Budget 2025 — Insight | PwC Ireland

Enhance Ireland’s FDI and financial services offering

Budget 2025 must outline a coherent strategy to enhance Ireland’s appeal for FDI. While the introduction of a tax exemption on certain foreign dividends is a positive step, broadening this exemption to include all dividends and foreign branch profits would further boost Ireland’s attractiveness as an investment location.

Tax policy is also crucial for supporting Ireland’s financial services sector, enhancing its competitiveness as a location for innovation and international business. Budget 2025 should prioritize tax measures that position Ireland as a hub for sustainable finance, such as introducing incentives for funds that invest in projects with significant positive environmental impacts. Additionally, reviewing the taxation of exchange-traded funds (ETFs) and addressing barriers to domestic household investment in funds could increase private investment in the retail market.

Address the housing crisis and climate transition

The supply of affordable housing will be a defining issue in the next general election. Economically, the housing crisis threatens future growth as it affects businesses’ capacity to attract and retain talent. A recent American Chamber of Commerce Ireland survey highlighted that housing is the biggest problem for US firms in Ireland, with nearly half citing it as their primary challenge.

Tax policy can help reverse this situation. PwC’s pre-Budget submission suggests measures such as extending the retrofitting scheme to modernize housing stock, reducing tax costs for businesses letting properties to staff at below-market rates, and developing incentives for carbon-efficient building methods, including modular homes.

Another critical growth area is the energy transition. Ireland aims to achieve climate neutrality by 2050 and reduce greenhouse gas emissions by 51% by 2030. Innovative tax policies to spur renewable energy investments and decarbonization efforts are essential. Budget 2025 should introduce tax incentives and reliefs to promote clean technologies, renewable energy activities, and green industrial infrastructure. Additionally, the government can implement tax measures to encourage households and communities to adopt sustainable energy consumption and transport methods.

In summary, a final challenge for this Government

This final fiscal set piece represents a critical opportunity for the Government’s re-election hopes. Despite announcing a large budgetary package, the Government will struggle to meet the expectations of an electorate squeezed by high mortgage rates and cost-of-living pressures. Much of the additional spending is already accounted for, leaving limited fiscal flexibility on Budget Day.

From a long-term perspective, the housing crisis and climate transition remain paramount. Housing will be a pivotal issue in the next general election, compounded by concerns that Ireland may miss its 2030 emissions targets. The Government is under pressure to address these urgent needs, but finite resources mean not all interests can be satisfied. How the Government allocates this limited package could prove decisive come polling day.