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Global Mobility & Employment

Budget 2026

Key measures

From an income and employment tax perspective there were a small number of key measures:

  • The Universal Social Charge (USC) is to be amended so that the ceiling for the second-rate band will increase by €1,318 from €27,382 to €28,700. 
  • The temporary universal relief applied to the Original Market Value of a company car (including vans) for vehicles in Category A-D and the amendment to the lower limit of the highest mileage band is being extended to 31 December 2028 on a tapered basis. The current relief of €10,000 will apply for 2026, reducing to €5,000 for 2027 and €2,500 for 2028.
  • A new category of vehicle for benefit in kind purposes will be introduced for vehicles with zero emissions. These vehicles will attract the lowest level of car BIK, with rates of 6% to 15%. 
  • The Special Assignee Relief Programme (SARP) has been extended for five years to 31 December 2030. New entrants to the scheme from 1 January 2026 will require a minimum salary of €125,000 and can benefit in a 30% reduction in income subject to income tax between €125,000 and €1million. Existing SARP claimants who continue to avail of this relief in 2026 or further years will not be impacted by this change. Amendments will be introduced in Finance Bill 2025 to simplify the administrative requirements.
  • Key Employee Engagement Programme (KEEP) has been extended to 31 December 2028 subject to approval by the EU Commission.
  • Foreign Earnings Deduction (FED) is being extended for five years to 31 December 2030 and the maximum income that may qualify for relief is being increased from €35,000 to €50,000. The relief will be extended to apply to the Philippines and Turkey.

Our view

It has been well flagged that Budget 2026 would be more restrained than Budget 2025 which was christened by many as a giveaway budget. There are small changes to the USC bands to align with the increase in the minimum wage. There are no changes to the personal tax bands or credits. As our marginal rate remains at 52.2%, Irish employees continue to have one of the highest personal tax burdens in the OECD.

It is positive to note that the temporary €10,000 reduction in the Original Market Value of a company car for vehicles in Category A - D (including vans and electric vehicles) is to be extended by on a tapered basis. It is also positive to see a new category for benefit in kind purposes introduced for zero emissions vehicles.

The Special Assignee Relief Programme is a valuable relief that encourages skilled individuals to relocate to Ireland by providing an income tax exemption for 30% of earnings in excess of €100,000 up to a cap of €1m. It is welcome that this has been extended for 5 years to 31 December 2030, although less helpful to see the minimum salary increase for new entrants from 1 January 2026. New entrants to the scheme from 1 January 2026 will require a minimum salary of €125,000 and can benefit in a 30% reduction in income subject to income tax between €125,000 and €1million. The Minister announced the simplification of administrative aspects of the relief which will be detailed in the Finance Bill. Any measures which will make the administrative requirements more practical, particularly removing the 90-day from arrival application requirement, will be welcome although it remains to be seen what these will be when the Finance Bill is published. However, in our view, the current relief is insufficient and too restrictive and it is disappointing that no other changes to the relief were announced.

The extension of KEEP for three years is welcome. However, it is disappointing that there have been no changes to the relief to address some of the challenges with it. We have previously suggested that the group requirements need to be simplified and that it would be helpful if the holding period to avail of company buyback provisions could commence from the date of grant of the options.

Whilst not mentioned in the budget employers should note that legislation already provides for an increase in PRSI by 0.15% from 1 October 2026. This will increase employee PRSI to 4.35% and employer PRSI to 11.40%. There will be further increases of 0.15% from 1 October 2027 and 0.2% from 1 October 2028 respectively.

In the Budget 2026 Tax Policy Changes publication it is stated “Revenue will conduct a range of targeted compliance management activities in 2026. It is expected that additional Exchequer receipts will arise from increased taxpayer compliance in a range of economic areas.” The estimates provide for a €50M yield from this compliance.

While the statement on compliance does not specifically mention payroll and expenses it is likely that a significant part of the €50M will come from these areas. In particular Revenue are likely to focus on the data received under the Enhanced Reporting Requirements (ERR) returns filed in 2024 and/or 2025 to target areas where they identify risk. It is recommended that employers who have not filed returns or who are only partially compliant address their obligations before the end of 2025. Revenue have previously mentioned the extension of their compliance campaign on share options to a review of the Employer Share Awards (ESA) returns. It is recommended that employers ensure that they have properly processed share awards through payroll and that their ESAs align to payroll.

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