Budget 2026 roundtable with Irish Tax Monitor

Consumer tax incentives

Speaking recently at the FSI Annual Lunch Declan Bolger, chair of FSI and CEO of Irish Life, highlighted the success of consumer tax incentives in other countries to encourage savings and investment, citing the Swedish ISK savings account as an example. In your view what incentives or schemes should be put in place to  encourage greater consumer/retail participation in light of EU ambitions to develop a Savings and Investment Union (SIU)?

Sweden’s ISK account offers a simplified and tax-efficient way for individuals to invest. Instead of taxing capital gains and dividends, the ISK applies a low annual standard tax on the account’s value. This approach reduces complexity for investors, lowers the tax burden compared to traditional investment accounts and encourages long-term investing by removing disincentives to sell or rebalance portfolios.

To replicate this success and foster a vibrant retail investment culture, Ireland could introduce incentivised accounts similar to Sweden’s ISK. These accounts could offer tax exemptions or reductions on capital gains and dividends, be simple to open and manage, and be accessible through both Banks and FinTech platforms.

The EU could look to harmonise or remove cross-border withholding taxes within the EU. This would encourage pan-European investment, reduce the administrative burden on investors and make the SIU more attractive to retail investors through greater returns from EU-wide competition for their savings.

Savings & investment union

In light of the EU’s “Savings & Investment Union” (SIU), published in March 2025, and the recommendations from the Draghi report, what suggestions do you have to support capital raising efforts? Please refer to any recommendations from your own firm’s pre-Budget submissions.

The Draghi Report, a strategic blueprint for revitalising European competitiveness, places strong emphasis on deepening capital markets and improving financial integration across the EU. For Ireland, a jurisdiction

already recognised for its robust and internationally respected Section 110 regime, the report’s proposals offer a timely opportunity to reinforce its leadership in the securitisation space. The Draghi Report Supports Ireland’s Tax and Securitisation Ecosystem. The Draghi Report calls for a revitalised Capital Markets Union (CMU), which includes harmonising tax and insolvency regimes across member states. This aligns well with Ireland’s Section 110 framework, which already offers a tax-efficient and compliant structure. As the EU moves toward greater integration, Ireland’s established regime can serve as a model for best practices. Draghi emphasises the need to unlock private capital to support innovation and growth. Ireland’s Section 110 companies are ideally positioned to channel institutional and private investment into European assets, including green and digital infrastructure, through securitised products.

The report highlights the inefficiencies caused by regulatory divergence. Ireland’s clear and consistent tax treatment under Section 110 reduces complexity for investors and originators alike. As the EU seeks to streamline financial regulation, Ireland’s regime stands out as a ready-made solution that can be scaled or replicated. The Draghi Report’s vision for a more competitive, integrated, and sustainable Europe aligns closely with Ireland’s strengths in the securitisation sector. With its well-established Section 110 regime, Ireland is not only prepared to benefit from these reforms but also to lead by example. By continuing to offer a transparent, efficient, and investor-friendly tax environment, Ireland can attract more securitisation activity and play a pivotal role in the EU’s financial future.

Housing

What are the main points from your firm’s pre-Budget observations on housing?

With an ongoing housing shortage and slowdown in new home completions forecast for 2025 and 2026, the housing crisis is being seen as an obstacle to continued economic growth, with our young, educated workforce looking for opportunities outside of Ireland and a negative impact on Ireland’s attractiveness as an investment location. There is a real need for tax incentives and reliefs that focus on addressing the supply and affordability of housing.

To address the issue of supply, there is a need to incentivise investment in residential property and development, in addition to supporting landlords. A number of avenues could be explored, including, a review of the Residential Zoned Land Tax (RZLT), tax relief for residential property constructed by employers for employees, the reintroduction of a ‘Section 23’ style relief to incentivise the development of residential units for letting and a reform of the taxation of case V rental profits. The limited availability of labour in the building industry could be alleviated by increasing support for apprenticeships and training in the construction sector.

To support the affordability of housing, from a personal perspective, an exemption from a BIK charge on employer-provided assistance for accommodation could help those on

lower incomes in areas such as Dublin, where rent prices are particularly high. The Rent Tax Credit could be extended beyond 2025, with an increase in the maximum credit beyond the current €1,000 per person and €2,000 per couple. An extension to mortgage interest relief would also be welcomed.

