Personal Tax

What has changed since Budget 2027?

• The relief for medical expenses was amended to include tax relief for the cost of drugs or medicines supplied on the prescription of a pharmacist and the pharmacist consultation charge under the Common Conditions Service. This amendment is effective from 1 January 2027. 
• The disregarded amount for third level education fees was reduced by €650 for full-time courses and €325 for a part-time course for the tax year 2026 and subsequent years. This should increase tax relief available on college fees. 
• The domicile levy was amended to provide that no deduction can be taken for donations to national governing bodies in calculating an individual’s worldwide income for the purpose of the levy. 
• In relation to donations to sports bodies / national governing bodies, an upper limit on tax relieved donations made by an individual in a year of assessment has been capped at €1 million per annum or where the donor is associated with the approved sports body, 10% of the donor’s total income. In addition, national governing bodies now fall within the meaning of specified reliefs for the purpose of the High Earners Restriction. 
• The Finance (No 2) Bill 2026 provides for the Individual Investment Account (IIA) announced in the Budget. The account is only open to Irish resident individuals, aged 18 and over who have a PPSN. An individual may only have one account at a time and cannot hold a joint account with another person. If an individual will move abroad while owning an IIA, they must let the provider know and cannot make contributions while non-resident. While the individual should have no tax reporting obligations in respect of the account, the individual may be required to report and account for tax where the qualifying account provider fails to deduct funds. The IIA is subject to commencement order. 
• Investments in Irish domiciled funds that are held in a recognised clearing system (for example, Euroclear, CREST etc) will now be governed by a new standalone section. This would generally be the case for Irish Exchange Traded Funds. 
• For CAT purposes, normal and reasonable payments for the support, maintenance or education of qualifying children made after the death of the disponer are not gifts or inheritances. The The Finance (No 2) Bill 2026 amends the exemption to provide that the exemption still applies to qualifying payments made after the death of the parent [such as from a trust] regardless of whether the other parent or civil partner is living or deceased. 

Who will be affected and when?

Those planning substantial donations to approved sports bodies / national governing bodies should consider how the proposed caps and High Earners Restriction could affect their relief before committing. 

What does this mean for businesses / individuals?  

Parents with children in third level education will benefit from the reduction in the disregarded amount for third level education fees which will provide for a higher tax credit on college fees. The extension of medical expenses to include the pharmacist consultation charge under the Common Conditions Service is also welcome.

What should businesses / individuals do now?  

Taxpayers investing in the new Individual Investment Account, available in July 2027 and subject to commencement order, should familiarise themselves with the rules of the new scheme in assessing if they should invest. Care should be taken regarding the proposed eligibility and residence conditions, particularly if they expect to move abroad. 

Our view

There were no big surprises in the Finance (No 2) Bill 2026 following the Budget announcement. The Individual Investment Account provisions give shape to the account announced in the Budget. Restricting accounts to eligible residents and stopping contributions during non-residence are in line with the ISA product in the UK. Less straightforward is the possibility that an individual who expects the provider to handle tax could nevertheless have to report and pay it if a deduction fails.  

The new standalone section is aimed at investors holding units in an Irish investment undertaking through a recognised clearing system.  The new section should not change how investors in these type of funds are taxed. Previously these investments fell under the offshore fund provisions but now will be governed by its own Irish tax provision. The expectation is that there will be a separate reporting requirement on the Form 11 for these funds distinct from offshore funds.