On 19 October 2026, the Irish Government published the Draft Budgetary Plan for 2027, as required under the EU Fiscal Compact, outlining the fiscal strategy and tax policy measures for the upcoming budget year. The plan projects a general government surplus of 0.5% of GDP in 2027, with tax revenue buoyancy driven by corporation tax receipts. Key tax measures include an increase in the standard rate income tax band by €2,000, a reduction in the USC 2% rate to 1.5%, extension of the R&D tax credit to 30% for qualifying expenditure, and a temporary VAT rate reduction for hospitality from 13.5% to 11% for 2027. The plan also confirms Ireland’s commitment to the OECD Pillar Two global minimum tax implementation from 1 January 2027.
Key Takeaways
- Personal Tax Relief: The income tax band widening and USC reduction will benefit approximately 1.8 million earners, with an average annual gain of €350 per worker, costing the Exchequer €600 million in 2027.
- Business Incentives: The enhanced R&D tax credit (30% volume-based) and Knowledge Development Box (6.25% effective rate) aim to sustain Ireland’s attractiveness for IP-intensive investment post-Pillar Two.
- VAT Hospitality Cut: The temporary 11% VAT rate for hospitality and tourism services runs from 1 January to 31 December 2027, estimated to cost €150 million, with a review clause for extension.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement