Deloitte Pre-Budget 2026 submission

Our key recommendations to support sustainable homes for people and enterprise:

• Tax incentives for strategic supply: To adhere to housing targets we would recommend the introduction of tax incentives and reliefs for developers to deliver adequate volume of required housing for businesses and individuals, when and where it’s needed. With a particular focus on 1) deliver required number of apartments in strategic urban high-density areas; 2) incentivise the remediation of brownfield sites; 3) re-purpose the property from non-residential to residential; 4) increase supply of student accommodation; and 5) accelerate supply of other types of accommodation such as employer provided accommodation, co-living spaces, nursing homes and independent living accommodation.

• Real estate and housing policy assessment and a Roadmap: The publication of a comprehensive Property Tax Policy Roadmap by Government, and the commitment to a stable and predictable property tax framework for a defined period, providing the certainty required to attract and retain private capital in the Irish real estate market. Any necessary adjustments to tax policy should be made in consultation with stakeholders, with protections such as grandfathering provisions in place to safeguard existing investments.

• International investors: Maintain the IREF regime without any significant amendments. There is still a case for maintaining the REIT regime. If any changes to the relevant law are made as a result of public consultations, the current regimes should be grandfathered for existing IREF/REIT investors and transition rules are put in place to protect existing investments and ensure fairness.

• Landlords: As housing shortages persist, it is imperative that the Department of Finance revisits targeted tax policy reforms to support new and existing landlords, including internationally mobile investors, in delivering long-term, high-quality rental accommodation (e.g., Case V capital allowances; residential investment allowance similar to industrial building allowance; rental losses offset; tax rate on rental income; Case V deductibility rules and retrofitting incentives).

• Stamp Duty on bulk purchases: Review the higher 15% stamp duty rate where existing regulations already address the underlying issue. In addition, amend the relevant Stamp Duty legislation to address bona fide bulk purchases cases where, for example, a company is bought with housing as a stock and proceeds to develop and sell the properties.

• Interest deductibility: Amend section 97 TCA 1997 to clarify the availability of a deduction for interest incurred on borrowings to fund the cost of stamp duty and legal fees associated with the purchase of the rental property. Amend section 105 TCA 1997 to permit interest relief on expenses incurred in the pre-letting phase. Amend section 552(3) TCA 1997 to permit interest relief on funds borrowed to purchase land.

• Close company surcharge: Remove profits on residential lettings from the scope of the close company surcharge.

For further details and more recommendations, read the “Housing Reimagined: Sustainable Solutions for People and Enterprise” section of this submission or reach out to Pádraig Cronin or Shane Wallace.

Our recommendations to move Ireland to becoming a leading decarbonised economy focus on: 

• Artificial Intelligence (AI) and Digitalisation tax credit: Implement a new AI and digitalisation tax credit for relevant expenditure related to the safe development, implementation, and use of AI and for certain categories of expenditure to assist businesses with the digitalisation process and its acceleration. Align the AI and digitalisation tax credit with the definition of “qualified refundable tax credits” for the purposes of Pillar Two and the US Foreign Tax Credit (FTC) Regulations.
• R&D Tax Credit: Remove the restriction on outsourcing through an amendment to section 766 TCA 1997 to include related party expenditurewithin the scope of the R&D tax credit capped at 100% of the internal R&D spend. An embedded protection mechanism to ensure that such treatment is only available to Intellectual Property owners should also be introduced. In addition, we would recommend removing the current cap applying to third level and agency staff and increasing the cap for unconnected party subcontracting currently in place in section 766 TCA 1997.

• Decarbonisation tax credit: Introduce a new stand-alone decarbonisation tax credit for expenditure incurred by businesses to lower carbon emissions. Align the credit with the definition of “qualified refundable tax credits” for the purposes of Pillar Two and the US Foreign Tax Credit (FTC) Regulations.

• Emission allowances: Broaden the definition of “emission allowances” to include various forms of expenditure incurred to achieve carbon emissions targets. Amend intangible asset legislation to provide relief for the cost of acquisition where such allowances are capitalised for accounting purposes..
  

