Direct Domestic Investment
Budget 2026
Key measures
Budget 2026 introduces a welcome improvement to the reduced CGT rate of 10% for Entrepreneurs in respect of gains on disposals of qualifying business assets. Currently, the lifetime limit on gains eligible for this relief is €1 million. Budget 2026 provides an increase in this lifetime limit to €1.5 million from 1 January 2026.
The VAT rate applicable to certain food-led hospitality businesses and hairdressing services is being reduced from 13.5% to 9% from 1 July 2026.
Other measures relating to the R&D tax credit regime, the Film Tax Credit and the Digital Games Tax Credit were announced and these are covered in more detail in the section on our Budget Hub dealing with Global Investments, Innovations and Incentives.
In order to support Irish businesses to grow and expand internationally, an exemption from Stamp Duty on the acquisition of shares in Irish listed companies (worth up to €1 billion) was also announced, effective until 31 December 2030.
Who will be affected and when?
Entrepreneurs, start up and scaling businesses will be impacted by the key measures announced in Budget 2026, with the increase in Entrepreneur Relief applying from 1 January 2026 and the reduced VAT rate applying from 1 July 2026.
What now?
The increase in Entrepreneur Relief limit to €1.5m will take effect from 2026 so will benefit qualifying entrepreneurs selling their businesses from 1 January 2026 onwards.
While the food-led hospitality and hairdressing sector will not benefit from the reduced VAT rate of 9% until July 2026, this will benefit such businesses and help to increase footfall from 1 July 2026.
Our view
We welcome the increase in the lifetime limit for Entrepreneur Relief to €1.5m on foot of Budget 2026. This ensures that entrepreneurs benefit from the lower 10% CGT rate on a larger amount of gains over their lifetime. We are of the view that such measures will encourage Domestic Direct Investment and create an enhanced entrepreneurial landscape for growth.
However, we had hoped to see the introduction of further measures to support Irish indigenous entrepreneurs and SMEs. For example, as set out in our pre-budget submission, the standard CGT rate of 33% (which will apply to entrepreneurs on gains in excess of €1.5m) should also be reduced, in order to enhance competitiveness, encourage domestic entrepreneurship and support timely succession planning.
The amendments to the R&D tax credit and the reduction in the VAT rate for the food & hospitality sector will provide a welcome cash flow boost to indigenous enterprises at a time of rising costs.
The stamp duty exemption for the acquisition of shares in listed companies is welcome. The proposed enhancement of the participation exemption on foreign dividends will also encourage expansion abroad, which will in turn benefit the Irish economy whilst also providing a benefit from a cash flow perspective. We also welcome the Minister’s commitment to adopt changes to Ireland’s interest regime in next year’s Finance Bill, following a consultation process.
We also welcome a number of changes which will impact the agricultural sector (such as extensions of Farm CGT Restructuring Relief, Young Trained Farmer Relief and Farm Consolidation relief from stamp duty).
