Financial Services

Key measures

Several significant tax policy changes have been announced in Budget 2026 aimed at enhancing Ireland’s financial services sector. Particular focus has been given to the funds and asset management sector in the Budget speech, but broader tax simplification measures relating to the tax treatment of interest, dividends and withholding taxes have also been sign-posted. 

A key highlight is the announcement of the reduction in the tax rates (from 41% to 38%) that apply to investments in Irish domiciled regulated funds and life assurance policies. There will be an equivalent reduction in rates that apply to equivalent offshore funds and certain foreign life assurance policies. 

In addition, to further encourage retail investment, a roadmap of the intended approach to simplify and adapt the Irish tax framework will be launched in early 2026, which will account of the European Commission’s recommendations on savings and investment.  

More generally, the Government has today launched an Implementation Plan for the overall Funds Sector 2023 Report. The Implementation Plan tracks the progress to date on several key initiatives (including tax measures). One important item that was also mentioned in the Minister’s Budget speech is that he will not be proceeding with a public consultation on potential introduction for an entity-level tax for Irish Real Estate Funds (IREFs); the Government will instead undertake a public consultation on proposals to simplify the IREF regime without limiting its effectiveness. 

The participation exemption for foreign dividends, which was initially introduced last year to simplify double tax relief for multinational businesses, is to be updated and expanded. The changes will include expanding its geographic scope to include jurisdictions with non-refundable dividend withholding taxes, reducing the required residency period for qualifying companies from five to three years and clarifying that the acquisition of a shareholding is not considered to be an acquisition of business assets for the purposes of the participation exemption. The Minister also noted that there would be a number of technical amendments to improve the operation of the regime - further detail is expected in Finance Bill 2025. 

An Action Plan has also been published on the reform of Ireland’s tax regime for the taxation and deductibility of interest, in response to stakeholder feedback seeking a more simplified framework. The Minster has announced the launch of a feedback statement in November 2025 to obtain further input from industry stakeholders. 

The Budget also promises a public consultation to explore opportunities to modernise withholding taxes, though no clear timeline has been announced as yet. 

The Bank Levy has been extended for another year with a target yield of €200 million. 

Finally, the extension and simplification of the Special Assignee Relief Programme (SARP) will be welcomed by the financial services sector. 

Who will be affected and when?

The measures, consultations and roadmaps announced today will have a significant positive impact on the financial services industry as a whole. While many of the legislative measures announced today will impact the funds and insurance industries, the various consultations (and resulting expected legislative changes) will have a wider impact across the financial services ecosystem.  It is expected that the legislative measures announced today will be included in the Finance Bill and will be effective from 1 January 2026. 

What now?

It is vital that financial services industry stakeholders engage positively and proactively with the various upcoming consultations announced in the Minster’s speech. 

While the timing of the public consultations on withholding taxes and IREFs is not yet known for certain, stakeholders should start to prepare for engagement in the process. It is expected that these will take place across 2026 with a view to changes being implemented as part of Finance Act 2026.

The interest consultation is expected to be open from 21 November until 16 January, with draft legislation in April 2026 for implementation in Finance Act 2026. This consultation will include Section 110 companies, anti-avoidance measures on the taxation and deductibility of interest  withholding tax, DIRT, encashment tax and reporting obligations. 

Deloitte will engage in all of these public consultations with recommendations for key changes that we believe should be addressed to provide greater clarity and simplicity for taxpayers.  

Our view

Overall, the measures and consultations announced today are positive for the financial services sector. The reference by the Minister that Ireland holds a leading position in the global funds industry (supporting over 37,500 jobs) is a welcome acknowledgement of the importance of the industry and the commitment by the Government to enhance Ireland’s competitiveness as a global investment hub. The suggestion that changes are expected to be introduced from next year’s Finance Act is also welcome as it allows the industry time to carefully consider what measures are needed, while having a clear target date in mind. 

It is also promising to see a proposed broadening of the geographic scope of the participation exemptions and changes to the residency requirement. 

Although the Budget Speech was silent on simplification measures for the payment of Irish source dividends to Investment Limited Partnerships, it is hoped that proposed amendments may be contained in Finance Bill 2025. 

Overall, Budget 2026’s financial services measures demonstrate a forward-looking strategy that balances fiscal responsibility with the need to foster a dynamic, globally competitive financial services ecosystem in Ireland.