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Key measures include:
Individual Investment Account (IIA)
Section 26 of the Bill introduces the legislation that will enable IIA providers to operate the new investment account. While it isn’t expected that any IIAs will be subject to tax for several years, given the annual contribution limit of €12,000 and the tax-free threshold of €50,000, the draft legislation is comprehensive, which should facilitate IIA providers building the internal systems needed for the eventual operation of the 1% tax. Annual reporting of the account value (based on daily averages during the period) must be provided to Revenue by the IIA provider via notification by the following 31 March and a final return due by 14 April. This notification is required regardless of whether the tax-free threshold has been breached.
The Bill does, however, also provide Revenue with the ability to make further regulations to deal with the administration of the IIA. Given this is the first account of its type in Ireland, having the flexibility to adjust how the account is administered will be key to its success, particularly as feedback from IIA providers is received by Revenue via the Technical Group Forum over the coming weeks.
The legislation has been drafted to turn off existing withholding tax provisions for dividends, encashment tax, interest, investment undertaking tax, and life assurance exit tax where the account provider provides the relevant declaration. Such simplicity should minimise the risk of double taxation.
While future regulations will likely reveal more detail on certain operational aspects, it is clear from the draft legislation that the risk of compliance rests firmly with the IIA providers. Failure to comply with eligible asset requirements can result in a €3,000 fine for the provider, while Revenue also has the power to revoke the IIA provider’s eligible provider status where they consider there has been a failure to comply with any obligation imposed on the IIA provider. Robust governance and controls will be essential for IIA providers to maintain eligible provider status.
Broader retail investment changes
While the Capital Gains Tax (CGT) rate has already dropped from 33% to 31%, from 1 January 2027, exit tax on payments to Irish individuals from Irish and equivalent offshore funds and life assurance policies falls from 38% to 35%.
Section 739DA TCA 1997 moves Irish fund units held through recognised clearing systems, principally exchange-traded funds (ETFs), into a standalone regime, retaining self-assessment and loss restrictions and applying the 35% rate. Disappointingly, the eight-year deemed disposal rule remains, pending a broader review. We hope for a clear timeframe to implement remaining Funds Sector 2030 recommendations.
Pillar Two
There have been significant changes introduced in the Finance Bill in relation to Pillar Two. These principally implement the OECD Side-by-Side Package agreed in January 2026. The Bill introduces a Side-by-Side Safe Harbour, UPE Safe Harbour, Substance-Based Tax Incentive Safe Harbour and Simplified ETR Safe Harbour. The Transitional CbC Safe Harbour has been extended and will remain available for fiscal years beginning on or before 31 December 2027, but will not include a fiscal year that ends after 30 June 2029.
A cap of €1 million per group per year has been introduced on late filing penalties where no designated local entity (DLE) has been appointed. Where a DLE has been appointed, only one return/ notification is treated as late. For future returns, penalties will now continue to run until a correct and complete return is filed.
Interest Limitation Rules (ILR)
Although minor, sensible taxpayer-friendly amendments have been proposed for the timing of interest limitation rules (ILR) related elections from 1 January 2027.
An extension to the deadline for making the interest group, group ratio, and equity ratio elections from the tax return filing deadline to two years after the end of the accounting period provides more flexibility to taxpayers.
The reporting company must also file the group’s reporting return by the tax return due date or the election date, whichever is later.
Preliminary corporation tax
Threshold
The threshold for small company preliminary tax increases from €200,000 to €350,000. It is reduced proportionately for accounting periods shorter than 12 months.
Top-up payment window
Companies that have paid less than 90% of the current year’s tax liability at the preliminary tax deadline will now have four months from the accounting period end to bring the total paid to 100% of the concerned period’s total liability. To qualify, at least 80% of the liability must have been paid by the preliminary tax deadline. This is particularly helpful for companies whose profit and loss account includes fair value movements on assets or liabilities with fluctuating valuations.
Real estate
The real estate-specific changes proposed in the Bill are modest but welcome, with a number of existing schemes extended or adjusted.
Other financial services measures
Health insurance levy
Several changes to the operation of this levy are being introduced, including a requirement for an insurance company to pass on any refunds received to policyholders.
Life assurance levy
Amendments have been made to the definition of this levy so that it does not apply to any products held in the new IIA.
Bank levy
The bank levy has been extended to 2027 with the base year and the rate remaining the same. The levy to be charged in 2026 and 2027 will be based on the eligible deposits held by each relevant institution as at the end of 2024. The rate of levy applied to the base is 0.1025%, to achieve the target yield of €200 million.
VAT modernisation: e-invoicing and digital reporting
The Bill includes legislative updates relating to e-invoicing and digital reporting as Ireland moves forward with implementation of the wider EU ViDA reforms. Businesses should start considering the practical implications of these changes and reach out to us to discuss how they may be affected, ahead of Ireland’s phased introduction of mandatory e-invoicing and digital reporting.
Payments, transfers, and account transactions
The wording of the VAT exemption for transactions concerning current, deposit or savings accounts, payments, transfers, debts, cheques, and other negotiable instruments has been updated to more closely aligned with the EU VAT Directive. This is a technical amendment which we understand does not involve any change in Revenue practice.
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