Budget 2027: How business leaders are reacting

Business leaders respond to Budget 2027 measures on investment, CGT, R&D tax credits and scaling funds, while calling for further reforms.

Economy and business supports

Kevin Timoney, chief economist at Davy, said: “The Irish economy is growing strongly and broadly again this year, while the public finances are in fundamentally better shape than often portrayed. Ireland’s macroeconomic and fiscal situation affords the Government choices that many other countries simply haven’t got. This is especially true in an environment with rising interest rates.

“Of course, pressure on some households and businesses exist from higher energy and day-to-day costs. An increasingly fraught political climate of late has also been evident in Ireland’s public discourse, with protests and strike action notably more prevalent this year.

“However, at the same time, it must be recognised that a lot of Irish households and businesses are capable of navigating challenges like those experienced this decade with relative ease, helped by strong financial balance sheets and relatively low tolerance for risk since the global financial crisis. This has underpinned Ireland’s strong economy, and we expect this will remain the case over coming years.”

Supporting scaling companies

The CEO of Scale Ireland, Martina Fitzgerald, said: “This budget is a strong endorsement of Irish tech start-up and scaling companies. The new €1 billion investment programme, to be run by ISIF, will help to tackle Ireland’s structural scaling funding gap. We hope the 2% reduction in the CGT rate – the first cut to CGT in almost three decades – will help incentivise increased investment in our sector. We also welcome the further enhancement to the R&D Tax Credit Scheme which will directly benefit companies.”

The chair of Scale Ireland, Brian Caulfield, said: “The new Scaling investment programme is very welcome and timely given the significant shortfall in scaling funding here. We look forward to working with ISIF and Enterprise Ireland to ensure the investment is allocated as soon as possible to help Irish enterprises scale globally. We hope this will leverage additional institutional investment in the sector. We also welcome the reduction in CGT – this is an initial step to accelerate investment into Irish innovation.”

Sarah-Jane Larkin, director-general of the Irish Venture Capital Association, said: “Budget 2027 is a welcome statement of confidence in Irish enterprise. It recognises that investment, innovation and scaling companies are central to Ireland’s future prosperity. The reduction in capital gains tax, the examination of the wider investment tax regime, the extension of investor schemes, the strengthened R&D tax credit, the new Personal Investment Account and the €1 billion ISIF scaling programme collectively send a clear message that Ireland is open for investment and committed to growth.

“The opportunity now is to build on that momentum. The Personal Investment Account can give Irish savers a meaningful route to participate in long-term growth, while a complementary strategy for pension and institutional capital would unlock the much larger pool of domestic savings available to support productive investment.”

She added: “A professionally managed national fund-of-funds would be a powerful next step, enabling a small proportion of domestic pension savings to invest through Irish venture capital and private equity funds. It would complement today’s measures by supporting scaling companies, high-value employment and innovation, while giving Irish savers access to the long-term growth of the economy they help to build.”

Larkin concluded: “This is a constructive and pro-enterprise Budget that gives business and investors greater confidence. It provides a strong foundation for the next phase: connecting more Irish savings and institutional capital with Irish companies and domestic opportunity. Ireland has the capital, talent and ambition to translate today’s measures into stronger companies, quality jobs and sustainable long-term growth.”

Ian Talbot, CEO of Chambers Ireland commented: “This Budget was presented as a budget for workers and we support measures that ease cost-of-living pressures. It does not, however, address the full range of business costs affecting many of our members. Support for workers and families, investment in infrastructure and a stronger focus on education and training will nevertheless help Ireland’s competitiveness and support businesses across the country. The new Savings and Investment Account also has the potential to mobilise funding for growing indigenous businesses.”

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R&D Tax Credit:

Mary Rose Burke, CEO of Dublin Chamber, said: “The decision to increase the limits on qualifying outsourced R&D expenditure from 15% to 20%, including for R&D undertaken with universities and higher-education institutions, better reflects how modern innovation is delivered and helps businesses access the expertise they need. The first-year repayment threshold has grown by one fifth to €105,000, helping to ease the cash-flow pressures faced by SMEs and scaling businesses.”

