Budget 2027 Cuts Irish Capital Gains Tax to 31 Per Cent at €186 Million Exchequer Cost
Reducing the standard rate of capital gains tax (CGT) from 33 per cent to 31 per cent will cost the Irish exchequer an estimated €186 million in a full year, positioning it as the single most expensive measure announced in Budget 2027 outside the personal income tax package, according to The Irish Times. Tánaiste and Minister for Finance Simon Harris stated that the reduction aims to reward risk and facilitate the scaling-up of home-grown Irish firms.
Exclusions and Rollout Schedule for Disposals
The new 31 per cent rate applies to profits generated from the sale or gifting of assets, but it excludes sales of development land, which remain taxed at 33 per cent. The adjustment applies to disposals made on or after October 7th. Department estimates indicate the measure will require €46.5 million next year before reaching its full-year cost of €186 million.
While welcoming the change and calling it a modest step forward, Úna Ryan stated that the adjustment is unlikely to significantly shift investment choices, boost startup activity on a broader scale, or speed up capital reinvestment within the Irish economy to any large degree, and she added that a more substantial reduction would have achieved those goals more effectively.
Adjustments to Research and Development Tax Credits
Minister Harris also announced modifications to the research and development (R&D) tax-credit regime, which permits businesses to claim back a percentage of activity costs in cash or against corporation tax bills in annual instalments. This follows adjustments in Budget 2026 by Paschal Donohoe, who raised the available relief from 30 per cent to 35 per cent of qualifying expenditure and the first-year refund threshold to €87,500 from €75,000.
The forthcoming finance legislation will raise current thresholds for tasks outsourced to higher education institutions and external companies to either 20 per cent or €200,000, depending on which figure is higher. Currently, companies can claim back subcontracted R&D costs of 15 per cent up to a maximum of €100,000 against in-house expenditure. Angel investor relief, which provides reduced CGT rates to qualifying individuals and partnerships, has also been extended.
Ian Collins noted that businesses did not anticipate movement on the headline rate following previous changes, but had sought continued progress in modernising and broadening the R&D regime to make it more fit for purpose.
Government Invests 1 Billion Euro to Scale Irish Companies
In addition to tax changes, the Government committed to investing €1 billion in scaling up indigenous Irish companies through the Ireland Strategic Investment Fund (ISIF). Minister Harris characterized this as ISIF’s biggest ever investment in scaling, structured as a three-year programme running up to 2030. Meanwhile, Minister for Public Expenditure Jack Chambers described the broader €8.65 billion budget package—comprising €7 billion in public spending and €1.65 billion in income tax measures—as a budget for workers formulated during a time of geopolitical uncertainty, as reported by the Irish Examiner.
Opposition figures offered starkly different assessments of the fiscal package. Sinn Féin’s Pearse Doherty criticized the announcements as failing to adequately address cost-of-living pressures, summarizing the budget with the phrase, “Gone before you get it,” according to RTE.ie. Alongside the tax and investment changes, the government adjusted income tax bands, raised inheritance tax thresholds, increased the Help-To-Buy scheme to €35,000, and restructured the carbon tax on home heating oil, reducing the rate from €63.50 to €48 per tonne of CO2 emitted, which political journalist Fionnán Sheahan noted on Newstalk would alter revenue streams previously allocated to green energy grants.