Ireland’s Budget 2027 includes a number of measures relevant to business investment, research and development (R&D) and Irish-owned companies looking to grow.
Announced on 6 October 2026, the Budget includes a reduction in the standard Capital Gains Tax (CGT) rate, further changes to the R&D tax credit and reforms to the preliminary corporation tax. Employers will also see changes to the Pay Related Social Insurance (PRSI) and Enhanced Reporting Requirements (ERR).
Irish Budget 2027 measures at a glance
Some of the main changes relevant to businesses include:
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Capital Gains Tax will fall to 31%
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Further changes to Ireland’s R&D tax credit
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Knowledge Development Box extended to 2032
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Preliminary corporation tax rules will change
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Employers will have more flexibility under ERR
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Employer PRSI threshold will rise to €600 a week
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Existing investment and start-up incentives will be extended
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More funding for enterprise and business growth in Ireland
At the time of writing, some measures remain subject to legislation under the Finance Bill. Further details are expected to be confirmed once the Bill is published.
1. Capital Gains Tax will fall to 31%
From 7 October 2026, Ireland’s standard Capital Gains Tax (CGT) rate will be 31%, down from 33%.
CGT can arise when an asset is sold or otherwise disposed of at a gain. The rules can differ depending on whether the seller is an individual or a company, and specific exemptions or reliefs may apply.
For business owners, the change may be relevant when disposing of shares or other business assets. Investors may also be affected where an investment falls within the CGT rules.
The new 31% rate does not apply across the board. Gains arising from the disposal of development land, for example, remain subject to CGT at 33%.
Businesses, founders and investors considering a disposal should therefore look at the new standard rate alongside any reliefs that may apply to their circumstances.
2. Further changes to Ireland’s R&D tax credit
Budget 2027 made further changes to Ireland’s R&D Corporation Tax Credit.
Qualifying companies can claim a tax credit based on eligible R&D expenditure. Broadly, the underlying activity must seek to achieve an advance in science or technology and address scientific or technological uncertainty.
Budget 2026 had increased the credit rate from 30% to 35%. That rate remains unchanged under Budget 2027, with the latest measures instead focusing on certain qualifying costs and the timing of payments.
Higher limits for outsourced R&D
Not all R&D activity is carried out in-house. Depending on the project, companies may engage universities, higher education institutions or unconnected third parties to carry out part of the work.
Only a limited amount of this outsourced expenditure can currently be included in an R&D tax credit claim.
From Budget 2027, the applicable limit will increase from the greater of:
- 15% of a company’s non-outsourced qualifying R&D expenditure; or
- €100,000
to the greater of:
- 20% of non-outsourced qualifying R&D expenditure; or
- €200,000.
The change may be useful for companies that depend on external laboratories, specialist expertise or academic partners as part of their R&D activity. That said, the higher limit does not make all outsourced costs eligible. The work and expenditure must still satisfy the relevant R&D tax credit requirements.
First-year R&D tax credit payment threshold rises to €105,000
The R&D Corporation Tax Credit is generally paid in three annual instalments, although smaller claims can be paid in full in the first year.
Budget 2026 increased the first-year payment threshold from €75,000 to €87,500. It will now rise again to €105,000.
As a result, qualifying credits of €105,000 or less can be paid in full in the first year. Companies with claims between €105,000 and €210,000 may also receive a greater proportion of the credit earlier in the payment cycle.
For smaller businesses, receiving more of the credit sooner may support cash flow while R&D activity is still underway.
New 5% uplift for supporting R&D expenditure
Budget 2027 also proposes an adjustment for certain costs connected with R&D activity.
Under the proposed rules, qualifying R&D expenditure may be increased by an amount equal to 5% of qualifying R&D wage costs, provided the company meets the relevant expenditure limits and any further requirements introduced in the legislation.
The purpose is to recognise some of the supporting expenditure that arises alongside R&D work but would not normally form part of the qualifying cost base.
The detailed rules are still to be finalised through the Finance Bill process.
3. Knowledge Development Box extended to 2032
The Knowledge Development Box (KDB) is an existing corporation tax incentive for companies earning income from qualifying intellectual property developed through R&D. Where the relevant conditions are met, qualifying KDB profits can currently benefit from an effective tax rate of 10%.
Budget 2027 extends the KDB to 1 January 2032. It also allows certain existing claimants to opt out for a limited period where the applicable requirements are satisfied.
For companies developing qualifying intellectual property in Ireland, the extension means the regime will remain available for longer. It may be particularly relevant to businesses in technology, life sciences and other sectors where R&D and intellectual property play a significant role.
4. Preliminary corporation tax rules will change
Companies in Ireland generally make preliminary corporation tax payments before their final liability for the accounting period has been established.
The current rules distinguish between small and large companies for preliminary tax purposes.
A company generally qualifies as a small company where its corporation tax liability for the previous accounting period is no more than €200,000. Small companies can usually calculate their preliminary payment using either 100% of the previous period’s liability or 90% of the expected liability for the current period.
