Global Daily Tax News, Ireland Responds To Feedback On Interest Tax Rules Overhaul, (Nov 25, 2025)

The Irish Government has published a Feedback Statement on the ongoing work to reform Ireland's tax regime for interest.

The consultation, which ran from September 2024 to January 2025, had sought feedback on a proposed fundamental reform of the underlying framework for the taxation and deductibility of interest. The Irish Government has said it will phase in the reforms, which are intended to ensure a "simplified regime that supports competitiveness and protects the tax base".

Following consideration of the responses, an Action Plan for the reform of Ireland's taxation regime for interest was published by the Department of Finance on October 7, 2025. The Action Plan sets out a phased approach, with Phase One addressing some of the primary concerns raised by stakeholders.

According to the Action Plan, the key themes and proposals put forward by stakeholders were as follows:

• The alignment of tax treatment between trading and passive interest income for income tax and corporation tax purposes, including a move to an accruals basis of assessment for interest income under Case III and Case IV of Schedule D;

• The introduction of a renewed and simplified test for the deductibility of interest, which would align the treatment between trading and passive interest expenses, for the purposes of computing corporation tax;

• The widening of the scope of interest deductibility to include 'interest equivalent' amounts which are economically equivalent to interest expenses.

Additional areas of potential reform will be addressed under subsequent phases.

Commenting on the publication of the Feedback Statement, Minister for Finance Simon Harris said:

"This reform is proposed in order to help Ireland retain an attractive and internationally competitive taxation environment. It aims to align Ireland's tax system with international best practice, and to provide administrative simplification and give greater certainty to Irish businesses. Responses received will help inform changes to be included in Finance Bill 2026 and I would encourage all interested parties to engage with this opportunity to contribute to Ireland's tax policy to ensure that it continues to encourage investment."