Dáil Éireann Debate, Thursday - 18 December 2025
370. Deputy Seán Ó Fearghaíl asked the Tánaiste and Minister for Finance the key measures taken to support Ireland’s tax competitiveness during 2025; his priorities for 2026; and if he will make a statement on the matter. [73579/25]
Amharc ar fhreagraMaintaining Ireland’s tax competitiveness is a key objective particularly in the context of economic uncertainty globally and the evolving international tax reforms.
Budget 2026 and Finance Bill 2025 introduced a range of measures designed to support competitiveness, sustain Ireland’s attractiveness for foreign direct investment, support domestic businesses and promote innovation. Some relevant measures provided for in Finance Bill 2025 include:
• A number of enhancements to the R&D tax credit regime, including increase in the rate of the credit from 30 per cent to 35 per cent. The primary policy objective of the credit is to increase business R&D in Ireland, as R&D can contribute to higher innovation and productivity. I will also publish a Research and Development Compass in the coming weeks, setting out potential pathways for future development of the credit and for new a innovation support to be developed in 2026.
• The update and enhancement of the participation exemption for foreign dividends. The participation exemption provides an alternative, much simplified mechanism for double tax relief for multi-national businesses by reducing the complexity and administrative burden of the current system.
• Measures to strengthen the competitiveness of Ireland’s audiovisual sector. An enhanced rate of 40% has been introduced under the Section 481 Film Tax credit for qualifying VFX work. In addition, the Digital Games Tax credit has been extended for a period of 6 years and further enhanced to allow for claims in respect of expenditure incurred on the development of post release content.
• To support opportunities for growth in the funds industry, specifically in the private assets space, a discrete but important tax change in Finance Bill 2025 provided for a Dividend Withholding Tax exemption for Investment Limited Partnerships and equivalent EEA partnerships. This measure is intended to increase the attractiveness of the Investment Limited Partnership as a fund structure and to help cement Ireland’s position as a desirable location for regulated investment funds.
• An increase in the Revised Entrepreneur Relief lifetime limit from €1 million to €1.5 million for disposals made from the 1st of January 2026.
With regard to other ongoing work, my Department is also undertaking a review of the tax treatment of interest in Ireland, which seeks to deliver a simplified and competitive taxation regime for interest which is aligned with international best practice. The taxation of interest is complex and is governed by Irish and EU legislation, and the proposed reform is intended to help safeguard Ireland’s competitiveness by providing a sound and stable interest deduction basis for both domestic businesses and inward investment in Ireland. Following extensive consultation with stakeholders, an Action Plan for reform of Ireland’s taxation regime for interest was published as part of Budget 2026 which sets out a phased approach to progressing reforms. A Feedback Statement for phase one of reform was published on 21 November 2025 and further public consultation will be carried out over the course of the next year.
To support broader housing policy objectives and to address complexity in the Irish Real Estate Fund (IREF) regime, which may be acting as barrier to investment for international investors, it was announced as part of Budget 2026 that a public consultation on proposals to simplify the IREF regime, without limiting its effectiveness, will also be held in 2026.
At an EU level, simplification of EU tax law has been identified as a key enabler of enhancing EU competitiveness. In this regard, Ireland is actively engaging with the Commission and Member States ahead of the expected publication of legislative proposals in June 2026. The proposals will seek to simplify several of the EU’s corporate tax Directives, including the several iterations of the Directive on Administrative Cooperation, and both my officials and I are committed to progressing them during Ireland’s Presidency of the Council in the second half of next year.
At OECD level, Ireland has consistently approached ongoing negotiations on the OECD Pillar Two Agreement with the aim of ensuring a level playing field for all stakeholders and maintaining Irish and European competitiveness. We remain committed to participating constructively in discussions to provide certainty and stability to the business community and avoid further fragmentation of the international tax architecture.
This is a high-level overview of some of the work ongoing in my Department, recognising the need to protect Ireland's competitiveness to support continuing investment and employment in our economy.
