Grant Thornton calls for reform of inheritance tax thresholds and income tax bands in Budget 2027
- Firm proposes CGT reduction to 20% and enhanced Entrepreneur Relief reforms to unlock investment, support business succession and strengthen competitiveness
- Recommendations include simplifying IREF rules, introducing targeted housing incentives and encouraging reinvestment in Irish property
- Tax specialists also call for enhanced R&D tax supports to accelerate innovation
Dublin, 30 June, 2026 – Grant Thornton has outlined a series of targeted tax measures it recommends for Budget 2027 to support sustainable economic growth and enhance Ireland’s international competitiveness. Drawing on insights from specialists across its tax practice, Grant Thornton says the forthcoming Budget presents an opportunity for Government to reinforce Ireland’s attractiveness as a place to invest, innovate and do business, while ensuring the tax system remains proportionate, predictable and fit for purpose.
The recommendations focus on several key themes, including encouraging investment, supporting entrepreneurship, improving housing supply, simplifying compliance obligations and enhancing Ireland’s tax incentives framework.
Reforming personal taxation to reflect modern Ireland
Grant Thornton is calling for targeted reforms to Ireland's personal tax system to ensure it better reflects modern family structures. The firm believes that Capital Acquisitions Tax (CAT) thresholds should be reviewed, particularly given the growing disparity between the tax-free thresholds available to children and those available to other family members. As asset values continue to rise, the current framework can disproportionately impact individuals without children and those seeking to transfer assets to siblings, nieces, nephews or long-term partners.
Grant Thornton is recommending a broader review of CAT thresholds to better reflect contemporary family relationships and living arrangements. This includes extending access to the Category A threshold beyond the traditional parent-child relationship to encompass a wider range of family members, cohabitants and to support business succession planning
Grant Thornton also believes action is needed to address the growing burden of personal taxation on workers. With Ireland's top marginal income tax rate already among the highest in Europe and further increases in PRSI contributions anticipated, the firm warns that the country's competitiveness could be undermined if workers are not given greater access to the standard rate of income tax.
To support working households, improve labour market competitiveness and reduce the impact of fiscal drag, Grant Thornton is recommending an increase in the standard rate cut-off point to at least €50,000.
Supporting entrepreneurship and investment
Grant Thornton is calling for a reduction in the Capital Gains Tax (CGT) rate from 33% to 20%, arguing that a more competitive rate would encourage investment, increase economic activity and facilitate the recycling of capital into new businesses and growth opportunities.
The firm is also advocating for a significant enhancement of Entrepreneur Relief, with the lifetime limit increasing from €1.5 million to €5 million, to better reward founders and owner-managed businesses that create jobs and contribute to economic growth.
Delivering housing and supporting real estate investment
Recognising the ongoing challenges facing Ireland’s housing market, Grant Thornton says greater certainty in tax policy is critical to supporting long-term investment decisions in the real estate sector.
The firm is recommending simplification of the Irish Real Estate Fund (IREF) regime, which has become increasingly complex for international investors, alongside targeted incentives to support housing delivery, including capital allowances for student accommodation and specialist housing developments.
Grant Thornton also believes consideration should be given to reintroducing targeted property investment reliefs to mobilise domestic capital for housing delivery and to removing the close company surcharge where profits are retained for reinvestment in Irish property and infrastructure projects.
Enhancing Ireland’s innovation and incentives framework
To encourage continued investment in innovation, Grant Thornton is recommending a number of enhancements to the Research and Development (R&D) Tax Credit regime. These include expanding the scope of qualifying expenditure, relaxing subcontracting rules to allow connected-party costs to qualify, accelerating access to credit repayments and increasing the first instalment payment from €87,500 to €125,000.
The firm also sees opportunities to modernise capital allowances and develop targeted innovation incentives to support investment in digital transformation, sustainability initiatives and advanced manufacturing.
Modernising VAT and supporting business cashflow
Grant Thornton is calling for reforms to the Relevant Contracts Tax (RCT) regime to provide greater certainty for taxpayers and better align the rules with commercial reality. Among the proposals is the introduction of a safe-harbour confirming that RCT no longer applies once construction is complete, regardless of snagging, retention or certification provisions.
The firm also supports the introduction of a permanent 9% VAT rate for the supply of qualifying apartments, including construction works and student accommodation, as a measure to help address housing supply constraints.
Recognising the pressures facing many businesses, Grant Thornton says Government should also consider practical cashflow supports, including more flexible VAT payment arrangements and improved processing times for VAT refunds.
Ensuring proportionate compliance obligations
Grant Thornton believes Budget 2027 should also focus on simplifying tax administration and ensuring compliance obligations remain proportionate. The firm is calling for a more balanced approach to penalties associated with Pillar Two reporting requirements, particularly where multiple Irish entities within a group can face cumulative penalties for a single filing failure.
The firm is also recommending reforms to late filing penalties for Inline eXtensible Business Reporting Language (iXBRL), the international standard for sharing business information electronically, as well as a review of interest rates on late tax payments, which currently stand at between 8% and 10%, to better reflect prevailing borrowing costs and economic conditions.
Commenting on the recommendations, Peter Vale, Tax Partner at Grant Thornton Ireland, said:
"Ireland has built a strong reputation as a competitive and stable location for innovation and enterprise. As businesses and ordinary people navigate an increasingly complex economic environment, Budget 2027 offers an opportunity to ensure Ireland's tax system better reflects the realities of modern Ireland.
Across all areas of the tax system, we see a common need for greater simplicity and competitiveness. Targeted, practical measures can unlock investment, support entrepreneurship, encourage housing delivery and reduce unnecessary administrative burdens, helping to ensure Ireland remains well positioned for long-term sustainable growth.
From a personal taxation perspective, there is also a clear need for a tax framework that is fairer, reflects modern family structures and takes account of how property prices have risen. We believe that more can be done to reward work and support working households.
While there are many competing demands on public finances, there remains scope for targeted measures that can deliver meaningful economic benefits. A Budget focused on certainty, competitiveness and simplification would send a strong signal, while helping to support Ireland’s long-term economic resilience and growth."
ENDS