‘Welcome’ rise in R&D tax credit – William Fry
Law firms have highlighted some of the measures on housing and international tax announced in Budget 2026 yesterday (7 October).
Lawyers at William Fry note that the “several improvements” to the R&D (research and development) tax-credit regime – including what they describe as a “welcome increase” in the credit from 30% to 35%.
This is subject to EU state-aid approval.
A R&D compass to be published in the coming weeks will consider further targeted changes to the regime.
Tax on interest
Various simplifications and technical amendments will be made to the participation exemption for foreign dividends, .
The minister also published to reform Ireland’s tax regime for interest, with a further consultation period expected.
The budget included a reduction of the tax rate applicable to Irish and equivalent offshore funds and foreign life-assurance products from 41% to 38%.
William Fry also highlights a new stamp-duty exemption to attract retail investors to the Irish market, applying to the acquisition of shares in Irish-listed companies with a market capitalisation of below €1 billion, expiring on 31 December 2030.
‘Bid to stimulate housing delivery’
described the measures on housing as “a clear attempt to stimulate delivery of residential units, regenerate existing building stock, and encourage institutional investment in cost rental housing”.
The VAT rate on the sale of new apartments will be reduced from 13.5% to 9%, effective from today (8 October) until 31 December 2030.
Rental income arising from cost-rental developments will be exempt from corporation tax with effect from 8 October, while there will be enhanced corporation-tax deduction for certain costs incurred in apartment construction and the conversion of non-residential property to residential.
The minister also announced that a new Derelict Property Tax, to be collected by Revenue, would replace the current levy collected by local authorities. The rate will not be lower than the current 7% of market value.
Legislation underpinning the new tax to be introduced in 2026, with a preliminary register of relevant land to be in place in 2027.
There will be an exemption for RZLT (residential zoned land tax) where a landowner obtains a change in the zoning of the land to reflect the activity currently being carried out – legislation is to be amended to provide for this in 2026.
Derelict tax ‘surprise’
“The VAT reduction, in particular, is expected to improve project feasibility for developers in the apartment sector, where, despite recently announced changes to the rent cap rules which will apply from 1 March 2026, a viability gap persisted,” says Arthur Cox.
The firm’s lawyers also describe the corporation-tax exemption as “a significant step toward incentivising long-term investment in cost-rental housing”.
“The new derelict property tax is something of a surprise but its implementation and collection by Revenue is clearly designed to encourage property owners to renovate or sell on,” Arthur Cox says.