Budget 2027 introduces a range of measures aimed at supporting investment, reducing some of the costs faced by employers and helping Irish companies grow.
The announcements include a reduction in Capital Gains Tax, changes to employer reporting, enhanced supports for research and development, measures for start-ups and targeted support for sectors including agriculture and hospitality. Further detail will follow through the Finance Bill and supporting Budget publications.
Capital Gains Tax Reduced
One of the main announcements for business owners is a reduction in the standard rate of Capital Gains Tax from 33% to 31%.
The Government says the change is intended to reward entrepreneurship, support the scaling of Irish businesses and release capital for reinvestment. Business owners considering a sale, restructuring or transfer should seek advice before taking action, as the timing and structure of a transaction can significantly affect the final tax position.
Support for Employers
The weekly earnings threshold applying to the lower rate of Employer PRSI will increase from €552 to €600 in 2027.
The measure is intended to ease the impact of the increase in the National Minimum Wage. The Government estimates that it will result in Employer PRSI savings of approximately €650 to €700 per year for each employee earning below the new weekly threshold.
Employers should factor the revised threshold and the upcoming minimum wage change into their payroll and workforce budgets for 2027.
More Flexibility in Employer Reporting
Changes are also planned to the Enhanced Reporting Requirements introduced in 2024.
From January, employers will be able to choose between continuing to report relevant payments in real time or submitting monthly returns. Further information on how the revised system will operate is expected in the detailed Budget publications and Finance Bill.
Support for Start-Ups and Growing Businesses
Budget 2027 extends a number of reliefs aimed at helping Irish companies attract investment and scale. Subject to the adoption of the new EU State aid General Block Exemption Regulation, these include:
- Employment Investment Incentive
- Start-Up Capital Incentive
- Start-Up Relief for Entrepreneurs
- Relief for Investment in Innovative Enterprises, also known as Angel Investor Relief
The corporation tax relief available to qualifying small company start-ups will also be extended.
In addition, the Ireland Strategic Investment Fund is launching a €1 billion, three-year investment programme running to 2030. Working with Enterprise Ireland, the programme will invest through a range of channels to support the development and international growth of Irish companies.
Research, Development and Innovation
Several improvements are being made to the R&D Tax Credit regime:
- The subcontracting limit for third-level institutions and third parties will increase from 15% to 20%.
- The related monetary limit will increase from €100,000 to €200,000.
- The first-year payment threshold will rise from €87,500 to €105,000.
- A new enhancement will be introduced for qualifying R&D wage costs.
- Regulated clinical trials may use their regulated status to satisfy the science test.
- A simplification measure will improve the recognition of the credit for preliminary tax purposes.
The Knowledge Development Box will also be extended for a further five years. A limited option will be introduced allowing existing claimant companies to opt out of the regime for all qualifying assets.
Companies undertaking product development, software development, scientific research or other innovative work should review whether their activities and related costs may qualify.
Corporation Tax and Withholding Tax
The Government plans to simplify aspects of the tax treatment of interest on borrowings used for certain lending and investment activities.
Changes will also be introduced to preliminary corporation tax rules, including an increase in the threshold used to determine whether a company is considered small for preliminary tax purposes. The Budget speech does not specify the new threshold, so further detail is required before businesses can assess the impact.
Professional Services Withholding Tax will move from the current flat 20% withholding rate to personalised deduction rates. The reform will be subject to a commencement order to allow for further engagement with stakeholders.
Agriculture and Agri-Business
Budget 2027 includes a number of targeted measures for the agriculture sector.
For Succession Farm Partnerships, the three-year holding period will be removed for applications made from 1 January 2027. The associated tax credit, available for five years, will increase from €5,000 to €10,000 for qualifying partnerships registered from that date.
The accelerated Wear and Tear Allowance for Farm Safety Equipment will be extended for three years to 31 December 2029, with a further 12 items added to the range of qualifying equipment.
The VAT rate on respiratory vaccines for livestock will fall from 23% to 9%. The Farmers’ Flat Rate Addition will also increase from 4.5% to 4.8% in 2027.
Farmers and farming families considering succession, partnership arrangements or investment in safety equipment should review the changes before making long-term decisions.
Tourism and Hospitality
Budget 2027 provides €15 million to support rural pubs. The precise design of the scheme has not yet been announced and will be developed over the coming weeks.
Hospitality employers may also benefit from the higher Employer PRSI threshold where they have employees earning below €600 per week. This is a general employer measure rather than a hospitality-specific relief.
Separately, the 9% VAT rate for certain hospitality services has already applied since 1 July 2026. It is therefore not a new measure announced in today’s Budget speech.
Housing, Property and Construction
Budget 2027 includes several housing-related tax measures:
- The Rent-a-Room relief threshold will increase from €14,000 to €16,000.
- The relief will be extended to qualifying newly installed detached auxiliary dwellings between 32 and 45 square metres.
- The Rent Tax Credit will increase by €150 to €1,150 for single claimants and €2,300 for jointly assessed couples.
- The maximum Help to Buy refund will increase by €5,000 to €35,000 with immediate effect.
These measures primarily affect individuals and the residential market rather than representing direct business tax reliefs. However, they will be relevant to clients operating in property, construction and related professional services.
Childcare
The Childcare Services Relief exemption will increase by €5,000 to €20,000. The limit on the number of children who can be cared for under the relief will also be removed.
This relief is aimed at sole traders who mind children in their own home.
Sustainability and Energy
The income tax disregard for household microgeneration income will increase from €400 to €600. This disregard allows private homes to sell small amounts of energy back to the grid without having to worry about tax.
The Government will also begin a public consultation on barriers to Sustainable Aviation Fuel production and the potential role of support mechanisms. No specific new business tax relief for Sustainable Aviation Fuel was announced in the speech.
Practical Actions for Business Owners
Businesses should now consider the following:
- Review the potential impact of the Capital Gains Tax reduction on planned sales, transfers or restructurings.
- Update 2027 payroll budgets to reflect Employer PRSI and minimum wage changes.
- Assess whether monthly Enhanced Reporting Requirement returns may suit the business once operational details are published.
- Review eligibility for start-up, investment, R&D and innovation-related reliefs.
- Revisit farming succession and investment plans in light of the new agricultural measures.
- Monitor the Finance Bill and detailed Budget publications before acting on measures where implementation details remain outstanding.
Budget 2027 delivers a mix of opportunities and challenges for Irish businesses. While some measures provide immediate benefits, others will require careful planning to maximise their value. Taking time now to understand how the changes affect your business can help you make informed decisions and prepare confidently for the year ahead.
How Malone & Co Can Help
The Budget speech sets out the direction of the measures, but important details will follow through the Finance Bill, commencement orders and Revenue guidance.
Our Tax, Payroll and Advisory teams are reviewing the announcements and their practical implications for businesses. If you would like to discuss how Budget 2027 could affect your business, please contact a member of our team.
