Ireland’s Corporation Tax Landscape in 2026: Record Receipts, Global Reform, and Enterprise Support

1. Introduction

The Department of Finance’s Tax Strategy Group Paper 26/03 (June 2026) (the “TSG Paper”) reviews Ireland’s Corporation Tax (“CT”) regime at a pivotal moment. Receipts are at record levels, but concentrated among a small number of multinational enterprises (“MNEs”). The international tax landscape continues to shift through the OECD Two-Pillar framework with the new Side-by-Side (“SbS”) package, EU legislative consolidation, and the emerging UN tax convention. The paper also reviews Ireland’s suite of enterprise tax supports. This article summarises the key points for practitioners.

2. Record CT Receipts and Concentration Risks

In 2025, CT was Ireland’s second-largest tax head at €34.7 billion; excluding once-off CJEU revenues, underlying net receipts were €32.9 billion, up 17% year-on-year (18% in 2024). Receipts have grown from €6.8 billion in 2015 to €32.9 billion in 2025 and now represent 31% of net tax receipts (29% previously).

Manufacturing (including chemical/pharma) led sectoral growth at 24.4%, followed by Financial & Insurance (+15.9%) and ICT (+16.1%). Corporate profitability reached €339 billion in 2024, with 88% (€299 billion) concentrated in five sectors: Manufacturing, ICT, Wholesale & Retail, Financial & Insurance, and Administrative & Support Services.

Large companies accounted for €28.4 billion (86%) of 2025 net CT receipts; SMEs contributed €4.5 billion (14%). Foreign-owned MNEs accounted for 87% of net receipts, whilst Irish-owned MNEs accounted for 5%. The ten largest CT payers alone contributed 56% (€18.6 billion), up from 37–45% in 2014–2019. Three sectors (ICT, manufacturing, financial services) accounted for around 70% of all CT receipts.

The Government has established several tools to manage this exposure: the Future Ireland Fund channels windfall CT receipts into a long-term savings vehicle for expenditure from 2041 onwards, the Infrastructure, Climate and Nature Fund sets aside resources to smooth capital spending and fund environmental projects through economic cycles, and the Medium-Term Fiscal & Structural Plan sets the Government's broader budgetary strategy for managing this revenue volatility. Together, these underscore the fiscal stakes of any reform affecting CT reliability.

3. OECD Base Erosion and Profit Shifting (“BEPS”): Pillar One and Pillar Two

Ireland ratified the BEPS Multilateral Instrument in 2019 and endorsed the Two-Pillar Solution in October 2021. The Two-Pillar Solution is the OECD/G20 framework, designed to address the tax challenges arising from the digitalisation and globalisation of the economy. 

Pillar One reallocates a portion of the largest multinational enterprises' residual profits to the market jurisdictions where their users and customers are located. It has stalled since 2024, principally due to lack of U.S. ratification.

Pillar Two establishes a global minimum effective tax rate of 15% on large corporate groups to curb profit shifting and tax base erosion. It is implemented via Finance (No. 2) Act 2023, applying to groups with turnover ≥€750 million in at least two of the preceding four years, effective for fiscal years from 31 December 2023. The first Global Anti-Base Erosion (“GloBE”) Information Returns are due mid-2026.

4. The SbS Package

The SbS package, agreed on 5 January 2026, lets the U.S. minimum tax system operate alongside Pillar Two through several safe harbours. These allow groups to avoid or simplify detailed Pillar Two top-up tax calculations in a given jurisdiction when certain conditions are met, such as reporting a sufficiently low profit margin or a sufficiently high effective tax rate under existing rules like the U.S. minimum tax system.

As of June 2026, the U.S. is the only jurisdiction recognised by the OECD Inclusive Framework as having a Qualified SbS Regime, meaning it relies on its own domestic minimum tax system in place of the GloBE rules. Separately, 50 jurisdictions, including the United Kingdom, Canada, Australia, Japan, and South Korea, have implemented the GloBE rules directly under Pillar Two. As a result, Irish subsidiaries of U.S.-parented groups face significantly less exposure to top-up tax.

5. EU Tax Developments and Ireland’s Council Presidency

Ireland assumed the EU Council Presidency in July 2026. Two packages are in progress: the DAC Recast, consolidating DAC1–DAC9 into a single text and simplifying DAC6/DAC7 reporting, and the Tax Omnibus Directive, simplifying six corporate tax directives (Interest and Royalties, Parent-Subsidiary, Tax Mergers, Dispute Resolution Mechanism, ATAD I and II). Both sit under the “One Europe, One Market” roadmap, targeting agreement by Q4 2027.

For more information on Ireland’s Presidency of the Council of the European Union, please visit our website. 

6. UN Framework Convention on International Tax Co-operation

The UN Framework Convention on International Tax Co-operation has been under negotiation since 2023. It comprises three workstreams: Workstream I on the core Convention, Workstream II on Protocol I addressing taxation of cross-border services income, and Workstream III on Protocol II addressing dispute prevention and resolution. Finalisation of the workstreams are expected mid-2027. 

Ireland supports the UN’s role as complementary to OECD work, and continues to engage in developing the workstreams.