Budget 2027 proposes increasing the small company threshold from €200,000 to €350,000.
This would bring more companies within the small company rules and may give them more flexibility when managing preliminary tax payments.
A further change is proposed for how companies can satisfy their preliminary tax requirement.
Under the proposed rules, companies would be treated as having satisfied their preliminary tax requirements where they pay at least 80% of their current-year corporation tax liability by the final preliminary tax instalment date. They would then need to pay the remaining balance within four months after the accounting period ends.
For businesses, this may provide greater flexibility when managing tax payments, particularly where the final liability becomes clearer after the accounting period ends.
5. Employers will have more flexibility under ERR
Enhanced Reporting Requirements (ERR) have applied since 1 January 2024 and require employers to report certain expenses and benefits provided to employees or directors. These include qualifying benefits under the Small Benefit Exemption, the Remote Working Daily Allowance and certain travel and subsistence payments.
From 1 January 2027, employers will be able to continue reporting these items in real time or submit the relevant information by the 14th of the following month. The reporting obligation itself will remain, but employers will have more choice over when the information is submitted.
6. Employer PRSI threshold will rise to €600 a week
Employers in Ireland generally pay employer Pay Related Social Insurance (PRSI) based on employee earnings.
For Class A employees, a lower employer PRSI rate applies where weekly earnings are below a specified threshold. From 1 January 2027, this threshold will increase from €552 to €600.
The employer PRSI rates themselves are also due to rise under changes that were already scheduled. From 1 October 2026, the lower Class A employer PRSI rate is 9.15% and the higher rate is 11.40%. These are scheduled to increase to 9.30% and 11.55% respectively from 1 October 2027.
Businesses should therefore take both the higher earnings threshold, and the scheduled rate increases into account when planning payroll costs for 2027.
7. Existing investment and start-up incentives will be extended
Budget 2027 also announces extensions to several existing tax incentives intended to support investment in Irish businesses and help qualifying companies raise equity finance.
These include the Employment Investment Incentive (EII), Start-Up Capital Incentive (SCI), Start-Up Relief for Entrepreneurs (SURE) and Relief for Investment in Innovative Enterprises, commonly known as Angel Investor Relief.
The planned extensions will depend on the new EU General Block Exemption Regulation coming into effect.
EII and SCI are existing income tax reliefs intended to help qualifying trading companies attract equity investment from individuals. EII is generally aimed at companies raising qualifying risk finance from investors, while SCI is designed for investment from family members in qualifying early-stage start-ups.
SURE operates differently. It can provide income tax relief to qualifying individuals who establish and invest in a new company carrying on a qualifying trade. Among other conditions, the individual must invest in new shares and work full-time in the new company.
Angel Investor Relief is a CGT incentive for individuals investing in qualifying early-stage innovative companies. Where the relevant conditions are met, reduced CGT treatment can apply when the qualifying investment is later disposed of.
The extensions give companies and investors more continuity around the availability of these reliefs. Each scheme has its own eligibility conditions, investment limits and other requirements, so the final legislation should be checked before relying on a particular relief.
8. More funding for enterprise and business growth in Ireland
Additionally, Budget 2027 provides €1.4 billion to the Department of Enterprise, Tourism and Employment for 2027.
Budget 2027 allocates €3 million to Enterprise Ireland for the creation of Startup Ireland, a new initiative intended to make it easier for founders to access entrepreneurship support.
Funding will also support IDA Ireland initiatives, the Growth and Sustainability Loan Scheme and Ireland’s participation in European Space Agency programmes.
Individual programmes will have their own eligibility criteria and application processes, so companies considering investment or expansion should review which support may be relevant to their plans.
What does Budget 2027 mean for international businesses in Ireland?
If you are already operating in Ireland, some of the Budget 2027 changes you may look at first include the updates to preliminary corporation tax, employer PRSI as well as the ERR.
Depending on your business, you may consider the reduction in CGT to 31% and the changes to the R&D tax credit. The KDB has also been extended to 1 January 2032, which may be relevant if your Irish operations involve qualifying intellectual property.
You may also review the extensions to existing investment and start-up incentives, alongside further funding that support enterprise growth.
How we can help with company setup and business operations in Ireland
If you plan to enter Ireland in the coming years, one of the first decisions will be how you want to operate in the market.
Depending on your activities, this may involve incorporating an Irish company, registering a branch or considering another way to establish an initial presence. Budget 2027 also introduces changes that may be relevant when planning investment, hiring employees or carrying out R&D in Ireland.
We can help you compare the available entry options and understand the tax, employment and compliance requirements attached to each approach.
When the time comes to establish your presence, we can support incorporation or branch registration, tax compliance and other setup requirements. Get in touch with us for more information.
FAQs
This article is intended for general information purposes only and does not constitute tax or legal advice. Specific advice should be sought based on individual circumstances.
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