Ireland’s Budget 2026, announced on 7th October 2025, brings important changes for businesses, accountants and tax professionals.
This guide explains the key Irish tax law updates and audit law changes in Ireland in 2026 to help you understand what these budget changes mean for your business.
It highlights the most important measures for business owners, finance teams, and accountants, Irish SMEs, including R&D incentives, VAT changes, Auto‑Enrolment, and new crypto reporting rules.
Key Takeaways
- R&D tax credit rate increases from 30% to 35%, with first-year payments rising to €87,500
- Capital Gains Tax entrepreneur relief lifetime limit rises from €1 million to €1.5 million from 1st January 2026
- VAT rate drops to 9% for new apartments, hospitality services, hairdressing, gas and electricity
- Cryptocurrency businesses must register with Revenue by 31st December 2026 under new CARF reporting rules
- Mandatory Auto-Enrolment pensions begin 1st January 2026 for eligible employees aged 23-60 earning over €20,000
Understanding the Irish Budget in 2026
The Irish budget for 2025-2026 delivers a €9.4 billion package focused on business investment and housing. Finance Minister Paschal Donohoe presented a more cautious approach compared to previous years, with €8.1 billion for public spending and €1.3 billion in tax measures. The official Revenue summary confirms no changes to personal tax rates or bands, maintaining fiscal discipline while supporting economic growth.
The government projects a surplus of €10.3 billion in 2025 and €5.1 billion in 2026, reflecting Ireland’s strong economic position. For accountants and businesses, these budget changes create new opportunities alongside updated compliance requirements.
Essential Budget 2026 Changes and Deadlines
| Area | Key Change | Effective From |
|---|---|---|
| R&D Tax Credit | 35% rate; €87,500 first payment | Periods ending ≥31 Dec 2026 |
| CGT Relief | Lifetime limit €1.5m | 1 Jan 2026 |
| VAT Apartments | 9% (from 13.5%) | 8 Oct 2025–31 Dec 2030 |
| VAT Hospitality/Hair | 9% (from 13.5%) | 1 Jul 2026 (ongoing) |
| VAT Gas/Electricity | 9% extension | Now–31 Dec 2030 |
| Auto-Enrolment | Mandatory for eligible employees | 1 Jan 2026 |
| CARF | RCASP registration/reporting | Reg. by 31 Dec 2026; report May 2027 |
| PRSI | Employee 4.2%→4.35%; Employer to 11.40% | Oct 2025/2026 |
| SARP | Min. €125k; to 2030 | 1 Jan 2026 |
Major Business Tax Changes
The Budget 2026 introduces several significant business tax incentives designed to boost innovation, housing development and investment in Irish companies.
Research & Development Tax Credit Enhancement
The R&D tax credit rate increases from 30% to 35% for accounting periods ending on or after 31st December 2026, according to Finance Bill 2025. This makes Ireland more competitive for research-intensive businesses.
Key improvements include:
- Higher credit rate: Companies can now claim 35% of qualifying R&D expenditure (up from 30%)
- Increased first-year payment: The threshold rises to €87,500 from €75,000, providing better cash flow for smaller projects
- Simplified employee cost rules: When an employee spends at least 95% of their time on qualifying R&D work, 100% of their salary qualifies as eligible expenditure
These changes benefit small businesses and startups in technology, manufacturing and product development. The effective tax saving can reach up to 47.5% when combined with corporation tax deductions.
Business Impact:
- Tech startups can recover more cash in year one, improving runway
- Manufacturing firms with product development teams see immediate tax savings
- Pharma and biotech companies gain competitive advantage versus UK (20-27%) and EU rates
- SMEs benefit disproportionately from the higher first-year payment threshold
Capital Gains Tax Revised Entrepreneur Relief
According to the Revenue Budget 2026 summary, the lifetime limit for Capital Gains Tax Revised Entrepreneur Relief increases from €1 million to €1.5 million, effective 1st January 2026.
