Finance (No. 2) Bill 2026

What the Bill provides

Sections 26 and 27 introduce a new Individual Investment Account regime. The account is available to Irish-resident individuals aged 18 or over who have a PPSN, with one account permitted at any time.

1. Annual contributions are capped at €12,000.
   Income, profits and gains arising on eligible investments within the account are generally exempt from tax.
2. A 1% annual Investment Account Tax applies to the average value of eligible investments and cash above a €50,000 threshold.
3. Eligible investments include specified listed shares and bonds, ETFs, UCITS and qualifying insurance-based investment products.
4. Qualifying providers include certain credit institutions, investment firms, insurance undertakings and UCITS management companies, including qualifying EEA providers.
5. Providers must register with Revenue and will be responsible for contribution monitoring, valuation, calculating and collecting Investment
6. Account Tax, annual investor statements, record retention and account-level reporting. The provisions are subject to commencement by Ministerial order.

What this means

The Individual Investment Account represents a significant development for Ireland’s retail investment market.

For banks, investment firms and other potential account providers, attention will now turn to the practical requirements of bringing IIA products to market ahead of the 1 July 2027 launch.

The combination of a simplified investor tax proposition and provider-led administration has the potential to materially change how retail investment products are structured and offered in Ireland.

What clients should do now

• Identify whether the institution intends to become a qualifying account provider and assign executive ownership.
• Map eligible products, customer declarations, contribution monitoring, transfers, withdrawals and daily valuation data.
• Design Revenue registration, tax collection, annual reporting and record-retention processes.
• Build commencement-order and Revenue-guidance tracking into the implementation plan.

What the Bill provides

Rate reduction to 35% for Investment Undertaking Tax (“IUT”) and Life Assurance Exit Tax (“LAET”)

Section 29 reduces the rate applying to relevant income and gains from Irish investment undertakings, domestic life assurance policies, certain foreign life policies and equivalent offshore funds from 38% to 35%. The change applies to specified chargeable events, payments and disposals from 1 January 2027.

Clarity on Exchange Traded Funds

Section 28 introduces a standalone domestic regime for Irish investment fund units held through recognised clearing systems. The regime retains the eight-year deemed-event concept. The Bill provides for different outcomes by investor category, including a 35% rate for individuals, a 25% rate for companies within the relevant charging provision and a 60% rate for personal portfolio investment undertaking gains. It also includes an express treatment for qualifying companies within section 110 where the gain is chargeable under Case III.

What this means

The 35% rate is welcome and, together with the Individual Investment Account, signals a clear policy focus on retail investment.

However, the wider deemed disposal architecture remains in place in respect of the funds held in a clearing system.

The clearing-system rules provide greater legislative clarity for Irish ETFs and other Irish fund units, but they also require careful investor classification. The express section 110 treatment should be reviewed by securitisation and structured-finance vehicles holding fund interests through clearing systems.

What clients should do now

• Review internal operating systems and consider how they will be updated for the new rates of taxation.
• Review Irish fund units held through recognised clearing systems, particularly in corporate and Section 110 portfolios.

What the Bill provides

Side-by-Side Package and OECD Guidance

As communicated during Budget 2027 announcements, Finance (No. 2) Bill 2026 makes extensive amendments to Ireland’s Pillar Two rules to reflect the OECD’s 2026 Guidance and Side-by-Side package.

• The Transitional Country-by-Country Reporting (“CbCR”) Safe Harbour is extended to fiscal years beginning on or before 31 December 2027 (but excluding a fiscal year that ends after 30 June 2029).
• A new Simplified Effective Tax Rate Safe Harbour is introduced.
• The Bill provides for a Substance-based Tax Incentive Safe Harbour.
• An Ultimate Parent Entity (“UPE”) Safe Harbour is introduced. Subject to certain conditions and requirements, the UPE Safe Harbour prevents a liability arising to top-up tax under Undertaxed Profits Rule (“UTPR”) i.e. the backstop charging provision of Pillar Two. Effectively, the UTPR is deemed to be zero.
• Where the UPE of an MNE group is located in a jurisdiction recognised by the OECD as having a qualified Side-by-Side regime, the Bill provides that the Income Inclusion Rule (“IIR”) and UTPR top-up tax can be deemed zero, subject to the relevant conditions and elections. Importantly, this does not switch off Qualified Domestic Top-up Taxes (“QDTT”). Irish entities of qualifying groups may therefore remain subject to Irish QDTT in respect of Irish profits.

