Budget 2026: Tax updates for businesses

Housing

• VAT rate on new apartment completions to reduce from 13.5% to 9% effective 8 October 2025. Measure expected to last until 31 December 2030.
• An enhanced corporation tax deduction will be introduced in respect of certain expenditure incurred on constructing new apartments which will also be extended to the conversion of non-residential buildings into apartments. This will be capped at a maximum additional corporation tax deduction of €50,000 per apartment.
• A new corporation tax exemption will be introduced in respect of rental income generated from Cost Rentals.
• The partial stamp duty refund for residential developments will be extended to 31 December 2030.

VAT

The VAT rate applying to catering, food and hairdressing will be reduced to 9% effective from 1 July 2026.

FDI

• A number of changes have been made to the Research & Development Tax Credit including:
  • An increase in the credit from 30% to 35% of qualifying spend.
  • An increase in the initial payment threshold from €75,000 to €87,500, targeted at supporting smaller projects.
  • A practical change to allow 100% of an R&D employee’s emoluments as qualifying costs where at least 95% of their time is spent on qualifying R&D activities.
• A number of changes have been made to the Participation Exemption on Foreign Dividends which was introduced in Finance Act 2025 in an attempt to broaden its scope to additional jurisdictions and shareholdings.
• Enhancements have been introduced in relation to both the Film Tax Credit and the Digital Games Credit in a bid to increase Irelands attractiveness in the audiovisual industry.

Employment Benefits

• The KEEP scheme will be extended to 31 December 2028 subject to a ministerial commencement order.
• The existing €10,000 reduction in the OMV of electric vehicles for benefit-in-kind purposes will be retained for 2026 before being tapered out gradually and expiring entirely on 31 December 2028.
• Reduced BIK rates of between 6% - 15% will be introduced for electric vehicles.

Other changes

• The accelerated capital allowances scheme on energy efficient equipment will be extended to 31 December 2030.
• The Bank Levy will be extended so that it applies for 2026 with no change to target revenue.
• A new stamp duty exemption has been introduced in respect of the acquisition of shares in Irish registered companies traded on a regulated market subject to a market capitalisation cap of €1 billion.