This relief allows business owners to pay a reduced 10% CGT rate (versus the standard 33%) when selling qualifying business assets. The additional €500,000 in lifetime cap provides greater incentive for entrepreneurship and business investment in Ireland.
VAT Rate Changes for Businesses
The Budget introduces several VAT rate reductions across multiple sectors to support growth and housing supply:
| Sector | Previous Rate | New Rate | Effective Date | End Date |
|---|---|---|---|---|
| New apartments | 13.5% | 9% | 8 October 2025 | 31 December 2030 |
| Food and catering | 13.5% | 9% | 1 July 2026 | Ongoing |
| Hairdressing | 13.5% | 9% | 1 July 2026 | Ongoing |
| Gas and electricity | 13.5% | 9% | Extended | 31 December 2030 |
These changes aim to support hospitality sector recovery and address Ireland’s housing shortage. The apartment VAT reduction is particularly significant for residential development.
Business Impact:
- Business owners save an additional €115,000 in tax on the extra €500,000 (23% difference between 10% and 33% rates)
- Serial entrepreneurs can reinvest more capital into new ventures
- Succession planning becomes more attractive for family businesses
- Foreign investors see improved exit opportunities when selling Irish trading companies
Corporation Tax Deduction for Apartment Construction
Budget 2026 introduces a 125% corporation tax deduction for qualifying costs of constructing certain new apartments, available for projects commenced between 8 October 2025 and 31 December 2030.
Business Impact:
- Construction companies can claim €125 in deductions for every €100 spent on qualifying apartment construction (125% enhanced corporation tax deduction, capped at €50,000 extra per unit)
- Real estate funds make Irish residential development more attractive versus commercial property through enhanced yields and cost rental exemptions
- Mixed-use developers incentivise including residential components in projects to access the 125% deduction on qualifying apartment costs
Stamp Duty Exemption for Irish SMEs
From 1st January 2026, a new stamp duty exemption applies to share acquisitions in Irish companies with market capitalisation below €1 billion that trade on regulated markets. This measure reduces costs for accessing public markets and supports homegrown businesses scaling internationally.
Business Impact:
- Growing Irish companies saves 1% on share transactions, making public listing more attractive
- Investors reduced transaction costs when investing in smaller Irish public companies
- IPO candidates lower ongoing costs of being publicly traded in Ireland
Employment and Individual Tax Changes
Budget 2026 includes several changes affecting employers and employees, from pension reform to tax relief extensions.
Universal Social Charge Adjustment
The USC 2% rate band ceiling increases to €28,700 from €27,382, effective 1st January 2026. This adjustment ensures full-time workers on the new minimum wage of €14.15 per hour remain outside higher USC rates, providing modest relief.
PRSI Contribution Increases
PRSI rates increase as follows:
- Employee PRSI rose by 0.1% to 4.2% from 1st October 2025
- Further increase to 4.35% planned for 1st October 2026
- Employer PRSI increases to 11.40% (9.15% for weekly income of €441 or less)
These increases fund the new Auto-Enrolment Pensions scheme.
Business Impact:
- All employers: Payroll costs increase by approximately 0.25-0.35% on top of existing salary commitments
- Labor-intensive businesses: Hospitality, retail and care sectors face proportionally higher cost increases
- Annual cost example: Employer with 50 employees averaging €40,000 salary faces additional annual cost of approximately €5,000-€7,000
Auto-Enrolment Pensions Scheme
Starting 1st January 2026, a new mandatory Auto-Enrolment Retirement Savings Scheme begins. Employers must automatically enrol eligible employees (aged 23-60, earning over €20,000 annually) with both employer and employee contributions. An estimated 750,000 people will benefit. Employers need updated payroll systems to manage this new requirement.