Budget 2026 – Opportunities

In reference to your firm’s pre- Budget communications, what are the major opportunities for the Minister of Finance to target in Budget 2026 to boost competitiveness and drive sustainable growth?

In order to maintain Ireland’s competitiveness, we would welcome a reduction in the Capital Gains Tax (CGT) rate from its current 33% to 20%. As it stands, Ireland’s CGT rate remains one of the highest in Europe. The reduction in the CGT rate would help encourage entrepreneurship and future investment in SMEs.

While CGT treatment, rather than income tax, can apply to shareholders who meet the share buyback provisions currently legislated for, the application of CGT  treatment in all cases where a shareholder fully exits a business for bona fide purposes would facilitate transfers of businesses to the next generation, which is needed by SMEs.

Further improvements to the Employment Investment Incentive Scheme (EIIS), including simplification of the scheme, are needed to make it more attractive to investors and improve access to finance for SMEs.

Given that Angel Investor Relief only came into effect on 1 March 2025, there is a real need for an extension beyond the current investment deadline of 31 December 2026, as outlined in Budget 2025. We would welcome an extension to 31 December 2028, together with further simplification of the scheme to achieve the desired uptake for this incentive to support SMEs.

In terms of domestic and FDI growth, the need to attract and retain high performing

employees remains critical; there is a call for the reform of the key employee engagement programme (KEEP), including an extension to the relief to 31 December 2028 and the extension of the SARP regime to new hires.

Extension of the Accelerated Capital Allowances (ACA) scheme to 31 December 2028, including an emphasis on the acquisition of green technology with a super deduction in the year of acquisition of, say, 130% for the purchase of green technology products from Irish businesses, would be positive.

Tax simplification

What are the main points from your firm’s pre- Budget observations on Tax Simplification?

Tax simplification and reducing the complexity and burden of tax compliance are key to driving Ireland’s competitiveness.

While the introduction of participation exemption legislation for dividends in Budget 2025 was welcomed, the way this new legislation operates does not provide the simplification that tax professionals and taxpayers were hoping for. The new legislation only applies to dividends received from a limited number of foreign countries and only for dividends paid out of profits. Distributions made by certain companies are specifically excluded.

Overall, this new legislation only simplifies the double taxation of some dividends while maintaining the same requirements for the rest. Simplification and widening of the scope of this new legislation in the next budget would be very welcome.

The taxation of branch profits and the tax and credit relief system currently in place could be simplified with the adoption of a participation exemption for branch income by Irish companies. For this to be beneficial, the legislation would need to avoid the pitfalls of the dividend participation exemption.

A simplification of the CT1 Form in general is called for, as it now stands at 62 pages, in particular the section on R&D credit. This section has grown significantly over the past two years, increasing the risk of error when completing it, with genuine R&D Credit claims potentially being refused if a box is incorrectly completed or missed. While the legislation has been extended to encourage and benefit smaller companies, the complexity related to the making of the claim feels counterproductive.

Furthermore, there is a call to reduce the complexity of our interest regime along with increasing the accessibility of the digital gaming tax credit and patent box regimes.

Domestic tax law reform

What is your number one wish for domestic tax law reform?

Over the past 30 years, Ireland has established itself as a prominent hub for the global investment industry.

However, a notable anomaly in this success is the relatively low level of investment from Irish retail investors. The primary reason for this anomaly is the high tax burden imposed on Irish retail investors, with Investment Undertaking Tax (IUT) generally set at 41%, compared to Deposit Interest Retention Tax (DIRT) on deposit interest and Capital Gains Tax (CGT) at 33% and the eight-year deemed disposal which imposes a tax on any unrealised gains upon the eight anniversary of first investing in the fund and each eight years  thereafter. IUT is levied irrespective

of the retail investor’s individual circumstances, even when they have incurred losses on other investments.

Finance Bill 2025 presents the Government with an opportunity to level the playing field. By aligning the IUT rate with the DIRT and CGT rates, and removing the eight-year deemed disposal, the Government can support the domestic fund industry and provide Irish retail investors with a viable alternative to leaving their money in low-interest deposits. While the risk profile of investments in funds is higher than that of deposits, a properly managed portfolio of fund investments can yield modest returns for Irish retail investors. However, a crucial aspect of this investment strategy is the ability to offset any losses made on one investment against gains from other investments.

In turn, these investment funds can benefit the local economy by investing in Irish housing and infrastructure projects, areas where the Government is struggling to meet the demands of Ireland’s fast-growing economy.