Key measures
The minister’s speech included some amendments to the Irish tax system to encourage and support domestic business and entrepreneurship. The principal measures of note are:
The minister’s speech included some amendments to the Irish tax system to encourage and support domestic business and entrepreneurship. The principal measures of note are:
In line with commitments outlined in Budget 2025 and the Programme for Government, and following a review conducted by the Department of Finance earlier this year, Budget 2026 introduces the following enhancements to the R&D tax credit regime:
We also welcome the publication of an action plan with the aim of reforming Ireland’s tax regime for the taxation and deductibility of interest. The reform is essential for indigenous Irish businesses seeking to raise finance to support growth and scale up operations.
Debt is a critical driver of growth. If relief for interest is not available, investment will move elsewhere, and the current regime makes it challenging in some circumstances to obtain a deduction for interest. A feedback statement will be published in November, and we look forward to participating in the process on behalf of our Irish-based clients.
Encouraging and supporting domestic entrepreneurship should be a key focus of Irish tax policy. The adoption of targeted pro-growth tax policies assists domestic enterprises to scale and grow, thereby fostering growth in the economy. It is also vital that Ireland matches its ambition for continued FDI expansion with a focus on strengthening the domestic enterprise sector.
Successive governments have consistently emphasised this objective, and the minister repeated this sentiment in his Budget speech, which is welcome. However, while the challenge seems well acknowledged and understood, and there have been some positive developments, it has not been enough to have a meaningful impact. We would like to have seen more to address this in Budget 2026.
Measures we proposed but which have not been addressed in this Budget include:
While Budget 2026 extends the KEEP scheme until 31 December 2028, it does not resolve the challenges in accessing the regime. As a result, it fails to mitigate the competitive disadvantage faced by private companies in offering stock-based compensation compared to multinational firms.
The increase of €500,000 in the lifetime limit under the Revised Entrepreneur Relief is not meaningful enough to make the impact that the regime could potentially have in retaining Ireland’s brightest and best entrepreneurs.
The fact that the current system of costing tax measures is based on the tax foregone, without taking into consideration the behavioural changes associated with those measures, also continues to be a challenge.
A supportive tax framework is essential to incentivise founders to retain and grow their businesses in Ireland, and to remain personally invested in their long-term development within the country.
The tax system needs to cater not only to start-up businesses, but also to those companies who have scaled from Ireland, have reached a point of inflection, and need further support to advance to the next level.
In the absence of meaningful reform, founders and their investors are increasingly directing capital toward other jurisdictions or opting for early exits. This trend risks undermining Ireland’s potential to cultivate a greater number of large, homegrown companies in the long term.
The measures unveiled in Budget 2026 will have far-reaching implications for businesses across Ireland. If you have any enquiries, comments, or wish to explore further, we are here to assist.
Contact Alan Bromell of our Tax team today.