Brendan Murphy doesn’t rush his verdict. 

The budget speech has only just been delivered when we sit down, but he’s already split his thinking in two.

“With one hat on, I was happy. With the other, I was disappointed,” he says.

As a tax partner at Baker Tilly Ireland, Murphy has a foot firmly planted in both sides of the economy. One hat represents the multinationals that dominate Ireland’s tax receipts and keep vast numbers employed. 

The other belongs to the entrepreneurs and medium-sized firms that drive indigenous business. Budget 2026, he argues, may have ticked plenty of boxes for the first camp — but he is not sure what it really delivered for the second camp.

“The FDI piece was pro,” he explains. “The Government did get some good things right on that front. But for entrepreneurs, there’s still a massive gap.”

That duality — reassurance for international investors, frustration for local founders — runs through his entire assessment.

Expectation management

In the weeks leading up to the budget, Murphy was already managing expectations. Having been critical of Budget 2025 — dismissing it as “kicking the can down the road” — he wasn’t expecting sweeping reforms this time around. Still, he had a clear wish list.

At the top was Capital Gains Tax. At 33 per cent, Ireland’s rate is one of the highest in Europe, and Murphy has long argued that it punishes risk-takers who build businesses and create jobs. He wanted a stepped relief linked to payroll or employment, rewarding those who contribute most back into the system.

Second was simplification of schemes like KEEP and EIIS, which, in theory, encourage investment in Irish companies but, in practice, are so complex that uptake is minimal. Streamlining the rules, he argued, would make them genuinely usable.

And third was meaningful support for SMEs, particularly those facing rising wage costs, pension auto-enrolment, and spiralling energy bills. He wanted to see targeted reliefs rather than blunt, across-the-board measures.

Those were the benchmarks. The question after Budget 2026 was whether any of them had been met.

On the foreign direct investment side, the budget delivered decisively. The R&D tax credit was raised again, now standing at 35 per cent — an almost 50 per cent increase in just two years. On an annualised basis, this will cost the Exchequer €305 million. 

For firms choosing where to locate innovation hubs, Murphy says it’s a clear signal.

“Effectively, you’re getting back almost 50 cent in every euro you spend between tax deduction and tax credit,” he explains. “That’s a really strong message to investors.”

Other changes were more technical but equally meaningful: a review of interest deductibility rules, tweaks to the participation exemption, and a consultation on withholding tax.

“To a global multinational, those are really positive,” Murphy says. “If those items are  simplified and implemented quickly, it will make a big difference.”

Hr adds: “Simplifications to the new participation exemption on dividends  and a commitment to an action plan to reform the regime for interest deductibility are also very welcome news for global groups and we would be keen to see the results of these as soon as possible.”

This is the “happy hat” he refers to. 

The way Murphy sees it, Ireland continues to double down on its appeal to foreign capital, not just through tax treatment but through promises of billions in capital spending.

Murphy acknowledges the logic. “The real risk isn’t that companies leave,” he says. “It’s that they slow down future investment. You need to make sure it’s easy for them to grow here.”

In a world of trade wars, tariffs and energy insecurity, keeping Ireland attractive to FDI is a legitimate priority. But it’s only one side of the equation.

The entrepreneur’s gap

On the domestic side, Murphy is less encouraged.

Murphy had hoped for a rethink on capital gains tax. Instead, the only measure was a modest increase in Entrepreneur Relief, raising the lifetime limit from €1 million to €1.5 million.

“It sounds good because you can say it’s a 50 per cent increase,” he says. “But when you run the numbers, it barely moves the dial. Someone selling a €10 million business goes from paying an effective rate of 31 per cent to 30 per cent. It’s minimal.”

For years, he and others have argued for raising the cap to €3 million or €5 million, which would bring Ireland closer to the UK’s old £10 million regime which had lasted at that level until 2020. “That would make a real difference to entrepreneurs,” he insists. Instead, they got what he calls “a token gesture.”

