Shaping Ireland's Budget 2026: key themes from industry submissions

Irish advisers and industry bodies are setting the tone for Budget 2026 with a wave of detailed pre-Budget submissions.

These proposals, published by accounting and consulting firms, industry organisations, tax advisers and advocacy groups, aim to bring greater transparency to the pre-Budget process and shed light on the wide-ranging demands made of the Minister for Finance in October annually.

The main themes of all submissions include:

• increasing competitiveness of Ireland as a place to invest and do business. This is particularly relevant for both foreign direct investment and, a growing focus on, domestic small and medium size enterprises (SME)

• reducing tax complexity following several years of international and domestic tax changes
• providing certainty in a volatile macroeconomic environment

Risks identified in these submissions include the Exchequer’s dependence on a small number of multinational companies. The Tax Strategy Group identified that in 2023, the top 10 companies paid 52% of the net corporation tax receipts. While foreign-owned multinationals accounted for 35% of employment and 53% of employment taxes. This concentration of receipts within a small number of firms is a recognised vulnerability. It means that tax receipts are highly vulnerable to the business decisions of a small number of multinational companies.

Engaging with stakeholders

Transparency and open engagement with stakeholders are cornerstones of the tax regime. Below is a summary of the proposals under separate industry headings.

Financial services

• The clear priority for the Irish funds industry is the introduction of a dividend withholding tax exemption for investment limited partnerships and an exemption from anti-hybrid rules
• The Funds Sector 2030 report also recommended that the work to simplify and consolidate the tax regime for offshore funds is prioritised
• Introduction of an incentivised savings and investment account to stimulate a greater level of investment by the domestic retail sector
• Apart from their use in the funds and asset management industry, Section 110 SPVs are used for a wide range of purposes across many sectors including for the securitisation of mortgages by banks, the leasing of aircraft and the provision of receivables financing, to name a few. There are currently more than 3,500 Irish Section 110 special purpose vehicles (SPVs) holding assets of more than €1.1 trillion. There are a few existing requirements in the Section 110 rules which the industry believes are unnecessary from a policy perspective and impact on the efficiency and attractiveness of Ireland as a domicile for international fund managers and non-bank finance. These include deduction of foreign withholding tax (WHT), the day one €10 million test, eight-week election deadline and accounting standards

Real estate

• A call for a comprehensive review of the Tax Property Policy of the Irish government to support the building of residential and industrial properties
• Tax changes proposed include reduction in stamp duties, targeted interest deductions for development and to review Irish real estate funds (IREF) regimes for international investors

Corporate

• Developing a more simplified tax system. There has been an increase in tax changes in recent years due to the Organisation for Economic Cooperation and Development (OECD) base erosion and profit shifting (BEPS) programme. Ireland has implemented the introduction of controlled foreign company (CFC) rules, anti-hybrid rules, interest limitation rules and Pillar II. There is a common request to simplify the application of recently introduced legislative changes to Irish companies, particularly SMEs, including:
  • Controlled foreign company rules: the CFC rules are an anti-abuse measure, designed to prevent the artificial diversion of profits from controlling companies to offshore entities in low or no-tax jurisdictions
  • Anti-hybrid rules: anti-hybrid rules prevent arrangements that exploit the differences in the tax treatment of an instrument or entity. Differences can arise from the way in which that instrument or entity is characterised under the tax laws of two or more territories. This can generate a tax advantage or a mismatch outcome
  • Interest limitation rules: the interest limitation rule is intended to limit base erosion using excessive interest deductions. It limits the maximum net interest deduction to 30% of earnings before interest, taxes, depreciation and amortisation (EBITDA)
  • Pillar II: the Pillar II rules provide that income of large groups is taxed at a minimum effective tax rate of 15% on a jurisdictional basis
• The introduction of a participation exemption for foreign dividends and on foreign branch profits
• Increase the research and development (R&D) tax credit and expand for AI, digitalisation and ESG. The R&D tax credit is an important feature of the Irish corporation tax system. The primary policy objective is to increase business R&D in Ireland, as R&D can contribute to higher innovation and productivity. More broadly, the tax credit forms part of Ireland’s corporation tax offering aimed at attracting foreign direct investment (FDI) and building an innovation-driven domestic enterprise sector. The credit enables Ireland to remain competitive in attracting quality employment and investment in R&D
• Create additional incentives for entrepreneurs to invest in the domestic economy; for example, reducing the capital gains tax in new ventures
• Make the new enhanced reporting requirements (ERR) workable for SMEs

Conclusion

Ireland’s tax regime is a core element of our economic policy mix and is a longstanding anchor of our offering to attract FDI. In addition to the competitive rate and broad tax base, the Irish tax regime is notable for its long-term stability. 2025 marked the 23rd year of application of the 12.5% rate of tax to most trading profits. However, SMEs with less than 250 persons employed accounted for 99.8% of all enterprises and 69.2% of persons employed in 2021. Therefore, certainty, transparency and open engagement with stakeholders are cornerstones of the shift required in tax policy to divest our reliance on foreign investment.

How Ogier can help

If you wish to plan for these potential changes or learn of any future developments in your industry, contact tax partner John Perry using the details provided below.

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice