 27 July 2026.
- The maximum refund that first-time buyers can claim under the Help to Buy Scheme will be increased by €5,000 to €35,000, effective from 7 October 2026.
- A further opportunity is being provided for landowners to avail of a rezoning exemption from the Residential Zoned Land Tax (RZLT). The RZLT aims to increase the amount of suitably zoned land in order to deliver increased housing. Landowners can avail of an exemption in 2027 if they seek to have their land rezoned "to reflect the genuine economic activity being carried out". Exemptions will be considered by local authorities on a case-by-case basis.
- The Derelict Property Tax which was announced last year will be included in Finance Bill 2026. The tax will apply to residential and non-residential properties, and the rate of the tax will be 7% of the self-assessed value of the property. Local Authorities will be responsible for identifying and recording properties on registers of dereliction. Preliminary registers of dereliction will be published on 1 September 2027, and the first pay and file deadline will arise in June 2028.
Conclusion
Overall, Budget 2027 seeks to balance further personal tax reliefs with measures intended to enhance Ireland's competitiveness as a location for investment and business. The plans to simplify our tax rules for interest relief, the enhancements to the R&D tax regime, the significant public investment in housing supply, and changes aimed at encouraging retail investment are likely to be of particular interest to international businesses and investors.
