Padhraic Mulpeter, Tax Consultant, Walkers (Ireland) LLP: Notwithstanding the very positive tax regime we currently have in place for Irish fund structures, there are a couple of areas where we would like to see some enhancements.

The Funds Sector 2030 report identified some areas for potential changes to the Irish tax regime. We have already seen some positive movement on this front with the introduction of a dividend participation regime in Finance Act 2024. The changes announced in the Budget to update and expand this exemption are welcome and should bring us more in line with other jurisdictions. Where possible, private equity managers typically want to establish the subsidiary holding companies in the same jurisdiction as the fund vehicle (i.e. an ILP). There is one notable gap in our taxation regime for this type of structure - the current lack of a dividend withholding exemption on Irish dividends paid to an ILP is undermining the attractiveness of the ILP regime and this was recognised in the Funds 2030 Report. We are hopeful that this gap will be addressed in Finance Bill 2025.

As a result of recent reforms to dividend taxation, dividends from qualifying non-resident subsidiaries to an Irish holding company are now generally exempt from tax (assuming the relevant conditions are satisfied). This is the case regardless of whether the subsidiary is trading (under Irish tax principles) or not. However, a sale of a non-trading subsidiary is potentially subject to Irish capital gains tax. This creates an incoherence which can lead to Ireland being discounted as a location for investment vehicles. Ireland compares unfavourably with other jurisdictions where there is an equality of treatment between dividend taxation and capital gains taxation.

The existence of a trading requirement complicates the practical operation of the exemption as it requires an assessment in relation to trading status either at the subsidiary level or in respect of the combined position of the parent and its qualifying subsidiaries. We would like to see some changes made in Finance Act 2025 to rectify this inconsistent tax treatment.

These measures, if introduced, would further enhance Ireland's holding company regime and make Ireland a more attractive location for private asset investment.

Colin Farrell, Tax Partner, Financial Services, PwC Ireland: While Budget 2026 provided some announcements of the participation exemption for foreign dividends, the geographic scope remains narrow (including after the amendment) and falls short of international reforms.

The definition of “relevant subsidiary” is also overly restrictive, particularly where it requires information about third-party companies. Closing this knowledge gap for parent companies would make compliance feasible and encourage greater use of the exemption. Moreover, including Ireland as a “relevant territory”, which currently appears unintended and unfair, would be a welcome change in Finance Bill 2025. Rectifying this, with retrospective effect to 1 January 2025, when the participation exemption rules were brought into force would improve the legislation.

It is crucial that Finance Bill 2025 addresses key issues concerning the Residential Zoned Land Tax (RZLT). Notably, the current legislation penalises forward fund transactions, common among developers and Approved Housing Bodies, through clawback provisions. Additionally, the definition of “residential property” should be broadened, alongside introducing appropriate exemptions or deferrals. Protections should also be provided for landowners appealing judicial reviews related to planning permission. Urgently addressing these matters would significantly enhance the effectiveness of RZLT as a tax incentive to alleviate the ongoing housing shortage.

Other areas likely to feature in this year’s Finance Bill are firstly, the introduction of automatic exchange of top-up tax information returns under Pillar Two between EU Member States in accordance with DAC9, as adopted by the European Commission and secondly, changes to interest rules that apply to the leasing sector to simplify the regime and encourage investment in the aviation industry.

Deirdre Barnicle, Partner, McCann FitzGerald: From an Irish funds sector perspective, it is very disappointing that the Budget 2026 did not include a number of key provisions as recommended by the Department of Finance in the Funds Sector 2030 Report, published in October 2024. The Report had recommended a number of tax changes designed to ensure that Ireland maintains its leading position in the asset management and funds servicing industries. While the reduction in the rate of investment undertaking tax for Irish resident individual investors from 41% to 38% is welcome, it falls far short of the recommendation to reduce the rate to 33% to align it with the CGT rate as set out in the Report.

Separately, it is very disappointing that there has been no introduction of an exemption from Dividend Withholding Tax (DWT) from distributions to Investment Limited Partnerships (ILPs), particularly as the Department of Finance had engaged in a formal consultation process with key stakeholders on a potential exemption earlier this year. Similarly, the failure to remove the eight-year “deemed disposal” rules, which trigger an exit tax on the eighth anniversary of an investment in an Irish authorised fund for Irish tax resident investors is disappointing as this is a significant deterrent for Irish individuals to invest in Irish authorised funds. However, it is helpful that an Implementation Plan for the Funds Sector 2030 Report was published on Budget Day which notes that many of these key measures are under consideration and demonstrates a commitment of the Government to introduce these changes in the medium to long term. We hope to see further detail on a timeline for these changes in a further Roadmap which is to be published in early 2026.

In relation to R&D, the Minister announced that further changes to the R&D Tax Credit are being considered, with a R&D Compass to be published in the coming weeks. We would hope that the upcoming Finance Bill would include a broader definition of qualifying expenditure, as well as a reduction in the cap for outsourced R&D, to better recognise the commercial realities of modern R&D investment.

Finally, we note that the 2024 Indecon Report made several recommendations as to the taxation of share-based remuneration, such as restricting the scope of the employer PRSI exemption and changing the tax treatment of RSUs for internationally mobile employees. While it is disappointing that these measures have not been implemented in Budget 2026, it is hoped that the Finance Bill 2025 may contain some of these recommendations.

Claire Healy , Partner, Transfer Pricing, Forvis Mazars: The announcement of Budget 2026 was met with a sense of disappointment among many. It has been described by the Minister of Finance as a budget that builds on Ireland’s resilience and seeks to secure jobs, prosperity and stability, with many of the tax changes expected being deferred or subject to further consultation. While many of the details outlined in the Minister’s speech and various Department of Finance publications since will be accurate representations of what will make it to Finance Bill 2025, a number of details remain to be seen.

A number of technical amendments are to be made to the participation exemption for foreign dividends introduced last year. Details of the impact of the VAT reduction on co-living and student accommodation remain to be clarified. Details of a potential cap on the number of units in a development of apartments entitled to claim the enhanced corporation tax deduction remain to be seen, given that this gives a tax saving of €6,250 per apartment to developers. Details of the Residential Zoned Land Tax introduced in Budget 2022 are to be elaborated on in the upcoming Finance Bill also.

Several initiatives outlined by the Minister are subject to approval by the European Commission, however, as none of these are contentious in nature, we do not foresee any issues arising.

With the exception of the above, and a few other immaterial amendments, we would not expect many shocks when Finance Bill 2025 is published in the coming weeks.

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