Budget 2027: A delivery first agenda for Ireland

Ireland approaches Budget 2027 from a position of strength. Employment is high, investment is robust and productivity outperforms many peers. However, we have now reached a point where our limits are being tested by demand. Housing shortages, infrastructure constraints, skills gaps, grid congestion, energy costs, and cost-of-living pressures are shaping outcomes now, not in the future. Global conditions are also shifting, with trade remaining volatile and international tax reform, notably the OECD’s Pillar Two Global Minimum Tax framework, reshaping the competitive environment for mobile investment. In this context, Budget 2027 should be more than a fiscal set piece — it’s an opportunity to make practical choices that expand productive capacity, strengthen resilience, and ensure prosperity will endure for future generations.

A stronger savings and investment culture in Ireland would help support our next phase of growth, acting as a key structural reform to mobilise household capital and deepen domestic markets. We welcome the proposed introduction of an Irish savings and investment account (SIA) that’s simple, long‑term, and broad‑based, with balanced tax‑free limits focused on low and middle income savers and a wide, well‑regulated range of eligible products (including pooled investment funds, ETFs, long‑term investment funds, and insurance‑based options). The SIA should complement pensions and be introduced alongside aligned reforms to the domestic tax treatment of funds and life assurance products. Features that encourage early participation by younger savers would build positive lifetime behaviours and deepen Ireland’s domestic investor base over time.

Our vision is for a delivery focused agenda that would see the Government accelerate investment in fundamentals, back innovation to translate it into growth, and build a stronger second engine of indigenous enterprise alongside continued world‑class foreign direct investment. Productivity gains are essential to sustain rising living standards, and that requires modernising the policy toolkit for innovation. While R&D remains a cornerstone, as modern R&D is collaborative, networked and often outsourced, we recommend aligning outsourcing rules with today’s models by allowing connected party outsourcing subject to safeguards, raising the third-party outsourcing cap from 15% to 30%, and removing or significantly increasing limits on outsourcing to universities and broader qualifying institutions. These reforms would improve operational efficiency, deepen collaboration between industry and academia, and keep Ireland attractive for complex, end-to-end programmes.

There is a ‘missing middle’ in the policy toolkit that is essential in driving competitiveness but falls outside the R&D tax credit. We propose a separate, refundable, expenditure based innovation incentive aligned with the OECD Oslo Manual to support the full lifecycle of innovation, targeted at companies that retain and exploit IP in Ireland. For example digitalisation and decarbonisation activities are central to sustaining and transforming current Irish operations. These activities are critical to productivity, resilience and competitiveness, yet many fall outside the scope of the traditional R&D tax credit. Focusing on implementation of established technologies and green transformation would help existing operations evolve at the pace required by markets, regulation, and climate commitments, bridging the gap between research and commercial deployment.

Energy is now considered core economic infrastructure. With geopolitical volatility and rising demand, Ireland must mobilise private capital to scale renewable generation, strengthen security of supply, and reduce fossil fuel reliance. Green ports and energy parks are critical enablers in the support of offshore wind build‑out, industrial electrification, and regional development. Time‑limited accelerated capital allowances, regional incentives, and targeted support for domestic supply chains can help Ireland compete for scarce capital, aligned with the EU Clean Industrial Deal window to 2030. District heating is another priority as less than 1% of national heat demand is currently met by district systems. Establishing a level playing field through a reduced VAT rate on district heat from renewable or waste sources, lower electricity tax rates for industrial scale heat pumps and electric boilers used to generate heat for district heating networks, and additional grants for network construction would make scale deployment more investable. Extending reform of the energy efficient accelerated capital allowances scheme by broadening eligible categories, moving to performance-based assessments, allowing leased equipment, and introducing a refundable credit for loss‑makers would increase uptake and prioritise carbon outcomes.

