Financial services - Budget 2026

Bank Levy

The Bank Levy introduced in Budget 2014 will be extended to the end of 2026 and will continue to affect Bank of Ireland, AIB, EBS and PTSB, all of whom received assistance from the State during the banking crisis.

It is expected that this levy will generate €200m in revenue for the exchequer.

Fund taxation reform: Encouraging retail investors

A significant change announced in Budget 2026 is the reduction in the Investment Undertaking Tax (IUT) and Capital Gains Tax (CGT) rate applicable to equivalent offshore funds, from 41% to 38%. This move directly responds to the Funds Sector 2030 Review, which highlighted the punitive nature of Ireland’s fund taxation regime for retail investors.

Historically, Irish-domiciled funds have been subject to a flat 41% exit tax, discouraging domestic retail investors participation. The new rate aims to:

• Encourage Irish retail investors to invest in domestic funds.
• Level the playing field between direct equity investments (taxed at 33% CGT) and deposit interest (taxed at 33% DIRT) with Irish Fund investments.
• Support long-term saving culture by making fund products more attractive and accessible.

A similar change is made to equivalent offshore funds, in order to remain compliant with EU free movement of capital requirements.

While the reduction may be considered modest, it signals a broader intent to reform the fund taxation regime, potentially paving the way for further alignment with CGT rates and the removal of the eight-year deemed disposal rule in future budgets.

Stamp Duty: Market Cap Exemption

To bolster Ireland’s domestic equity market, Budget 2026 introduces a stamp duty exemption for shares of Irish companies with a market capitalisation below €1 billion, provided they are traded on a regulated market.

This measure is designed to:

• Stimulate retail investment in Irish SME companies.
• Revive IPO activity and support indigenous enterprises seeking capital.
• Enhance liquidity and competitiveness of the Irish Stock Exchange following some notable departures.

The exemption addresses long-standing concerns about the 1% stamp duty on share trades, which has been viewed as a barrier to equity market participation, especially when compared to other EU jurisdictions.