Derek Heny, BDO Head of Tax on the R&D Tax Credits changes: “The increase in the thresholds for subcontracted R&D to third parties and universities is a welcomed step, however, there was more that could have been done regarding international related party amendments that would have increased the competitiveness of the regime internationally. Increasing the year one refundable amount will assist businesses with increased cashflow. It remains to be seen what the Pillar Two changes will be and we look forward to seeing how these changes work to help businesses.”

Paddy Stapleton, head of tax at leading audit, tax and consulting firm RSM Ireland said: “The R&D changes announced in Budget 2027 should make the tax credit more flexible, accessible and effective, as well as strengthen Ireland’s position as an attractive place for investment. These changes will positively impact SMEs through to large multinationals, while also reducing costs and administrative burden for companies claiming the relief.

“The 5% increase in base expenditure will mean more innovation support for all companies accessing the regime. While the increase in thresholds for those that leverage outsourced support address a long-standing limitation of the regime and recognise the collaborative nature of modern innovation.

“For the life sciences sector, the proposal to recognise regulated clinical trials as satisfying the science test will reduce administrative burdens and provide more certainty for those participating in global clinical trial programmes in Ireland. This is particularly key given the uncertainty driven by US tariff changes over the last 18 months.

“However, it is a missed opportunity that Budget 2027 did not include broader supports for businesses investing in AI adoption and other emerging technologies. While these investments may not always meet the criteria for R&D tax relief, they are increasingly critical to driving productivity, efficiency and innovation. A complementary incentive to support businesses in deploying AI at scale would have helped accelerate the next wave of business transformation and should be a priority for government.”

AI & Skills

Commenting on the allocation of €150 million from the National Training Fund to strengthen Ireland’s AI readiness, Ian Talbot, CEO of Chambers Ireland said: “Building AI capability is becoming an important test of national competitiveness. Ireland must help SMEs use AI to streamline their operations and raise productivity. That requires accessible, industry-led training and practical support.

“The National Training Fund gives Ireland an immediate means of supporting that objective. With a projected surplus of up to €2 billion, the question is whether today’s €150 million commitment is ambitious enough to deliver AI adoption among SMEs at the scale and pace required.”

Mary Rose Burke, CEO of Dublin Chamber said: “The release of €150 million from the National Training Fund for AI skills is a welcome recognition of the need to prepare our workforce for the changes ahead. Businesses see the potential of AI to improve productivity and transform how they operate, but skills remain a significant barrier to adoption. Employers must have a central role in shaping how this funding is deployed, with practical supports that are responsive to the needs of business and designed so that SMEs can access it easily.”

Tax bands

Thomas Pugh, chief economist at leading audit, tax and consulting firm RSM Ireland said: “Budget 2027 turned out to be a bigger affair than the coalition government would have liked. The tax package was increased to €1.65bn compared to initial plans for a €1.5bn in order to keep fuel excise duty cuts in place until the spring. The government finances can clearly absorb the relatively small increase in spending, but the risks from inflation and geopolitics are rising, meaning this may not be enough to quell demands for support.

“Today’s budget was far more focused on the cost-of-living than planned as a swathe of energy measures, increased subsidies and cuts to childcare costs, and the uprating of income tax allowances were announced. These will all go some way to supporting households either through directly cutting inflation or supporting incomes. On the details, we tentatively estimate that these measures will reduce average CPI inflation by around 0.25ppts in 2027, but we will need to crunch the numbers more precisely in the coming days and some of this will be offset by a big hike in tobacco duties.

“Those big increases in government support, combined with high savings and a robust labour market are exactly why we think the domestic economy can keep growing by around 3% this year and next despite the energy shock.”

Mark O’Rourke, managing director of Bibby Financial Services said: “This is a positive Budget for the Irish business community, and demonstrates that the Government does seem to be listening to what is required to ensure continued growth for the Irish economy.

“From our conversations with SMEs nationwide, any measures that help improve confidence and reduce operational costs will be well received.

“The reduction in capital gains tax from 33% to 31% will strengthen the case for investing, reinvesting and scaling in Ireland. The package of fuel supports also eases a growing cost that has affected businesses in every sector in recent months, particularly those where transport and delivery are central to operations. In addition, the increase in the employer PRSI threshold lowers the cost of employing people at a time when firms all over the country are managing already extremely tight margins.

“From a day-to-day operational point of view, these measures speak directly to the pressures business owners have been facing in recent months. Of course, they won’t resolve every challenge, but they do show a government that is listening to what businesses need and a commitment to meaningful change.

Julia Considine, Private Client Partner at Grant Thornton Ireland said: “The Minister described this as a Budget to Reward Work and the changes announced to income tax bands and credits are an important step towards achieving that objective. At a time when inflation and cost-of-living pressures continue to affect households, allowing workers to keep more of what they earn is a welcome policy response.”

“The increase in the standard rate income tax band means more income can be taxed at 20% rather than 40%, while increases to the main tax credits will provide a direct reduction in tax liabilities for employees. These are measures that workers will see reflected in their take-home pay and they should be welcomed.”

“The changes announced will help, but they should also be viewed as part of a longer-term journey. Ireland remains heavily reliant on labour taxes and there remains scope for further reform aimed at improving competitiveness, encouraging workforce participation and enhancing take-home pay.”

“Regular increases to tax bands and credits are essential if Government wants to avoid a situation where inflation-driven wage growth results in workers continually drifting into higher effective tax burdens. Maintaining the value of these thresholds over time should become a central feature of future budgets.” 

However, Peter Vale, Head of Tax at Grant Thornton Ireland, on Budget 2027 stated: “It was disappointing that there was no roadmap outlining plans to address our high personal tax rates. The marginal rate for employees has increased from 43% in 2008 to over 52% today.  This puts Ireland at a significant competitive disadvantage at a time when our corporation tax advantage continues to be eroded.”

Infrastructure

Andrew Brownlee, CEO of the Construction Industry Federation, said: “CIF welcomes the continued commitment to investment under the National Development Plan in Budget 2027, and the Government’s recognition that this investment must be sustained through current economic and geopolitical uncertainty to strengthen Ireland’s resilience.

“Water, wastewater, energy and transport infrastructure are critical to unlocking land, enabling development and increasing housing supply at the scale required. The increased capital investment announced today, underpinned by the €275.4 billion National Development Plan, is therefore vital to Ireland’s future growth, housing delivery and to addressing the infrastructure emergency.

“We welcome the €2.3 billion investment in Uisce Éireann, including €1.5 billion in capital funding, to increase water and wastewater capacity, progressing more than 400 projects and advancing strategically important projects including the Eastern and Midlands Water Supply Project and Greater Dublin Drainage Scheme. This is precisely the type of enabling investment required to support housing and wider economic growth.

“The substantial investment in transport is also important, including €5.5 billion for the Department of Transport, continued investment in DART+, BusConnects and rural transport infrastructure, and the commitment of €6 billion between 2027 and 2030 to progress MetroLink.

“On housing, we welcome the €9.4 billion investment announced today. While we are disappointed that the VAT reduction has not been extended to all apartment types, including duplexes, the increase in the Help to Buy Scheme is a positive step that will support more people in accessing home ownership.”

Shane Dempsey, director-general, Association of Consulting Engineers of Ireland said: “Today marks a decade of increased Government investment in infrastructure. The €20 billion in additional capital investment announced in today’s Budget shows the Government’s ambition to put in place the energy grid, water infrastructure, roads, rail and hospitals that our growing economy and population urgently require. This will need to increase rapidly to €30 billion to deliver the National Development Plan (NDP).

“Engineers have been asking Government for three things: invest more, invest more quickly and invest smarter. Each year, the amount invested has increased, and recent efforts to remove barriers to delivery appear to be increasing the pace at which projects are progressing. Regarding smarter investment, more work is needed to ensure that as much of today’s investment as possible goes into building the infrastructure Ireland needs.

“For consulting engineers, public-sector contractual terms, particularly around risk allocation, are increasingly out of step with the private sector. We are seeing member firms move away from the risk associated with public-sector projects and towards the greater certainty provided by private-sector work.

“Too often, public projects are procured with an excessive focus on lowest cost, while contractual terms place disproportionate risk on those least able to manage it. The result can be costly disputes, delays and additional project costs – all of which erode the value of the original investment and take resources away from delivering the infrastructure itself.

“The answer is not simply to invest more. We need to procure better and allocate risk more fairly.”

