Joe Walsh, Director, Financial Services Tax, Forvis Mazars: There is deep disappointment following the announcement of Budget 2026, citing a lack of meaningful progress on long-anticipated reforms, particularly in the tax treatment of interest, and the deferral of key strategic initiatives to a later phase that won’t be implemented until at least 2027.

One of the most pressing issues for the financial services sector was the expectation of immediate changes to the tax treatment of interest. Following extensive consultations earlier in the year, industry stakeholders had hoped Budget 2026 would deliver concrete legislative updates to modernise and simplify Ireland’s interest deductibility regime.

Instead, the Department of Finance published an “Action Plan” for Reform of Ireland’s Taxation Regime for Interest, outlining a phased approach. While Phase 1 includes proposals to align the treatment of trading and passive interest income and to simplify deductibility tests, these measures are only expected to be considered in Finance Bill 2026, with further reforms, including those in relation to Section 110 Companies, Bond-washing Rules and Encashment Tax, pushed into Phase 2, which won’t be introduced until 2027 or later (if at all).

This delay has frustrated many in the industry, who argue that the current framework is outdated and inhibits Ireland’s competitiveness in attracting international capital and supporting domestic growth.

There is a growing consensus that the Government must have greater urgency in its reform plans. The financial services sector is a cornerstone of Ireland’s economy, and delays in modernising its tax frameworks could have long-term consequences.

Deirdre Barnicle, Partner, McCann FitzGerald: Budget 2026 has been marketed as a framework for economic resilience in uncertain global times, seeking to implement measures focused on job security, long-term savings funds and investment in housing and infrastructure. However, the Minister for Finance has recognised the importance of continuing to promote competitiveness and growth in a challenging international environment and has included a number of measures that will assist in this regard.

Multinational businesses will benefit from the enhanced participation exemption for foreign dividends. The exemption, which previously only applied to dividends paid from subsidiaries from the EU/EEA or jurisdictions with which Ireland has a double taxation agreement, has now been extended to include jurisdictions that apply a non-refundable dividend withholding tax. This enhances Ireland’s appeal as a base for parent companies with subsidiaries outside the EU/EEA. In addition, the tax residency period required to avail of the relief has been reduced from five years to three years.

The increase in the R&D Tax Credit from 30% to 35% is also a welcome development in the context of R&D investment and innovation in Ireland. As discussed in further detail below, this will be the first effective increase in the rate for multinationals within the scope of the Pillar 2 rules since 2008. The increase of the first-year payment threshold is also welcome.

A key change for the Irish investment fund sector is the reduction of investment undertaking tax from 41% to 38% in respect of “chargeable events” arising in respect of Irish resident individuals. While it is disappointing that the rate of IUT was not reduced to 33% to align with the CGT rate, as recommended by the Funds Sector 2030 Report published in October 2024, this is a move in the right direction and the publication of the Implementation Plan for the Funds Sector 2030 Report on Budget Day signifies the commitment of the government to implementing the Report’s recommendations in the short to medium term.

The Budget introduces a new stamp duty exemption on the acquisition of shares in Irish incorporated companies trading on a regulated market. The exemption focuses on the growth of SMEs, carrying a market cap threshold of €1 billion. This exemption will replace the current stamp duty relief on shares in Irish incorporated companies listed on the Euronext Growth Market. This change is a targeted incentive to boost investment in homegrown SMEs. Irish incorporated companies have long cited the stamp duty rate as a disincentive against floatation and the exemption is hoped to reduce friction costs for SMEs wanting to list beyond the Euronext Growth Market. It follows a general commitment by the Government to prioritise growth and expansion, having chosen to forego a forecasted €24 million in stamp duty receipts per annum in favour of an investment in Ireland’s capital market activity.

In response to the EU’s plan to simplify the VAT administration framework, the Minister announced a phased roll-out of domestic e-invoicing for business-to-business transactions. Further details will be released on the mechanics of the process in the coming days, but it is expected that a modernised VAT system should reduce tax compliance costs for businesses in the longer term.

Colin Farrell, Tax Partner, Financial Services, PwC Ireland: Budget 2026 highlights Ireland's ongoing efforts to maintain its status as a competitive business hub. A headline announcement is the increase in the R&D tax credit to 35%, a decisive measure aimed at bolstering innovation. This enhancement will attract further investment, reinforcing the country's position as a leader in high-tech industries.

However, despite this positive step, there are concerns about Ireland's overall competitiveness. The high capital gains tax (CGT) rate remains unchanged at 33%, which hinders investment. Additionally, the lack of reform in the complex deemed disposal rules for exchange-traded funds (ETFs) continues to pose a challenge for investors. Addressing these issues is crucial for fostering a more inviting investment environment.

Moreover, no initiatives have been introduced to simplify tax administration, leaving existing complexities in place. A streamlined tax system could significantly reduce the administrative burden on businesses, thereby enhancing competitiveness. In particular, the Form CT1 has more than doubled in length in the last decade. Many sections are irrelevant for indigenous SMEs, yet still need to be filled out, greatly and unnecessarily increasing their compliance burden.

With the introduction of a participation exemption for foreign dividends in last year’s Finance Bill, Budget 2026 announced an expansion of the exemption’s geographic scope to include jurisdictions where non-refundable withholding taxes apply. The look-back period has shortened from five years to three years, helping to alleviate the challenges companies are facing.

While the Budget projects a pro-business stance with a strong focus on investment and job creation, the heavy reliance on volatile corporate tax revenues poses a risk. Although revenues have surged, this reliance can make public finances vulnerable to economic fluctuations.

Overall, while Budget 2026 takes steps towards enhancing R&D, expanding the participation exemption, and maintaining economic activity, it leaves critical issues untouched. Addressing the high CGT rates and simplifying tax rules would be essential moves to strengthen Ireland's competitive position on the global stage.

Padhraic Mulpeter, Tax Consultant, Walkers (Ireland) LLP: Although there were relatively few Budget announcements relating to immediate legislative change in the financial services sector, overall, the measures and consultations announced are positive for the sector.
Broader tax simplification measures relating to the tax treatment of interest, dividends and withholding taxes have been sign-posted in the Budget. In particular, the publication of an action plan with the aim of reforming Ireland’s tax regime for the taxation and deductibility of interest is very welcome. The reform is essential for Irish businesses seeking to raise finance to support growth, and more broadly for taxpayers and advisors to apply the rules, which have in recent years become multi-layered and difficult to navigate.

Although the reduction in exit taxes from 41% to 38% for individual Irish taxable investors in Irish domiciled regulated funds and life assurance policies is a positive, it falls short of industry hopes of significant change to these tax rules. Irish retail investors remain incentivised by our tax system to consider riskier investment options, such as individual share acquisitions (CGT at 33%), rather than highly regulated and sophisticated Irish and EU funds.

We are hopeful that there will be further changes to the tax rules applicable to Irish retail investors. The promise of a roadmap to be published early next year setting out the intended approach to adapt the Irish tax framework to encourage retail investment is a welcome next step in that process.

This article appeared in the October 2025 edition of the Irish Tax Monitor.