Ireland Budget 2027 for business: R&D credit changes, KDB extended, 12.5% rate kept

Country reference

• Country: Ireland (planned expansion country)
• Authorities: Revenue Commissioners; Department of Finance
• Topic: Budget 2027: corporation tax and business incentive measures
• Key date: Announced 6 October 2026; legislation in Finance Bill 2026
• Law: Finance Bill 2026; Taxes Consolidation Act 1997

R&D tax credit

• Subcontracting limit: the greater of 20% of in-house qualifying spend or EUR 200,000 (was 15% or EUR 100,000).
• First-year payment threshold up from EUR 87,500 to EUR 105,000.
• A new 5% uplift on qualifying R&D wage costs to cover supporting costs.
• Lighter documentation for regulated clinical trials, and changes to using the credit against preliminary tax.

Other corporate measures

• Knowledge Development Box: extended for five years; existing users may opt out for all assets.
• Preliminary tax: the small-company threshold rises from EUR 200,000 to EUR 350,000 of prior-year tax.
• Pillar Two: the OECD side-by-side package and new safe harbours go into Finance Bill 2026, with a one-year extension of the transitional country-by-country safe harbour.
• Interest deductibility: targeted technical changes for certain lending and investment activities.
• Start-ups: start-up company relief extended to 31 December 2030; EII, SCI and SURE extended, subject to EU state aid rules.
• Bank levy: continues to the end of 2027.

What did not change

The advisers’ summaries list no change to the 12.5% rate on trading income, the 25% rate on non-trading income, or the 15% minimum rate for large groups under Pillar Two.

What to do now

• R&D claimants: model the new subcontracting limits and wage uplift for 2027 claims.
• Companies near the threshold: check whether the EUR 350,000 test moves you to a single preliminary tax instalment.
• Large groups: watch the Finance Bill for the side-by-side and safe harbour detail.

Our take

Stability is the message to multinationals. The R&D and KDB changes help the domestic innovation base, and the Pillar Two update keeps Ireland aligned with the OECD.