Ireland has cut its standard Capital Gains Tax rate, expanded R&D incentives and committed further funding to digital skills as Budget 2027 seeks to strengthen investment and business competitiveness.
The standard Capital Gains Tax rate falls from 33% to 31% for qualifying disposals made from 7 October, while changes to the R&D Tax Credit will allow businesses to claim against a greater proportion of outsourced research activity.
The limit applying to qualifying R&D outsourced to unconnected third parties and higher education institutions will rise from the greater of 15% of in-house R&D expenditure or €100,000 to the greater of 20% or €200,000.
The first-year repayment threshold for the credit is also increasing from €87,500 to €105,000. Companies with claims at or below the new threshold will be able to receive the full benefit in the first year, improving the cash flow effect of the incentive for smaller claimants.
Budget 2027 also provides €150 million from Ireland’s National Training Fund for AI and digital skills, alongside measures intended to reduce administrative work for employers.
Dublin Chamber welcomed the package, arguing that the combination of innovation support, investment incentives and skills funding should strengthen Ireland’s domestic enterprise base.
Mary Rose Burke, Chief Executive of Dublin Chamber, said the increase in outsourced R&D limits better reflected the way research is increasingly delivered through partnerships with universities and specialist external organisations.
The Chamber had previously called for changes to the R&D regime, a lower Capital Gains Tax burden, greater use of the National Training Fund and action to reduce regulatory complexity.
The CGT reduction remains well above its preferred rate. Burke said: “The reduction in the Capital Gains Tax rate by two percentage points is a step in the right direction. However, at 31%, Ireland’s rate will remain one of the highest in Europe, limiting the recycling of capital into Irish businesses. We would like to see Government build on this initial reduction by setting out a roadmap towards a more competitive rate of 20%.”
The Budget also introduces a Savings and Investment Account intended to direct more domestic savings towards productive investment. Dublin Chamber said the scheme could help connect household capital with Irish companies seeking to start, scale and grow.
Skills funding forms another significant part of the business package. The €150 million allocation from the National Training Fund is intended to support AI and digital capabilities as companies increase their use of automation and data-driven tools.
Burke said employers should have a central role in shaping how the funding is deployed so that programmes reflect practical business needs and remain accessible to smaller companies.
Employers will also see changes to Enhanced Reporting Requirements, with reporting moving from real time to a monthly basis. Dublin Chamber had pressed for the system to be simplified as part of wider attempts to reduce the administrative cost of doing business.
Budget measures outside the tax system could have an equally significant effect on the operating environment. The Government has allocated €9.4 billion to the Department of Housing, while major commitments have also been made to transport and water infrastructure.
Dublin Chamber highlighted the €6 billion allocated to MetroLink and further funding for projects including DART+, arguing that better transport capacity is closely linked to housing delivery and employers’ ability to recruit across the Dublin region.
A further €2.3 billion has been assigned to Uisce Éireann, including work connected with the Eastern and Midlands Water Supply Project and the Greater Dublin Drainage Scheme.
The Chamber has repeatedly linked shortages in housing, transport, water and energy capacity with Ireland’s wider competitiveness. Businesses can benefit from lower taxes or investment incentives only if physical constraints do not prevent them from adding workers or expanding operations.
Budget 2027 therefore combines relatively immediate changes to taxation and administration with longer-term spending intended to increase productive capacity. The CGT cut is smaller than business groups had sought, but changes to the R&D credit directly address access to external expertise and the timing of payments to smaller claimants.
The effectiveness of the package will now depend on delivery. Training funding must translate into programmes companies can use, reporting reform needs to reduce administration in practice, and infrastructure spending must create additional capacity if the Budget is to improve conditions for investment and growth.
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