The simplified rules contain financial-services-specific adjustments, including provisions for insurance companies dealing with policyholder taxes, returns to policyholders and reserve movements. The Bill also addresses Additional Tier 1 (“AT1”) capital in the simplified income computation.

Filing and Penalties

The Bill also makes important changes to Ireland's Pillar Two filing and penalty provisions. The GloBE Information Return (“GIR”) rules are updated to reflect the revised international exchange and dissemination framework, including circumstances in which an Irish filing constituent entity may limit its local filing to information that would otherwise have been disseminated to Revenue under the relevant EU or OECD exchange arrangements.

The penalty regime is also revised, including a €10,000 fixed component for certain late filing failures.

Importantly, where multiple Irish constituent entities within the same group are exposed to penalties and no designated local entity has been appointed, the Bill introduces an aggregate penalty cap of €1 million for the relevant fiscal year. Where a designated local entity has been appointed, its failure to make the relevant filing is instead treated as one filing failure in respect of the entities which appointed it.

What this means

For groups currently benefiting from the Transitional CbCR Safe Harbour, the extension potentially provides another valuable year of simplified compliance. At the same time, groups should not assume that the new permanent safe harbours operate automatically. There are detailed eligibility conditions, elections and computational rules which need to be assessed on a jurisdiction-by-jurisdiction basis.

Banking and insurance groups will need to revisit jurisdictional mapping, election strategy and data ownership. The insurance and AT1 adjustments demonstrate that sector-specific analysis remains essential even within a simplified framework.

The amendments in respect of Filing and Penalties provide useful clarification as multinational groups move from Pillar Two implementation and their first substantive compliance cycle. In particular, the group-level penalty cap and treatment of designated local entities should mitigate the risk of a single compliance failure generating duplicative penalties across numerous Irish constituent entities. Nevertheless, the addition of a €10,000 fixed penalty and the emphasis on delivery of a correct and complete return reinforce the importance of establishing clear responsibility for GIR preparation, central filing and the Irish notification process.

What clients should do now

• Refresh the group’s safe harbour decision tree for each jurisdiction and fiscal year.
• Confirm whether Irish QDTT exposure remains after applying any Side-by-Side or UPE safe harbour.
• Validate insurance reserve, policyholder tax and AT1 data against the new statutory calculations.
• Document elections, evidence and governance before the first affected filing cycle.

What the Bill provides

Interest as a Charge and Deemed Deleveraging / Recovery of Capital

Section 33 substantially revises the section 247 rules governing corporation tax relief for interest on certain borrowings used to acquire shares in, or lend to, qualifying companies.

The changes address the deployment of borrowed funds, recovery of capital, reinvestment, currency conversions and swaps, connected-company financing and acquisitions, transfer-pricing interactions, and allocation across multiple loans. The changes are generally helpful: they remove the common-director requirement and disapply existing restrictions for certain connected-party loans. However, companies will need to trace new borrowings to a qualifying use and monitor any period during which the funds are used elsewhere. A foreign-currency rule provides that, where a loan in one currency is used to acquire money in another currency, including through a currency swap, and that money is applied to a qualifying purpose within a reasonable period, the loan is not regarded as having been used for another purpose. Conversely, investments in or loans to a foreign-incorporated company that is treated as akin to an Irish partnership will no longer qualify for section 247 relief.

Consequential amendments are made to the section 249 recovery of capital rules. Revised s.249(1)(a)(iii) reduces interest relief where an investing company recovers, or is deemed to recover, capital from the company concerned or a connected company, unless the recovered amount is dealt with in one of the permitted ways. These include: 

• using the recovered amount to make a new investment;
• using it to repay the relevant s.247 loan or another qualifying s.247 loan; or
• in specified cases, the company concerned or an intermediate holding company using an equivalent amount to make a new investment.

The new investment generally must be made on, or within six months of the capital recovery and the investing company must keep supporting records for six years.

Interest limitation rules

Section 34 extends the deadline for making certain Interest Limitation Rule elections to two years after the end of the relevant accounting period. The principal changes apply to accounting periods commencing on or after 1 January 2027, subject to specified technical provisions.

What this means

The section 247 changes, which generally apply to transactions from 1 January 2027, are more than a technical tidy-up.

They are relevant to acquisition finance, holding-company structures, private equity, banking and insurance groups and should be tested against live arrangements rather than considered only during annual compliance.