For further details and more recommendations, read the “Securing our future: AI and the Green Transition” section of this submission or reach out to Cathal Noone. 

Our key recommendations include:

• Capital Gains Tax (CGT) rate: Reduce the headline CGT rate to 20% for many reasons including; to enhance competitiveness, reduce the succession burden and strengthen Ireland’s enterprise environment.
• CGT Tapering relief: Introduce a CGT rate reduction model for entrepreneurs disposing of their businesses, where the applicable CGT rate decreases progressively based on the entrepreneur’s period of ownership and active involvement in the business.

• Tax-Efficient SME Financing Model: Introduce a loan finance arrangement allowing individuals to lend money to SMEs. Tax the coupon received at the standard rate of income tax (20%) instead of the marginal rate (combined rate of up to 55%), provided certain safeguards, such as market interest rates, are in place.

• Close company surcharge: Amending the legislation to exempt retained earnings from the surcharge where they are demonstrably earmarked for reinvestment, such as capital expenditure, R&D, or employment growth. Additionally, the joint election requirement under section 434(3A) TCA 1997 should be simplified for smaller companies. A broader review of Part 13 TCA 1997 is also urged to modernise the regime, ensuring it supports entrepreneurship, investment, and scaling while preserving safeguards against abusive profit retention.

• Entrepreneur Relief: Review the lifetime limit and nature of Entrepreneur Relief.

• Retirement relief: Increase the current caps for both family and non-family disposals to reflect modern business valuations; index-linking these thresholds to protect them from erosion due to inflation; and recognise reinvestment and business sustainability as key conditions for continued relief eligibility.

• Duty CAT Thresholds: Existing CAT thresholds should be increased.

• Stamp Duty: Reintroduce consanguinity relief on commercial property family transfers and reduce the stamp duty rate to 1% on such property transfers to the next generation.

• Tax Policy measures to drive regional development: Adopt tax policy measures designed to drive development in regions and enhance economic activity. Key recommendations include enhancing the R&D tax credit for rural innovation, establishing “Growth Hubs” with employer PRSI exemptions, and introducing accelerated capital allowances for commercial property investments outside Dublin. Additional proposals involve tax incentives for employer-provided regional housing, reducing stamp duty on regional commercial property, and offering relief for business investments in public and private infrastructure. A reduced CGT rate for long-term regional investments and a €5,000 remote working tax credit per employee are also proposed to incentivise decentralisation.

• Tax rates on dividends: With a policy objective of encouraging entrepreneurs to keep investment in the business and to reward successful entrepreneurs that have emerged from the start-up period, a 20% tax rate on dividends could be provided to entrepreneurs subject to an annual dividend cap of €100,000 and subject to the company having been trading for a period of five years.

• Stamp duty of share transactions: Consideration given to reducing the stamp duty rate on share transactions in Ireland.

For further details and more recommendations, read the “Fuelling the Future: Incentivising homegrown investment” section of this submission or reach out to Fergal Cahill, Carmel Marnane, or Aisleen Stephens.

Our key recommendations include:

Participation Exemption on Foreign Dividends: Provide for essential amendments to ensure that the regime operates as intended including:

• Extension of the geographic scope of the participation exemption.

• Amendment of key definitions including “relevant territory” and “relevant subsidiary.”

• Amendment to the definition of “relevant distribution” to allow for distributions made from equity.

• Permit the inclusion of “deductible dividends” within the regime in the context of US personal holding company rules and other equivalent foreign tax provisions.

• Amendment to the rules surrounding the qualifying participation to be held by a parent company.

• Participation Exemption on Foreign Branch Profits: Introduce an elective exemption for foreign branch income.

Financial Services: In line with the Programme for Government, the Government plans to publish an implementation plan for Budget 2026, considering the Funds 2030 Report recommendations. Notably, several recommendations in the Funds Report highlight areas of tax policy that we are of the view need attention and action in Budget 2026.

These include:

• Changes to taxation of investments in Irish domiciled funds and life products

• Amendments to the taxation of offshore funds

• Extending the definition of a “collective investment undertaking” as defined in section 172(A) TCA can impact on its overall attractiveness to investors.

