Budget 2026: Securing Ireland’s future against economic headwinds

Resilience in a shifting global landscape.

As the Government approaches the first budget of its term, there’s a lot to be considered. With the introduction of tariffs and global economic headwinds, we see a completely changed economic environment. Infrastructural gaps and innovation capacity are challenging Ireland’s competitiveness. Despite current strong tax revenues and a robust fiscal position, the past few months have been turbulent for many Irish businesses with the future of our economy now uncertain. The decisions made by the Government in this year’s budget are crucial to securing Ireland’s economic prosperity.

The Irish Government’s €9.4bn budget package aims to navigate global uncertainties and address domestic pressures. Through various tax and spending strategies, the budget seeks to bolster Ireland's economic position, improve competitiveness, close infrastructural gaps, attract international investment and resolve social issues. With a €1.5bn tax package, there is very little room for tax cuts without needing to supplement the finances with other revenue streams. If the Government were to reduce VAT on hospitality from 13.5% to 9% (as has been proposed) that could cost approximately €867m. This measure is designed to support the hospitality sector in the face of rising cost pressures and shifting consumer demand, but it leaves very little room for other tax cuts

Below, we explore key priorities and potential measures the Government should consider to support individuals, private businesses and enhance Ireland’s appeal for foreign direct investment (FDI) and financial services (FS).

The lack of housing availability is increasingly cited as the primary challenge for companies operating in Ireland, affecting businesses’ ability to attract and retain talent. Tax policy can play a vital role in addressing this issue. Key measures such as reforming the Residential Zoned Land Tax (RZLT) and extending the Stamp Duty Residential Rebate Scheme are crucial to making housing development more viable and affordable. Additionally, implementing a temporary VAT reduction on new, affordable homes could enhance affordability for first-time buyers.

Sustainability in the housing sector is also essential. Reducing Capital Gains Tax (CGT) for retrofitted properties is recommended to encourage energy-efficient upgrades. Moreover, to encourage more private investment, modernising the Real Estate Investment Trust (REIT) regime could enhance sector stability by allowing greater flexibility in income distribution and reinvestment timelines.

Budget 2026 represents a significant opportunity for the Government to address Ireland’s infrastructural gaps, particularly in the transport and energy sectors. Thoughtful allocation in these critical areas will significantly impact Ireland’s long-term growth prospects and competitiveness.

Innovative tax policies to spur renewable energy investments (including the investment required in our port infrastructure and supply chain) and facilitate decarbonisation efforts will be vital. Tax incentives and reliefs for clean technologies and green industrial infrastructure will promote sustainable energy consumption and transport methods, helping Ireland transition to a greener future.

The recently released 2025 National Development Plan emphasises strategic investments in infrastructure to bolster Ireland’s competitiveness and sustainability. It aligns with Budget 2026 priorities, focusing on enhancing transport networks, expanding housing capacity, increasing grid capacity and advancing renewable energy projects to address existing infrastructural gaps.

By implementing targeted tax policy-led incentives, the Government can accelerate its infrastructure plans.

Budget 2026 must deliver a coherent strategy to boost Ireland’s attractiveness for FDI and listed groups. Simplification of the Irish tax system is crucial, not only for private businesses but also for global investors, to enhance competitiveness.

Offering incentives to encourage investment in Ireland around artificial intelligence (AI) and refining the research and development (R&D) tax credit would, in our view, make a significant impact on Ireland’s competitiveness.

The Government should also commit to modernising the tax regime by addressing current issues in relation to the participation exemption for foreign dividends and widening the scope of the regime to encompass branch profits.

Amendments in areas like interest deductibility rules and simplifying reliefs such as the Employment Investment Incentive Scheme (EIIS) are urgently needed to facilitate global investment.

A comprehensive review of all returns and reliefs should ensure they are accessible to foreign investors.

Backing private enterprises is crucial for Ireland’s economic success in the face of global uncertainties and tariffs. Businesses, both domestic and foreign-owned, are feeling significant pressures, exacerbated by the new tariff environment. The Government must deliver a strong message to the business community that Ireland is ready to do what it can to support growth, diversify trade and promote sustainable investment.

Enterprise Ireland has launched a fund specifically to support exporters affected by U.S. tariffs. The fund offers targeted grants designed to alleviate the financial impact on businesses engaged in international trade. To be truly effective, however, accessing these grants must remain straightforward and free from excessive administrative hurdles. Additionally, consideration should be given to establishing further funding options to ensure comprehensive support for all affected sectors.

Reducing Ireland’s Capital Gains tax (‘CGT’) rate from 33% to 20% to stimulate capital transactions and business succession could have significant benefits. Small changes, such as applying a 12.5% corporation tax rate to income generated from rental properties leased to employees and providing relief from benefit-in-kind liabilities for below-market rents, could make a difference at little cost to the Exchequer.

Furthermore, reformation of Employee Ownership Trusts’ taxation could ignite a new form of business succession planning, helping to retain jobs and wealth in Ireland and fostering growth in the indigenous sector.

Budget 2026 must prioritise enhancing Ireland’s appeal as a leading financial services hub. In an increasingly uncertain geopolitical environment, it’s time for meaningful action to strengthen our economic offering. Many jurisdictions are vying for the high-value jobs this mobile industry creates, so we must act now to stay ahead.

To maintain our competitive edge, we see three areas for action. First, targeted simplification measures for financial services taxpayers would further enhance Ireland’s offering. Urgent amendments to interest deductibility rules could also unlock global investment, while addressing branch taxation would further boost our sector appeal.

Next, we must focus on innovation and incentives. Encouraging investment in artificial intelligence (AI) and refining the research and development (R&D) tax credit would significantly boost Ireland’s competitiveness in the financial services space. Equally, reformed carried interest rules could attract fund managers, bringing more high-value jobs to our shores.

Finally, we need to position Ireland for the booming private assets sector. The global growth in this area presents a golden opportunity, but to capitalise on it we need to establish Ireland as a go-to domicile jurisdiction. Recent enhancements to the regulated Irish limited partnerships together with holding company reforms are positive. Now, we need targeted measures to make these truly fit-for-purpose in asset management. To achieve this, we should focus on simplifying the participation exemption and streamlining withholding tax on partnership repatriations.

Furthermore, implementing the recommendations from the Funds 2030 report to encourage retail investor participation would align with EU Savings and Investments Union objectives, positioning Ireland at the forefront of financial innovation.

Budget 2026 presents an important opportunity for the Government to tackle urgent national challenges while boosting Ireland’s economic standing both domestically and internationally.

Despite a substantial budgetary package, much of the funds are already allocated, leaving limited fiscal flexibility. Thoughtful allocation in critical areas, like housing, will significantly impact Ireland’s long-term growth prospects and competitiveness. It is paramount that Budget 2026 gets the balance right.

Stay informed with our expert insights ahead of Budget Day on 7 October 2025.