Business Impact:
- All employers: Must implement new payroll processes and communicate changes to eligible employees
- Initial contribution rates: Start at 1.5% each for employer and employee, gradually increasing
- SMEs with 10-50 employees: Face significant administrative burden implementing new systems
- Employee retention: May improve as pension benefits become standard across all qualifying employers
- Cash flow: Additional employer contribution represents new recurring cost
Non-compliance consequences:
- Employers failing to auto-enrol eligible employees face penalties from the Pensions Authority
- Required to make retrospective contributions for periods of non-compliance
- Potential reputational damage and employee relations issues
Special Assignee Relief Programme Extension
The SARP, providing income tax relief for highly skilled international workers, extends until 31st December 2030. However, the minimum qualifying salary increases to €125,000 annually for new entrants from 1st January 2026 (up from €100,000).
Business Impact:
- Tech and pharma companies: Higher salary threshold may reduce SARP usage for mid-level hires
- Financial services: Can still attract senior international talent with attractive tax treatment
- Startups: May struggle to meet €125,000 threshold for key technical hires
Key Employee Engagement Programme Extension
The KEEP scheme, allowing qualifying employees to exercise share options without incurring income tax, USC, or PRSI, extends until 31st December 2028, subject to European Commission approval. This remains important for smaller companies attracting and retaining talent.
Rent Tax Credit Extension
The Rent Tax Credit extends for three more years until the end of 2028. Maximum values remain €1,000 for single individuals and €2,000 for couples, providing relief against rising rental costs.
New Audit and Reporting Requirements
Budget 2026 introduces significant new reporting requirements, particularly around cryptocurrency transactions. These audit law changes Ireland 2026 represent major shifts in Ireland’s accounting regulations and compliance landscape.
Crypto-Asset Reporting Framework Implementation
Ireland is implementing the OECD’s Crypto-Asset Reporting Framework (CARF) through Finance Bill 2025. This represents one of the most significant new Irish tax law updates 2026 for businesses dealing with cryptocurrency.
Key deadlines and requirements:
- Registration deadline: Reporting Crypto-Asset Service Providers (RCASPs) must register with Revenue by 31st December 2026
- Data collection begins: 1st January 2026 onwards
- First reporting deadline: 31st May 2027 (covering the 2026 period)
Who is affected?
RCASPs include:
- Centralised cryptocurrency exchanges
- Crypto brokers and dealers
- Platforms facilitating crypto transactions
- Certain decentralised exchanges
- Wallet providers offering exchange services
What must be reported?
- Customer identification data (name, address, date of birth, nationality, tax ID)
- Transaction records and amounts
- Wallet information
- Asset holdings
This framework aims to increase tax transparency and ensure cryptocurrency users meet their tax obligations. Businesses must invest in IT systems to handle these reporting requirements. Failure to obtain customer self-certifications requires halting transactions.
Practical Compliance Checklist for Irish Businesses
To stay compliant with new Irish accounting regulations 2026, businesses need a structured approach to implementing these budget changes for businesses. Here’s a detailed compliance checklist:
Immediate actions (Q4 2025):
- Review R&D activities and identify qualifying expenditure
- Assess whether your business qualifies as an RCASP under CARF
- Update payroll systems for Auto-Enrolment from January 2026
- Review VAT rates on relevant supplies and update invoicing
- Prepare for PRSI rate increases in budget forecasts
Early 2026 actions:
- If you’re an RCASP, begin collecting customer self-certifications
- Upgrade IT systems to track cryptocurrency transactions
- Implement R&D employee time tracking (95% threshold)
- Review entrepreneur relief eligibility for planned disposals
- Assess SARP eligibility for new international hires
Throughout 2026:
- Monitor Finance Bill progress for implementation guidance
- Maintain comprehensive records for R&D claims
- Track crypto-asset transactions for 2027 reporting
- Review stamp duty implications for share transactions
- Stay informed on regulatory developments
What Accountants Need to Know About Irish Budget in 2026?
For accounting and tax professionals, several key points require attention to support clients effectively.