The ILR election extension is a practical improvement for complex groups, but it should not delay the underlying analysis of group composition, interest capacity and election consequences.

What clients should do now

•  Review acquisition and connected-party financing completed or proposed for late 2026 and 2027.
• Trace recoveries of capital, refinancings, currency conversions and reinvestments through the amended tests.
• Update ILR governance calendars and preserve the evidence needed to support elections made within the extended period.

What the Bill provides

Finance (No. 2) Bill 2026 confirms the welcome reforms to the preliminary corporation tax regime.

• The prior-period corporation tax liability threshold for treatment under the small-company regime increases from €200,000 to €350,000. Companies falling below this threshold may use 100% of their previous accounting period liability as the basis for preliminary tax, while qualifying new companies with liabilities below €350,000 in their first accounting period will not be obliged to pay preliminary tax for that first period.
• The Bill also confirms the new top-up mechanism. Where a company has paid at least 80% of the current-year liability by the applicable preliminary tax date, it can make an additional payment within the prescribed period after the accounting-period end which brings its aggregate payment to 100% of liability. The legislation then treats the relevant preliminary-tax obligation as having been satisfied. The rules apply to both small and large companies, subject to their respective payment provisions.
• The Bill also contains an amendment in relation to the imposition of interest where a large company underpays its preliminary corporation tax and clarifies that interest will be calculated on the lower of 45% of corporate tax payable in the accounting period or 50% of the corresponding corporate tax in the preceding accounting period.

The amendments apply for accounting periods commencing on or after 1 January 2027.

What this means

This is a meaningful compliance improvement for businesses whose taxable result can move late in the reporting cycle, including Section 110 companies, insurers and other financial services entities with valuation, FX or year-end adjustment volatility.

It reduces cliff-edge exposure, but only where the 80% gateway is met and the corrective payment is made on time. Forecasting and payment controls therefore remain critical.

What clients should do now

• Update preliminary-tax procedures for accounting periods commencing in 2027.
• Introduce an explicit 80% threshold check and a post-year-end corrective-payment calendar.
• Reassess which entities qualify for the small-company or start-up treatment under the €350,000 threshold.

What the Bill provides

Section 51 provides the legislative framework for structured electronic invoicing and the electronic transmission of transaction data to Revenue. From 1 November 2028, the first mandatory cohort will include Irish-established businesses within the initial large corporate population.

The regime will subsequently broaden, including to VAT-registered businesses engaged in cross-border EU B2B trade. Revenue's previously announced implementation timetable envisages domestic e-invoicing and real-time reporting for large corporates from November 2028, expansion to VAT-registered businesses engaged in cross-border EU B2B trade from November 2029, and full implementation of the EU VAT in the Digital Age requirements from July 2030.

The new regime moves beyond conventional electronic invoices such as PDFs. Revenue has confirmed that structured invoice data must be capable of automatic processing, with the European EN16931 standard forming part of the technical framework.

Section 54 also recasts the domestic financial services VAT exemption to align the statutory wording more closely with the EU VAT framework. This should be viewed principally as a legislative alignment measure rather than a substantive change in the VAT treatment of financial services.

What this means

VAT digitalisation is a significant systems and controls programme, particularly for banks, insurers, asset managers, corporate service providers and SPVs with fragmented invoice flows.

VAT-exempt and partially exempt businesses will also need to consider the impact on VAT coding, reverse-charge VAT, recoverability and supporting controls. Revenue has confirmed that businesses may need to be capable of receiving structured e-invoices even before they are required to issue them.

What clients should do now

• Determine when the business is expected to enter the mandatory regime, including whether it falls within the initial November 2028 cohort.
• Map outbound and inbound invoice flows, including those processed through shared-service centres, fund administrators and corporate service providers.
• Assess ERP, procurement, accounts-payable and tax-engine readiness for structured invoice data and identify reliance on PDFs, spreadsheets and manual intervention.
• Review VAT determination and coding controls, particularly for exempt activities, partial exemption, reverse-charge VAT and cross-border transactions.
• Consider inbound e-invoice readiness separately from the date on which the business becomes obliged to issue e-invoices.
• Treat the financial services exemption amendment as a separate technical workstream rather than conflating it with the systems changes required for VAT digitalisation.

What the Bill provides

Bank levy

Finance (No. 2) Bill 2026 extends the bank levy to 2027. It continues to apply to Allied Irish Banks plc, EBS DAC, Permanent TSB plc and The Governor and Company of the Bank of Ireland.