• A number of existing operational rules and requirements associated with the section 110 regime are, in our view, unnecessary and negatively impact on Ireland’s competitive position as a location for international fund managers.

• Providing stability and certainty for investment in property in Ireland.

• Amendment be considered to Part 8A TCA 1997 for Specified Financial Transactions.

For further details and more recommendations, read the “Nurturing a global economy” section of this submission or reach out to Louise Kelly, Cathal Noone, or Matthew Dolan.

Our key recommendations to support Ireland’s talent include:

• Special Assignee Relief Programme: “SARP” should become a fixed part of the tax code. It is essential that the government promptly confirms the continuation of the programme beyond its current expiration date of 31 December 2025. There are certain shortcomings which should be addressed to make the Irish SARP competitive with expat regimes offered in other jurisdictions.

• Small Benefit Exemption: The limit on the number of benefits (currently five) appears to serve no clear purpose other than to create administrative burden and additional risk for employers in meeting their Employer Enhanced Reporting (EER) obligations. Policy should focus on the maximum value (€1,500) per tax year and not the quantum.

• Employer Enhanced Reporting (EER): The practical implementation presents challenges, particularly the requirement to report “on or before” the benefit date. We propose a legislative amendment to allow employers to report benefits within a reasonable period after the benefit date, such as within 30 days or on a monthly basis for reportable benefits dates falling within that particular income tax month. We strongly recommend that the current scope of EER is not expanded until the reporting deadline is amended. Additionally, the combined value of all benefits under the Small Benefit Exemption, should be subject to EER on the last day of the month when the final small benefit is given.

• Place of work: Determining an employee’s normal place of work is essential for the tax treatment of travel and subsistence payments made to employees. The traditional notion that employees work solely from a conventional office is no longer applicable. We recommend recognising a home office as a "place of work" in instances where the company has formally adopted a hybrid working policy.

• Auto enrolment: One of the principal issues concerns individuals who have reached the Standard Fund Threshold (SFT) and subsequently ceased pension contributions. We urge the government to consider this issue and provide a solution to prevent automatic enrolment for individuals who have reached the SFT, thereby avoiding unnecessary penalties and complications.

For further details and more recommendations, read the “Supporting Ireland’s talent” section of this submission  or reach out to Ian Prenty or Kelly Payne.

Our recommendations for creating a more accessible tax system include:

SMEs: Rigorous implementation of the SME test should consider the unique challenges and needs of SMEs, leading to regulations that are more suited to their size and capacity.

Tax Compliance for Real Estate Sector: Conduct a targeted review of tax compliance requirements, starting with a reassessment of the utility and design of RCT and PSWT. Implement a modernised, streamlined compliance framework to support efficient home delivery, reduce unnecessary costs, and enhance Ireland’s attractiveness for long-term investment.

Form CT1: Introduce a subset of Form CT1 specifically for domestic SMEs. Ensure timely communication of any changes to the Form CT1 schema and provide an administrative guide to Form CT1, including a visual representation of the schema.

R&D Refunds: Establish a clear timeline for the processing and payment of R&D refunds by the Office of the Revenue Commissioners either on a legislative basis or an agreed administrative basis.

Offshore Funds: To simplify the tax treatment and in turn increase compliance and reduce errors, priority should be given to introduce legislation in Finance Bill 2025 to provide for universal tax treatment of all investment income so as to:

• Tax all investment income at marginal income tax rates

• Tax all investment gains at CGT rates

• Provide for CGT loss relief across all chargeable investments

• Eliminate the multiple differing categorisations of investment types with differing tax rates/regimes applying to different investments

• Remove the 8 year exit charge for investment funds [subject to anti avoidance for personal portfolio funds/sub funds]

Tax Disputes: Implement measures to foster a more supportive and fairer environment for resolving tax disputes, benefiting both taxpayers and the Revenue.

For further details and more recommendations, read the “An approachable tax system” section of this submission or reach out to Geraldine McCann or Fiona McLafferty, or Fionnuala Hynes.