7. Research & Development (“R&D”) Tax Credit

The R&D Tax Credit rate rose from 30% to 35% in Finance Act 2025, with the first-year payment threshold raised from €75,000 to €87,500. In 2024, 2,165 companies claimed €1.263 billion (up from €976 million in 2023); R&D claimants contributed over €10.5 billion to CT revenues in 2023. The R&D Tax Credit and Innovation Compass (February 2026) sets medium-term direction on qualifying expenditure, capital expenditure, simplification, and innovation supports.

8. Knowledge Development Box

The Knowledge Development Box (10% effective rate on qualifying IP income, modified nexus approach) sunsets 31 December 2026. Take-up has been low (peak annual cost €24.9 million in 2022 vs. an original €50 million estimate). Options ahead of Budget 2027 are to extend, amend, or allow it to lapse.

9. Interest Taxation Reform

The Department is reviewing Ireland’s interest deduction rules for simplification and competitiveness. This review seeks to deliver a simplified and competitive taxation regime for interest in Ireland, which is aligned with international best practice, and which protects the tax base. A Feedback Statement was issued in November 2025, with draft legislation for consultation expected in Autumn 2026.

10. Audio-Visual Tax Credits

Ireland continues to offer a range of audio-visual tax incentives designed to support screen production and creative industries. The Film Tax Credit in section 481 of the Taxes Consolidation Act 1997 (as amended) (the “TCA”), known as the "Scéal Uplift," was increased from 32% to 40% for productions up to €20 million, effective May 2025. A new VFX rate of 40% applies to productions with at least €1 million in eligible VFX expenditure, capped at €10 million, and received EU approval in April 2026. The Unscripted Production Tax Credit in section 487A TCA, offering 20% relief up to €15 million per project, took effect in January 2026. Finally, the Digital Games Tax Credit in section 481A TCA has been extended to 31 December 2031.

11. Start-Up Relief and SME Capital Supports

Section 486C TCA provides CT relief for start-up companies during their first five years of trading, offering full relief where the CT liability is under €40,000 and marginal relief up to €60,000. This relief is capped by reference to Employer PRSI contributions, at €5,000 per employee, with an additional €1,000 in Class S PRSI per individual available since 2025. In 2023, the relief cost €8.6 million across 1,516 claimants, supporting 20,447 jobs at an average cost of €418.52 per job. The relief is currently due to sunset on 31 December 2026, though this may be extended by a further five years.

The Part 16 reliefs, comprising the Employment Investment Incentive (“EII”), Start-Up Capital Incentive, and Start-Up Relief for Entrepreneurs, support SME risk capital. EII cost €56.8 million in 2023, up from €32.6 million in 2020, and an extension to end-2029 has been recommended. Under the General Block Exemption Regulation linked lifetime company limit (an EU state aid framework allowing Member States to grant certain categories of aid), a company may raise up to €16.5 million, with EII relief available at rates ranging from 20% to 50%.

12. Capital Gains Tax (“CGT”) Reliefs for Entrepreneurs and Angel Investors

Ireland maintains two notable CGT reliefs targeted at investors and entrepreneurs.

Angel Investor Relief, introduced under the Finance Act 2024 and commenced in March 2025, provides a 16% CGT rate (18% where the investment is made through a partnership) on gains up to twice the initial investment, subject to a lifetime cap of €10 million. A three-year extension of the relief has been recommended.

Revised Entrepreneur Relief provides a 10% CGT rate on qualifying business assets. The lifetime limit has been raised from €1 million to €1.5 million for disposals made on or after 1 January 2026. In 2023, this relief cost €156.7 million across 1,364 claimants.

13. Taxation of Investment Funds and Life Assurance Products

Ireland's gross roll-up regime governing investment funds and life assurance products is also undergoing reform. Under this regime, the Investment Undertaking Tax and Life Assurance Exit Tax rates fell from 41% to 38% (25% for corporates), effective from 1 January 2026. Combined 2023 yield from Investment Undertaking Tax, Life Assurance Exit Tax, offshore funds, and foreign life policies totalled €351.6 million.

The Funds Sector 2030 review, published in October 2024, recommended removing the deemed disposal rule and aligning rates with CGT. A reform roadmap, along with a new EU-aligned investment account, is expected via Finance Bill 2026.

14. Conclusion and Practitioner Implications

The TSG Paper confirms that Ireland's CT regime stands at an inflection point. Record receipts continue to grow, but so does the degree of concentration in a small number of MNEs and sectors, leaving the Exchequer exposed to shifts in corporate profitability or reform decisions taken abroad. This coincides with simultaneous change on multiple fronts: the OECD's Two-Pillar framework and new SbS package, the EU's DAC Recast and Tax Omnibus Directive under Ireland's Council Presidency, the UN Framework Convention on International Tax Co-operation, and a range of domestic enterprise tax supports, including the Knowledge Development Box, interest deduction rules, and investment fund taxation, under review ahead of Budget 2027 and Finance Bill 2026.

Practitioners should reassess top-up tax exposure for U.S.-parented groups under the SbS safe harbours, prepare for the mid-2026 GloBE Information Return deadline, and monitor the Knowledge Development Box, interest deduction reform, and investment fund taxation roadmap for structural changes ahead. Ireland's EU Council Presidency adds both influence and exposure on the DAC Recast and Tax Omnibus negotiations.