Global Daily Tax News, Numerous Tax Changes For Businesses In Ireland's New Budget, (Oct 9, 2025)

Ireland's 2026 Budget, announced on October 7, 2025, includes various changes to the nation's tax incentives for businesses.

Numerous changes are proposed to the research and development tax credit, including increasing the rate of the Credit from 30 percent to 35 percent; and increasing the first-year payment threshold from EUR75,000 to EUR87,500. The Government has also committed to publishing a roadmap for reform of the credit, stating measures will be identified in the coming weeks to better align the incentive with industry practices, for example in the areas of outsourcing and qualifying expenditure definitions. It will also set a pathway for development of innovation supports, the Government said.

The Government has also announced it will enhance the participation exemption for foreign dividends introduced last year. The Government has said it will update and enhance the rules by expanding the geographic scope of the exemption to include jurisdictions where non-refundable withholding taxes apply, and providing for a number of technical amendments to improve the operation of the relief.

Alongside the Budget, the Government has released an Action Plan on reform of Ireland's tax regime for interest. The Government said, "The Action Plan is informed by responses received to an extensive consultation on the tax treatment of interest in Ireland. The primary request arising from that consultation is for fundamental reform of the underlying framework for the taxation and deductibility of interest. The phased approach of the plan will progress reforms to achieve a simplified regime that supports competitiveness and protects the tax base. In this regard, a feedback statement will be published in November for further consultation."said.

The Budget announces changes to tax reliefs for the visual effects industry and for the production of digital games. Specifically, the Section 481 Film Tax Credit will be enhanced to provide for a new 40 percent rate of relief for productions with a minimum of EUR1m of eligible expenditure on relevant visual effects work. This rate will apply up to a maximum of EUR10m per production.

For the digital games sector, the Digital Games Tax Credit will be extended for six years to December 31, 2031. The Credit will also be extended to post release content work, where the credit was claimed in respect of the game on initial release.

Other changes to tax reliefs include:

• improvements to the Capital Gains Tax Revised Entrepreneur Relief by increasing the lifetime limit on gains to which the relief applies, from EUR1m to EUR1.5m for disposals made from January 1, 2026;

• extension of the Key Employee Engagement Programme until the end of 2028;

• extension of the Special Assignee Relief Programme for five years while also increasing the minimum qualifying income to EUR125,000;

• extension of the Foreign Earnings Deduction (FED) for five years, an increase to the level of relief available to EUR50,000, and expansion of the scheme to include the Philippines and Turkey;

• extension of the EUR5,000 VRT relief for electric vehicles for one more year, and also benefit-in-kind regime concessions for company cars;

• extension of the Accelerated Capital Allowances schemes for energy efficient equipment and for gas vehicles and refuelling equipment for a further five years until December 31, 2030;

• extension of the Farm Consolidation (Stamp Duty) relief, Farm Restructuring (CGT) relief, and the Young Trained Farmer (Stamp Duty) relief to the end of 2029; and

• expansion of the scope of Farm Restructuring Relief to include woodlands and forestry.

Other announcements in the Budget include:

• the upcoming launch of a consultation on modernizing the administration of withholding taxes and expanding their scope;

• a reduction to the tax rate that applies to Irish and equivalent offshore funds and foreign life assurance products from 41 percent to 38 percent;

• the introduction of a new market cap exemption Stamp Duty threshold of EUR1bn for Irish SMEs and start-ups trading on regulated markets. For companies below this threshold, the one percent Stamp Duty charge paid on share transactions will not apply; and

• a one-year extension to the Bank Levy.