Resilience depends on a stronger base of Irish‑owned, scaling firms. Budget 2027 can enhance long-term ownership and reinvestment by phasing down capital gains tax to 20% over a defined period, introducing a targeted “scale‑up” relief that rewards entrepreneurs who retain significant shareholdings as their business grows, and increasing the lifetime limit under Revised Entrepreneur Relief from €1.5 million to €5 million. Simplification is also a competitiveness tool for smaller companies. Our report supports short‑form and pre‑populated corporation tax returns, a root and branch review to reduce compliance burdens, and clearer legislation and guidance so that bona fide share buybacks and exits receive capital (not income) treatment, facilitating family succession, management buy‑outs, and domestic reinvestment. Enabling employee ownership trusts, aligned with the UK model, would offer business owners a credible onshore alternative to trade or private equity sales while retaining jobs and value in Ireland. In the near-term, a time‑limited PRSI rebate of up to 50% for employees earning up to €26,000 could help offset wage pressures and support employment stability.

Housing is an economic imperative as well as a social priority; without sufficient, affordable homes, employers struggle to attract and retain talent. The report proposes a pragmatic package to accelerate delivery, including targeted supports to scale modern methods of construction, reintroducing a time‑limited development levy waiver to improve viability, and broadening help‑to‑buy to include second‑hand properties and extend the ‘fresh start’ principle. To improve the efficiency and affordability of existing stock, a retrofit tax credit linked to genuine BER improvements would complement grants and reduce upfront cost barriers. Bringing derelict and vacant properties back into use could be encouraged through a time‑limited tax exemption on sales of refurbished homes. For large, complex projects, a mechanism to provide upfront certainty on key tax and capital allowance treatments would reduce risk, align with Infrastructure Task Force priorities and unlock timely delivery.

Beyond the upgraded R&D regime, a new innovation incentive should support broader productivity enhancing activities. For start-ups and early‑stage firms outside the scope of Pillar Two, a reduced 6.25% corporation tax rate linked to new or incremental investment could spur growth and job creation. To position Ireland at the forefront of emerging sectors such as AI, 100% first-year capital allowances for qualifying equipment would encourage cutting‑edge investment. Completing holding company modernisation, expanding the scope of the participation exemption for foreign dividends, introducing the branch exemption, updating domestic withholding exemptions for Pillar Two in‑scope groups, and simplifying interest rules, would reduce friction.

Future-proofing financial services is another priority. Targeted simplification around interest deductibility would reduce cost and uncertainty. Aligning Life Assurance Exit Tax and Investment Undertakings Tax (both currently 38%) with the 33% capital gains tax (CGT) rate and removing the eight‑year deemed disposal and 1% life assurance levy would support a stronger domestic investor base and complement the SIA. Ireland should also ensure the tax framework accommodates fund tokenisation to maintain first‑mover status. Further refinements to the holding company and withholding tax regimes, including efficient repatriation through partnership structures, would improve Ireland’s proposition. In sustainable finance and aviation, tailored incentives for green investment and sustainable aviation fuel would reinforce strategic strengths while advancing climate goals.

Talent enables everything. Pragmatic employer-focused reforms can reduce friction and enhance Ireland’s attractiveness. Updating the longstanding €12,700 annual limit for approved profit-sharing schemes would reflect modern equity practices. Shifting enhanced reporting requirements for certain non‑taxable payments to annual reporting would preserve transparency while easing the administrative burden. Simplifying the small benefit exemption by removing the ‘first five’ cap (but keeping the €1,500 value limit) would reduce needless complexity. Reviewing specified rates for loan benefit‑in‑kind to align with market conditions would ensure fairness. And evolving SARP, removing the sunset clause for long‑term certainty, extending relief to USC, and streamlining administration, would strengthen Ireland’s position for globally mobile skills.

Our report sets out practical, targeted, and achievable measures to expand capacity, support innovation, grow indigenous enterprise, deliver homes and clean energy, and maintain Ireland’s edge as a stable, competitive location for investment. Budget 2027 is an opportunity to shift from managing the cycle to enabling delivery so communities and businesses can prosper in the years ahead.