For 2027, the rate is 0.1025%, with the base linked to eligible deposits held at 31 December 2024.

Health insurance levy

The Bill makes a number of changes to the levy applying to authorised health insurers.

The age of an insured person will now be determined by reference to their age on the date the contract is entered into or renewed, rather than the first day of the relevant accounting period.

Where an insured person's cover ceases within 365 days of the contract being entered into or renewed, the insurer may claim a pro-rata repayment of the levy by reference to the complete days remaining in the period.

The amendments take effect from 1 April 2027.

What this means

Bank levy

The bank levy remains a targeted measure rather than a sector-wide banking change. The extension provides certainty for 2027 but also confirms that the levy remains a continuing feature of the Irish banking tax landscape. Liable institutions will need to reflect the cost in tax forecasting, budgeting and capital planning.

Health insurance levy

The repayment mechanism is a welcome refinement and should align the levy more closely with the actual period of insurance cover. Health insurers will nevertheless need to assess the system and reconciliation changes required to calculate and capture repayments correctly.

What clients should do now

• Banks: Build the 2027 bank levy into forecasts and governance papers for affected institutions.
• Health insurance providers: For health insurers, update policy and reconciliation systems for age-at-contract and pro-rata repayment mechanics.

What the Bill provides

Section 25 enhances the R&D corporation tax credit. The measures include higher subcontracting limits, a 105% treatment for qualifying R&D employee emoluments where statutory conditions are met, an increase in the first instalment available in year one from €87,500 to €105,000, and preliminary-tax recognition for certain later instalments from earlier claims.

Most changes apply to accounting periods whose specified return date falls on or after 23 September 2028. Certain amendments, including the €105,000 first-instalment change, apply from enactment.

What this means

The enhancements may be valuable for banks, insurers, asset managers and fintechs investing in proprietary software, data, analytics and automation.

Claims should still be built around the statutory scientific or technological tests, contemporaneous project evidence and a clear distinction between qualifying development and routine implementation or maintenance.

What clients should do now

• Review third-party and university R&D expenditure in light of the increased subcontracting limits.
• Consider the cash-flow benefit arising from the increased first-year payment threshold of €105,000.
• Model the cash-flow impact of the preliminary-tax interaction.

What the Bill provides

The standard Capital Gains Tax rate is reduced from 33% to 31% for disposals made on or after 7 October 2026.

The Bill updates certain preference-share benchmarks by replacing references to fixed-dividend shares quoted on a stock exchange in the State with fixed-dividend shares admitted to trading on a regulated market in an EEA state, with effect from 1 January 2027.

Where an assessment is amended to give effect to an Advance Pricing Agreement between competent authorities, additional tax becomes due within one month of the amended assessment. Schedule 24A is also updated for the Liechtenstein double tax agreement and the protocol to the Sweden agreement.

What this means

The CGT reduction is positive for investment and transactions, but clients should continue to distinguish the general 31% rate from special rules that may retain a different treatment, including development land.

The preference-share and APA provisions are more targeted, but can be important for financing structures and groups using bilateral dispute-resolution mechanisms.

What clients should do now

• Review disposal timetables and transaction models for the 31% rate from 7 October 2026.
• Check whether preference-share terms rely on statutory benchmarks affected from 1 January 2027.
• Include the one-month payment rule in APA implementation protocols.

What the Bill provides

The Bill legislates for a new annual Derelict Property Tax at 7% of market value for property and the land appurtenant to that property within scope. The first geographic phase concerns built-up areas with populations of at least 4,000, before expansion to areas with populations of at least 2,000.

In assessing whether a building is suitable for use, a local authority will consider a range of factors, including whether the property is partially or fully boarded up, has a roof that is no longer weatherproof, or has deteriorating plasterwork or unsecured brickwork.

The first preliminary registers are scheduled for 1 September 2027 and final registers for 28 February 2028.

The draft Bill provides potential deferral of the tax in certain circumstances, including changes in ownership and where remediation works are completed.

What this means

The new Derelict Property Tax creates a potentially significant cost for property owners. Owners should act now to identify properties potentially within scope and consider whether remediation, redevelopment or disposal is appropriate to manage their exposure.

What clients should do now

• Identify owned real estate that may fall within the initial geographic scope.
• Consider the property’s current use and whether remediation works or a sale would be more appropriate commercial response.
• Establish a process to review preliminary registers and challenge incorrect entries on the register where appropriate.