Client advisory opportunities:
- Many clients may qualify for increased R&D credits but aren’t claiming
- Entrepreneurs planning exits should review enhanced CGT relief
- Businesses hiring international talent need SARP guidance
- SMEs may benefit from KEEP extensions for employee retention
Compliance challenges:
- CARF implementation requires new cryptocurrency taxation expertise
- Auto-Enrolment adds payroll complexity for all employers
- Multiple VAT rate changes need careful system updates
- Increased PRSI rates affect payroll calculations
Revenue engagement:
- First-time R&D claimants need 90-day pre-filing notification
- CARF registration must be completed by December 2026
- Enhanced documentation standards for R&D employee costs
- Self-assessment deadlines remain unchanged
Impact on SMEs and Startups
The impact of 2026 Irish budget on corporate tax rates and business incentives particularly affects small and medium enterprises.
| Aspect | SMEs/Startups Benefit | Larger Firms Benefit | Net Cost Pressures |
|---|---|---|---|
| R&D Credit | Cash flow boost for innovation | Scaled claims on big projects | Documentation time |
| CGT Relief | Exit incentives | Subsidiary sales | None direct |
| VAT Cuts | Margin relief in services/hospitality | Housing/development scale | Invoicing updates |
| Auto-Enrolment | Shared employee retention tool | Easier via HR systems | Payroll contributions (€1k+ per employee/year) |
| CARF | Compliance barrier for new entrants | Established IT handles it | System investments (€10k+) |
Small businesses should conduct comprehensive reviews of how these changes affect their specific situation, as net impact varies significantly by sector and business model.
Fiscal Policy Updates in Ireland in 2026
Ireland’s fiscal policy in 2026 reflects careful balancing between maintaining competitiveness and ensuring sustainable public finances. The Irish government budget demonstrates fiscal prudence while supporting growth initiatives. The government projects:
- Economic growth continuing, with domestic demand growing 2.3%
- Unemployment gradually increasing from 4.6% in 2025 to 4.8% in 2026
- Continued budget surpluses, though smaller than 2025
- Corporate tax receipts of €34 billion in 2026
This prudent approach aims to protect Ireland’s economy against global uncertainties, including international trade tensions and potential economic shocks.
Preparing for Implementation
Budget 2026 sets Ireland’s economic policy direction, with clear focus on supporting innovation, addressing housing supply, ensuring tax transparency and maintaining competitiveness. This Irish budget review shows a government committed to long-term strategic planning.
For businesses and accounting professionals, staying ahead requires:
- Continuous learning: Tax law evolves, particularly around digital assets
- Proactive planning: Many benefits require advance preparation and documentation
- System investment: New reporting requirements demand upgraded IT infrastructure
- Professional advice: Complex changes make expert guidance increasingly valuable
The accounting regulation updates in Ireland in 2026 outlined in this guide represents significant changes. As the Finance Bill 2025 progresses through the legislative process, additional details will emerge. Businesses should work closely with accountants to navigate these changes effectively and maximise opportunities.
Final Thoughts
The key changes in Irish budget in 2026 for small businesses and larger corporations reflect government commitment to balancing immediate needs with long-term economic resilience. while some measures increase costs (PRSI, Auto-Enrolment), others provide significant benefits (R&D credits, entrepreneur relief, VAT reductions).
Success requires staying informed, planning ahead and seeking professional guidance. Whether you’re an accountant advising clients or a business owner managing compliance, understanding these changes positions you to make better decisions and capitalise on new opportunities.
For ongoing updates, monitor the Revenue Commissioners website and Gov.ie Budget resources and consult with qualified tax professionals as Finance Bill 2025 is finalised and implemented throughout 2026.
Frequently Asked Questions
When does the new R&D tax credit rate of 35% take effect?
Do I need to do anything if my business doesn’t deal with cryptocurrency?
How does Auto-Enrolment affect my payroll from January 2026?
Can I claim the enhanced entrepreneur relief on past business sales?
What happens if I miss the CARF registration deadline?
Are there any changes to corporation tax rates?
Where can I find official information about Budget 2026?
Parul is a dedicated writer and expert in the accounting industry, known for her insightful and well researched content. Her writing covers a wide range of topics, including tax regulations, financial reporting standards, and best practices for compliance. She is committed to producing content that not only informs but also empowers readers to make informed decisions.