Calls for capital gains tax to be reduced to 20% in Budget 2026
Ireland's capital gain tax needs to be updated to ensure a fairer transfer of business and to promote sustainability, PwC has said.
Publishing its pre-budget submission, the professional services firm said that Ireland's capital gain tax, which is one of the highest in Europe at 33%, should be lowered to 20% to help private businesses.
It said that treating the exit of a shareholder from a business as a capital gains tax event rather than being subject to income tax would be an "important step to achieving this."
It also noted that a reduction in capital gains tax for retrofitted properties would also help promote sustainability.
The submission also calls for increases in the capital acquisition tax lifetime threshold, which PwC said remains "out of kilter" with inflation. It is recommending increases to the capital acquisition tax small gift exemption, as well as the annual exemption.
In addition, it said the small benefit exemption should be increased to €2,500, while the restriction to five benefits should be removed to encourage employers to reward employees throughout the year.
Attracting and retaining staff remains a key issue for employers, PwC said, urging the Government to incentivise the provision of accommodation by Irish businesses to their employees.
At present, where a business rents property to its employees, the company is subject to corporation tax of 25% and a potential close company surcharge, the accounting firm said.
Foreign direct investment
Attracting foreign direct investment (FDI) remains a key priority for Ireland, PwC also noted, especially in the context of current trade uncertainty, global tax reforms and increasing competition for investment.
It added that Ireland needs to diversify its tax policy and put plans in place to attract the next generation of multinationals.
"Budget 2026 is a key opportunity to introduce targeted tax measures to enhance Ireland's position as a global financial services hub," PwC said in its submission.
Padraic Burke, tax leader at PwC Ireland added: "The global environment is facing significant upheaval following the new US Administration's rejection of the OECD Global Tax Deal.
"The US stance threatens the viability of the entire regime, with the possibility of retaliatory tariffs or withholding taxes that could further strain global trade and economic growth."
"Ireland must continue to simplify its tax system, expand incentives and support businesses and individuals in driving sustainable growth. Tax policies and incentives, if wisely chosen, could be critical to addressing Ireland's key infrastructural, housing, climate and other challenges."
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