Gift and Inheritance Tax Reform

Julia Considine, Private Client Partner at Grant Thornton Ireland, said: “Any increase in the CAT thresholds will be welcomed by those who benefit from it, but Budget 2027 was an opportunity to look beyond simple tweaks and set out a roadmap to address the fundamental imbalance within our inheritance tax system. The Revenue figures themselves illustrate the disparity starkly. Almost €3 in every €5 of inheritance tax receipts in 2025 came from beneficiaries in Groups B and C, despite those groups having substantially lower tax-free thresholds than what applies to a child inheriting from a parent.

“Family dynamics and living arrangements have evolved over the years, but our inheritance tax system is still stuck in the past. Not everybody has children and for many people, the most important person in their life may be a long-term partner, sibling, niece, nephew, or somebody who does not fall within their immediate family at all. You could be partners in life, but strangers in blood and penalised because as a couple, you didn’t tick the box of a traditional marriage.

“Rising residential property prices are really making the issue more pronounced. Someone may inherit a family home that has seen its potential price skyrocket, but the inflexibility of the current system means that it will often have to be sold because the person inheriting it simply can’t afford a substantial tax liability.”

Liam Kenny, tax partner at RSM Ireland said: “Nominal increases in the CAT free lifetime thresholds is not enough. Widespread reform is needed to bring this out of step regime in line with modern family circumstances, and asset values. Families across Ireland are facing challenges for succession planning right now, so tinkering with the thresholds doesn’t provide the support they need.”

Capital Gains Tax

Mary Rose Burke, CEO of Dublin Chamber, 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%.”

Una Ryan, Tax Partner at Grant Thornton Ireland said: “A reduction in the CGT rate from 33% to 31% is very much welcomed and sends a positive signal that the Government recognises the positive impact that owner managed and family businesses have on the Irish economy.  However, the reduction is relatively modest and, in isolation, is unlikely to materially change investment decisions, encourage significantly greater levels of entrepreneurship or meaningfully accelerate the recycling of capital into the Irish economy. We would have welcomed a more meaningful reduction to the CGT rates.

EIIS and Enterprise reliefs

Una Ryan, Tax Partner at Grant Thornton Ireland, on Budget 2027 said: “While the Minister acknowledged that “enterprise drives productivity growth, incomes and increases in living standards and that it is the small business owners, risk takers and entrepreneurs that are the bedrock of our economy” it was then disappointing that the lifetime limit for Revised Entrepreneur Relief remains capped at €1.5 million. Entrepreneurs who spend years building and scaling Irish businesses are central to delivering on those objectives, and a more meaningful increase in the threshold would have sent a stronger signal that Ireland is committed to supporting entrepreneurship, encouraging investment and acknowledging that these businesses are the bedrock of our economy.”

On the extension of EIIS reliefs Ryan said: “The extension of EIIS reliefs, Angel Investor Reliefs is very welcome as it provides much-needed certainty for Irish businesses seeking growth capital and for investors considering long-term equity investments. That said, the regime remains overly complex in a number of areas and we feel that further simplification would go a long way towards increasing participation and improving access to funding for SMEs.”

Derelict Property Tax

Robert Fitzgerald, Tax Partner at Grant Thornton Ireland, said: “The introduction of a Derelict Property Tax demonstrates the Government’s determination to increase the supply of housing and bring underutilised property back into productive use. The objective is understandable given the continuing housing challenges facing the State.”

“Tax measures can influence behaviour, but their success depends on design. Clear definitions of what constitutes a derelict property, straightforward compliance processes and appropriate exemptions for genuine redevelopment activity will be essential for its success.”

Personal Investment Account

Brian Murphy, Tax Partner at Grant Thornton Ireland, said: “The introduction of a Personal Investment Account is a genuinely positive development and one that many stakeholders have been advocating for a number of years. Irish households are among the strongest savers in Europe, yet much of that capital remains in deposit accounts generating limited real returns over time. The key now will be ensuring that the final design of the Personal Investment Account is simple and attractive enough to drive meaningful behavioural change.”

“Importantly, this isn’t simply about investment returns. Greater participation in long-term investing can boost financial literacy, strengthen retirement outcomes and provide additional sources of funding for economic growth.”

