As we look ahead at 2026 the panel outlines their hoped-for changes to Ireland’s tax regime in the coming year with improving the taxation of investment funds for Irish investors, and fully implementing the recommendations of Funds Sector 2030 featuring prominently. The beed for eform of Ireland’s interest regime is highlighted as is the delayed introduction of a foreign branch exemption to complement the participation exemption for foreign dividends.
BDO’s Angela Fleming places the reform of Ireland’s interest regime at the top of her wishlist for 2026 and welcomes the recent publication by the Minister for Finance of the Feedback Statement for Phase One of reform of Ireland’s taxation regime for interest, published in October. The Feedback statement contains a ‘strawman’ for several fundamental reforms to the current regime, she writes, including new interest deductibility rules for corporation tax that include the introduction of a “profit motive” test for interest deductibility; the retention of the section 247 regime and the alignment of tax treatment between trading and passive interest income by moving to an accruals basis of taxation for non-trading interest income. This will be an area that industry will be engaging with the Department of Finance extensively and will be followed closely by the Irish Tax Monitor throughout 2026.
Also high on Fleming’s wish list is the now long-awaited introduction of a foreign branch exemption. She writes, ‘Ireland’s current worldwide system of taxation reduces our attractiveness as a location for inward investment due to the complexity and administrative burden of operating the tax and credit model. Thus the introduction of a foreign branch exemption is high up on our wishlist of tax changes for forthcoming budgets.’
Also on the wish list front McCann FitzGerald’s Deirdre Barnicle hopes to see further implementation of the Funds Sector 2030 recommendations. She writes ‘a complex and punitive tax regime discourages long-term retail investment in Irish funds. It is important that steps are taken to better align Irish fund taxation with international norms.’ Welcoming the cut to IUT in Budget 2026 she calls for a further reduction in IUT to bring in line with CGT. The Department of Finance is set to publish an eagerly awaited roadmap in early 2026 setting out the intended approach to simplify and adapt the tax framework to encourage retail investment.
With the rise of remote and cross-border working, determining whether an individual’s home outside an employer’s jurisdiction constitutes a permanent establishment (PE) has become increasingly complex, writes BDO’s Michelle Adams. She analyses the OECD’s recently published updated guidance on the Permanent Establishment (PE) article of the Model Tax Convention and the implications for employees working remotely from other jurisdictions. She writes, ‘To manage PE risks, enterprises should implement robust policies for tracking employee work locations and time spent, clarify the commercial rationale for any cross-border remote work, and ensure contractual arrangements reflect actual working practices. Regular reviews and clear documentation are essential to demonstrate compliance and mitigate potential tax and regulatory exposures.’
Elsewhere McCann FitzGerald’s Barnicle, writes on the OECD BEPS process and in particular the deep state of uncertainty around the Pillar 2 rules following the US decision to remove US-headquartered companies from Pillar 2 rules. She writes, ‘It is expected that many jurisdictions will wish to reassess their eligibility for a “side-by-side” system, looking to redraft or amend legislation to increase competitiveness. Countries who have not yet implemented Pillar 2 (e.g. China, India and Brazil) will likely seek to reconsider the application of Pillar 2 rules as currently drafted in light of the exemption for US-parented companies.’
Barnicle also gives her insights into developments around encouraging pension savings at national and European level, including Ireland’s MyFutureFund and the European Commission’s November proposals to boost supplementary pensions. She also highlights the upcoming increase of the Standard Funds Threshold in January 2026 – the SFT is the maximum value an individual can accumulate on all retirement benefits before triggering additional tax charges. She writes The threshold of €2,000,000, which has not changed since 2014, will be gradually increased each year starting from 2026. This reduces the risk of high earners and long-term savers limiting pension contributions due to a future Chargeable Excess Tax (CET) at a rate of 40%. The government has committed to reviewing the rate of CET following the recommendation to reduce the rate to 10% in the state-commissioned 2024 SFT report.
This article appeared in the December 2025 edition of the Irish Tax Monitor.
