Domestic Direct Investment

Key measures for domestic direct investment

Budget 2027 introduces welcome measures for Irish entrepreneurs, family businesses, SMEs and investors. The headline measure for Domestic Direct  Investment is the reduction in the standard rate of Capital Gains Tax from 33% to 31%, applying to disposals made on or after 7 October 2026. The 33% rate continues to apply to disposals of development land. While modest, the CGT reduction is a positive signal and recognises that tax can influence succession, reinvestment and the timing of business disposals.

Budget 2027 also provides for the extension of important reliefs for start-ups and early-stage investment. The Employment Investment Incentive (“EII”), Start-Up Capital Incentive (“SCI”), Start-Up Relief for Entrepreneurs (“SURE”) and Angel Investor Relief are all to be extended, subject to the relevant EU State aid rules being adopted. Section 486C start-up corporation tax relief is also being extended to 31 December 2030.

Budget 2027 also announces an increase in Capital Acquisitions Tax (“CAT”) tax-free thresholds. The Group A threshold is increasing from €400,000 to €420,000, Group B from €40,000 to €44,000 and Group C from €20,000 to €22,000. These increased thresholds apply to gifts and inheritances taken on or after 7 October 2026. The changes are particularly relevant to family business succession and transfers to the next generation. There was no change made to the CAT rate which remains at 33%.

Notably for SMEs, the preliminary corporation tax threshold for classification as a small company will increase from €200,000 to €350,000. The employer PRSI threshold is increasing from €552 to €600 per week - this should assist with reducing the cost burden particularly given the signalled minimum wage increase.

Who will be affected and when?

Entrepreneurs, business owners, family businesses, SMEs, start-ups and private investors will be impacted, with measures applying from 7 October 2026 and in 2027.

What now?

Business owners should consider the impact of the reduced CGT rate on planned disposals, succession planning and reinvestment decisions. Families and owner-managed businesses should also review succession plans in light of the increased CAT thresholds. These CGT and CAT changes may provide additional scope for transferring wealth or business assets, but careful planning remains essential.

Start-ups, scaling businesses and investors should monitor the Finance Bill and the relevant EU State aid position, as this will be key to confirming the continuation of EII, SCI, SURE and Angel Investor Relief.

Deloitte's view on Budget 2027 measures

Ireland’s growth model cannot rely on foreign direct investment alone. Scaling home-grown businesses requires a tax framework that rewards risk, supports ownership transition and keeps capital working in Ireland. As set out in our Pre-Budget 2027 Submission, Domestic Direct Investment is critical to Ireland’s long-term growth and resilience. Supporting local entrepreneurs, family businesses and SMEs drives job creation, innovation and wealth retention in Ireland. A competitive CGT regime can help reduce the “lock-in effect”, where business owners delay disposals or succession because of the tax cost, and can help unlock capital for reinvestment into new ventures.

Budget 2027 is a welcome change in direction for indigenous enterprise, but not yet the step-change Ireland needs. Deloitte recommended a reduction to 20% in our Pre-Budget 2027 Submission, on the basis that Ireland’s 33% rate was internationally uncompetitive and could restrict capital mobility. Reducing the CGT rate to 31% acknowledges that a 33% rate can discourage owners from realising value, progressing succession and recycling capital. The signal matters, but competitiveness demands more.

Positive changes include the increase of the preliminary corporation tax thresholds that should provide certain SMEs with a cashflow benefit and a lower administrative burden. The extensions of EII, SCI, SURE and Angel Investor Relief are also important, but their impact will depend on accessible rules and certainty through the Finance Bill and EU State aid process.

The increased CAT thresholds offer practical support for succession, but further reform is needed to keep pace with rising asset values.

The real test is whether today’s positive signals translate into a simpler, more competitive and durable framework for indigenous investment.