Agriculture

Emma Broderick, Tax Partner at Grant Thornton Ireland, said: “ As part of the Budget measures announced today, the VAT rate applicable to respiratory vaccines for livestock has been reduced from 23% to 9%. This measure is intended to lower the cost of veterinary medicines for farmers and support the agricultural sector by reducing the VAT burden on these products. While respiratory vaccines for livestock will now benefit from the reduced 9% rate, they will not qualify for the 0% VAT rate that applies to certain other animal medicines.  The Farmer’s Flat Rate Addition is being increased from 4.5 per cent to 4.8 per cent in 2027. This will provide for full compensation for flat rate farmers for their VAT input costs.”

Energy transition

Broderick also said: “From an energy transition perspective, Budget 2027 is notable less for what it introduced and more for the signals it sent.

“There were no major new tax measures announced to accelerate the adoption of sustainable fuels. However, the Government did indicate an intention to continue examining the role that lower-carbon fuel alternatives can play in decarbonising transport and aviation. That is particularly relevant for Hydrotreated Vegetable Oil (HVO) and Sustainable Aviation Fuel (SAF), both of which are likely to form an important part of Ireland’s transition pathway in sectors where electrification remains challenging.   HVO is increasingly being considered by road transport and logistics operators as a practical way to reduce emissions without replacing existing diesel fleets. Similarly, SAF is expected to play a central role in reducing emissions from aviation over the coming decades. Both technologies face cost challenges when compared to conventional fuels, so businesses will be watching closely for future policy developments.”

Pub tax rebate scheme:

Austin Hickey, director, BDO’s consulting department said: “Industry estimates suggest that around 2,200 pubs have closed in Ireland since 2005 – roughly 100 a year on average so today’s Budget announcement of a €15m scheme to help keep rural pubs open will be welcomed by many. While details of the scheme have yet to be confirmed, this may be the right moment for businesses in the sector to take stock and plan for long-term viability in what is a rapidly changing market. An effective and innovative scheme, if done well, could support not just individual businesses, but the wider social and economic infrastructure of rural communities.

“Initiatives such as Pub is the Hub in the UK, and a similar piloted scheme, previously explored by the VFI highlight how rural pubs can broaden their role as community anchors, bringing people together not only to socialise, but also to work, access services, shop locally and eat, helping to sustain footfall throughout the week and across the year.”

Sporting event support:

Austin Hickey, director, BDO’s consulting department said: “The allocation of €22m to support hosting the Ryder Cup and the UEFA Euro 2028 Championship aligns with the Government’s Major International Sports Events Policy and Strategy, which seeks to position Ireland as a sustainable host of major events while delivering clear economic returns, strengthening high-performance pathways, and expanding participation and legacy benefits. As details emerge, the key will be ensuring transparent governance and measurable outcomes from visitor spend and international profile to community sport participation gains.

“Recent research undertaken by BDO and Amárach Research, indicates strong public backing for this approach: 65% of respondents support Government efforts to secure major international sporting events, and 53% believe such events showcase Irish culture and hospitality internationally, with over half also viewing public investment in this area as representing good value for money.”

Easing pressure on wages

John O’Callaghan, managing director of S&W in Ireland stated: “From a business point of view, the direction of travel is right. On substance, there’s less in it.

“A two-point cut in capital gains tax won’t make or break anyone’s decision to sell or reinvest, and it’s a long way from the 20% that 65% of business owners told us they wanted in our BOSS survey this summer. People of a certain age will remember when capital gains tax was cut to 20% and my recollection is that the tax take went up substantially afterwards.

“The surprise is entrepreneur relief. It had been flagged as likely to rise to €2m and there’s no change. That will disappoint business owners planning an exit.

“This Budget certainly isn’t an anti-business budget. The bigger help for employers comes through higher tax bands and credits for workers, which should ease some of the pressure on wages.

“The Investment Account is interesting. You can put in up to €12,000 a year, the first €50,000 is tax-free, and it opens next July. It will probably encourage people who don’t invest to start thinking about it, in a measured way. Interestingly,  it appears specifically that deemed disposal rules will not apply to investments held within the account.

“Investors in funds outside the new account get a smaller concession, with the exit tax rate falling from 38% to 35% from January. Deemed disposal stays in place for now, so investors are still being taxed every eight years on gains they haven’t realised, and that’s disappointing.”

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