Ireland cuts capital gains tax to 31 percent
The Irish Government emphasizes that homegrown and privately held companies form the backbone of a stable economic system. During Budget 2027, the Finance Minister rolled out tax initiatives explicitly designed to bolster these enterprises and the entrepreneurs behind them.
The key measures introduced include a cut in the capital gains tax rate from 33% to 31%, which will apply to disposals from 7 October 2026. Employers will, from 1 January 2027, have the option to report in real time or file monthly returns under the updated Enhanced Reporting Requirements.
Supporting Irish Businesses
Improvements to the research and development tax credit scheme, along with extensions to existing corporation tax, income tax, and capital gains tax reliefs for startups and risk capital investors, are part of the package. The Minister recognized the vital role Irish businesses and entrepreneurs play in the economy, especially in boosting productivity, incomes, and living standards.
According to KPMG’s Enterprise Barometer 2025, 79% of respondents expressed confidence in growth, and 83% targeted building businesses with lasting value. However, just 35% felt the Government sufficiently acknowledged enterprise as a growth driver. The announced measures may fall short in affecting business decisions.
Improving access to private capital remains a priority, with a significant share of Irish household wealth remaining on deposit, and comparatively little invested in growing indigenous businesses. The announced Investment Account should encourage broader participation in capital markets, but reforms to the Employment and Investment Incentive Scheme (EIIS) could have further supported investment in Irish businesses and SMEs.
Tax Framework and Investment
The tax system should support long-term ownership and growth, yet the disparity between dividend taxation and the 10% CGT rate applicable to qualifying disposals under Revised Entrepreneur Relief may encourage founders to sell instead of maintaining investment. Budget 2027 could have mitigated this by raising the relief’s lifetime cap and introducing a capped dividend tax rate for active SMEs.
Capital taxation and succession planning should be integrated into a cohesive enterprise framework. The reduction in the CGT rate to 31% is a positive step, but combining it with restored relief for inflationary gains and CGT deferral for reinvestment in innovative SMEs would create stronger incentives to redirect capital. Family-owned businesses require predictable succession rules, with reforms to Retirement Relief and CAT business relief potentially supporting genuine intergenerational continuity.
Talent initiatives must address the practical challenges faced by private firms, which compete for scarce skills against employers with higher cash compensation. However, Budget 2027 overlooked key reforms to assist domestic businesses, particularly under the Key Employee Engagement Programme (KEEP), which remains hampered by administrative complexity, valuation uncertainty, and restrictive limits.
Simplification itself serves as a competitiveness measure, as compliance costs take a larger slice of an SME’s resources compared to bigger firms. The proposed changes to the Enhanced Reporting Requirements and preliminary corporation tax rules should offer more certainty and flexibility, allowing management to concentrate on productive activities. The KPMG team will continue tracking developments and providing guidance to businesses.
The small company threshold is increased from €200,000 to €350,000.
Revised top-up rules apply where at least 80% of the liability is paid by the due date and the balance within four months after the accounting period ends. Certain deemed underpayment provisions are removed.
Capital Acquisitions Tax and Succession
Proposed increases in the capital acquisitions tax tax-free group thresholds for gifts and inheritances taken on or after 7 October 2026 are announced. A proposed increase in the weekly earnings threshold for the lower rate of employer PRSI from €552 to €600 applies from 1 January 2027.
