Budget 2027: From strength to sustainability

Ireland approaches Budget 2027 from a position of strength, with high employment, strong investment, and productivity levels that outpace many peers. However, housing shortages, infrastructure constraints, energy costs, and geopolitical instability are testing that resilience. AI, geopolitical conflict, and trade volatility are reshaping the global economy. Budget 2027 is an opportunity to prioritise practical choices that will create the right ecosystem for business and strengthen resilience for future generations.

Budget 2027 is being shaped by a strong, but not risk-free, fiscal position. The overall package is €8.5 billion: €1.5 billion of tax measures and €7 billion of additional spending. Tax revenues in the first half of 2026 exceeded €50 billion — €2.3 billion ahead of the same period last year. Surpluses are helping build reserves, but Ireland’s tax base remains concentrated. With just ten companies accounting for more than half of corporation tax receipts, such tax revenues should not be treated as permanent funding sources.

The Future Ireland Fund helps to defend against concentration risks, with almost €16 billion transferred to date and contributions projected to reach almost €40 billion by 2030. But resilience to income shocks isn’t only a public-sector responsibility.

Ireland also needs a stronger household savings and investment culture that channels capital towards long-term growth. A simple, broad-based savings and investment account with tax-free limits and access to a wide range of regulated products could complement pensions and encourage earlier participation in investing and saving. It should be introduced alongside reforms to the taxation of funds and life assurance, including aligning Life Assurance Exit Tax and Investment Undertakings Tax with the 33% capital gains tax (CGT) rate and abolishing the eight-year deemed disposal rule.

Finally, ensuring that work pays should be addressed via changes to the personal tax regime, particularly by extending the standard rate income tax band. Although an expensive tax expenditure, this will have knock-on benefits for all sectors, attracting and retaining talent.

Competitiveness is no longer secured by a headline low tax rate alone. Infrastructure gaps, high energy costs, and regulatory complexity undermine the overall offering. Budget 2027 should reduce friction for businesses that invest and employ in Ireland.

Tax simplification is a competitiveness tool. Short-form, pre-populated corporation tax returns for smaller companies, clearer legislation and guidance, and a root-and-branch streamlining of complex reliefs would reduce the burden of compliance and give taxpayers greater certainty. The same principle should apply to cross-border investment. Expanding the participation exemption for foreign dividends, introducing a branch exemption, and simplifying interest rules would make Ireland a more attractive and straightforward place to invest.

Pillar Two is now a reality for large multinationals operating in Ireland, but the compliance burden remains disproportionate to the €1.2 billion of additional revenue raised to date. Budget 2027 should commit Ireland to insist on immediate and comprehensive simplification of the GloBE rules at EU and OECD level, supported by clear, timely domestic guidance and streamlined reporting requirements. This would protect Ireland’s competitiveness while meeting its international commitments.

Innovation policy should extend beyond traditional R&D and support the adoption and commercial deployment of new technologies. A refundable, expenditure-based incentive tied to qualifying expenditure would fill the policy gap between traditional R&D and commercial roll-out, allowing support for the ‘missing middle’ of digitalisation, decarbonisation, and the commercial deployment of established technologies. Alongside that, R&D outsourcing rules should reflect collaborative business models by allowing connected-party outsourcing (with safeguards) and increasing the third-party cap from 15% to 30%.

Finally, 100% first-year capital allowances for qualifying AI equipment and related technology should support investment that enables businesses to develop new products, services, and revenue streams while also generating productivity gains.

Long-term resilience depends on building a stronger base of Irish-owned businesses that can scale internationally while remaining headquartered in Ireland. A stronger indigenous business sector creates jobs, broadens the tax base, and gives households more opportunities to participate in Ireland’s economic success. Budget 2027 should make entrepreneurship and growth more attractive, particularly for founders who are building businesses over time rather than selling early.

A targeted 20% CGT rate for qualifying investments in active trading businesses would encourage productive investment and business succession. Revised Entrepreneur Relief should have its lifetime limit increased from €1.5 million to €5 million, alongside a targeted scale-up relief for entrepreneurs who retain shareholdings as their companies grow. Employee ownership trusts should be made workable as an onshore succession option, helping preserve ownership and value in Ireland. For employees earning up to €26,000, a temporary PRSI rebate of up to 50% could ease wage pressures and support stable employment.

The €12,700 annual limit for approved profit-sharing schemes has not been revised in decades and increasing it to reflect current pay levels would bring the regime in line with modern equity practices and help firms retain key employees. Simplifying the small benefit exemption, including the removal of the ‘first five’ cap while retaining the €1,500 value limit, would reduce unnecessary administration.

Private enterprise cannot scale without homes and infrastructure. Measures to accelerate modern methods of construction, a time-limited development levy waiver, a broader help-to-buy scheme including second-hand properties, a retrofit tax credit linked to BER improvements, and a targeted CGT exemption for refurbished derelict properties would help expand housing supply and bring existing properties back into productive use.

The conflict in the Middle East has triggered a second fossil fuel shock in less than five years, pushing up energy costs and reminding us that Ireland remains exposed as a net importer. The response cannot be limited to short-term relief measures. Budget 2027 should accelerate investment in secure, sustainable domestic energy and strengthen long-term resilience.

Private capital will be essential to scale renewable energy generation, strengthen the grid, and support industrial electrification. Targeted accelerated capital allowances, broader eligibility for energy-efficient equipment, incentives for clean technologies, and a reduced VAT rate for renewable or waste-sourced district heating would improve project economics. Support for network construction and domestic supply chains would help move from ambition to delivery.

The National Development Plan provides for record capital expenditure of €20.3 billion in 2027, including investment in energy, transport, water, and housing. But funding alone will not close the infrastructure deficit. Delays in planning and project delivery increase costs and constrain business expansion, ultimately weakening Ireland’s competitiveness.

Budget 2027 should pair capital commitments with practical delivery. Planning bottlenecks should be removed, tax and capital allowance treatment clarified for complex projects, and targeted incentives used to encourage private investment. Energy and infrastructure policy should be judged by what is delivered, not simply what is announced.

Financial services remains a mobile, high-value sector in which Ireland is competing with jurisdictions that can move quickly. Budget 2027 should make the tax and regulatory framework easier to understand, more predictable, and open to new forms of investment. The framework should also accommodate fund tokenisation, streamline withholding tax, and facilitate repatriation through partnership structures. These reforms would support Ireland’s private assets opportunity and strengthen its position as a hub for global capital.

Attracting and retaining talent is equally important. Evolving the Special Assignee Relief Programme (SARP) by removing its sunset clause and extending relief to USC would strengthen Ireland’s attractiveness to internationally mobile talent. The tax burdens associated with investing in financial products often domiciled in Ireland, such as ETFs, needs to be addressed so that individuals are incentivised to invest for the long-term without facing disproportionate taxation.

These measures are practical rather than symbolic. They would reduce cost and uncertainty as well as support investment in high-value activities, and would also help ensure that Ireland’s financial services ecosystem continues to create jobs and attract both domestic and international investment.

Budget 2027 arrives at a pivotal moment. Ireland has important choices to make, but limited time in which to act. The priority should be to use today’s fiscal strength to tackle the constraints that are already affecting businesses and households: housing, energy, infrastructure, skills, and complexity in the tax system. Practical measures on savings and investment, simplification, indigenous enterprise, and talent would help turn a strong starting position into more durable growth. The Government’s Future Forty report underlines that Ireland needs to act now to protect its long-term competitiveness.

Stay informed with our expert insights ahead of Budget Day on 6 October 2026.