KEEP and EIIS, meanwhile, were simply rolled over without reform. Both schemes, designed to incentivise investment in Irish firms, remain hampered by low take-up and unwieldy rules.

“Enhancements are what’s needed, not just extensions,” Murphy argues. “Extending without fixing them doesn’t help.”

For entrepreneurs, the result is another year of rising costs with little targeted relief. “All they’re seeing is increased costs,” Murphy says. “There wasn’t a lot there for them.”

The hospitality gamble

No measure drew more headlines than the VAT cut for hospitality. After intense lobbying, restaurants and cafés won a lower rate. But it won’t take effect until July 2026 — a full six months into the year.

“They got what they wanted,” Murphy says, “but the timing of implementation  means  you have to ask: who’s going to survive until it kicks in?”

By then, the sector will have absorbed a wage hike of 65 cent an hour, the introduction of pension auto-enrolment in January, and higher costs across energy and food supplies. For many independents, the relief will come too late.

And even when it arrives, Murphy questions whether it’s the right instrument. “Large chains will benefit just as much as small cafés,” he notes. “It’s untargeted.”

The VAT measure also consumes a significant portion of the available tax package. In Murphy’s view, more targeted supports — wage subsidies, energy credits, or reliefs linked directly to employment — would have been both fairer and more effective.

“I fear a blanket VAT cut won’t turn the tide,” he warns. “It’s not the silver bullet the sector needs.”

In his analysis, there are wider issues. Everything – energy bills, wages, insurance, rent, supplies – has risen faster than the sector can pass on to customers.

“A VAT cut affects what you charge, not what you pay. It offers short-term relief, but not structural support,” he says. “Many operators will simply use the VAT saving to absorb rising costs rather than lower prices. Understandable, but it means the consumer won’t feel it — and the benefit disappears quickly.”

Housing and an SME cost crunch 

Housing dominated the budget speech, with billions pledged for construction, planning reform, and apartment development. Murphy recognises the importance.

“Companies won’t stay here if employees can’t find housing,” he says. “So in that sense, it feeds back into the FDI piece as well.”

But he’s sceptical about delivery. “Having budgets is one thing. Actually getting efficient output is another,” he says. “We need to cut through red tape and get this money spent quickly.”

He adds: “Although the reduction in VAT to 9 per cent from the current 13.5 per cent rate will give some relief for hard-pressed apartment buyers, the reality is that construction inflation for apartment builders still continues.

“With demand continuing to exceed supply, there is a question mark over whether this will lead to real price reductions. Even with the VAT rate reducing to 9 per cent a buyer would still be paying over €40,000 in VAT on the purchase price of a €500,000 home, which can be hard to justify in the current housing crisis.”

Ireland has a history of grand announcements that falter at execution. For Murphy, the credibility of Budget 2026 depends less on what’s written in the speech than on how quickly shovels hit the ground.

One of Murphy’s sharpest concerns is the accumulation of new costs facing domestic businesses in the year ahead. Minimum wage hikes, statutory sick pay, pension auto-enrolment, higher energy bills — all are coming down the track.

“These are huge costs,” he stresses. “For SMEs, they’re going to feel it straight away from January.”

Split verdict

So, has Budget 2026 left Ireland in a stronger position? Murphy’s answer is nuanced.

“For multinationals, the changes are positive. The R&D credit increase is huge. The reviews, if acted on quickly, are really important. The spend on housing and infrastructure, if implemented, will help keep them here.”

But for entrepreneurs, the picture is stark. “They’ll feel let down again,” he says. “They’re trying to create business, trying to employ people, and all they see is rising costs. There’s not an awful lot else for them.”

It is the dilemma at the heart of Irish economic policy: an over-reliance on foreign capital, and an underpowered domestic sector.

Murphy has a phrase he comes back to often: “hope is one thing, expectations are another.” Going into Budget 2026, his expectations were low, and they were met. His hopes — for capital gains tax reform, simplified schemes, and targeted SME supports — remain unfulfilled.

With one hat on, he applauds a budget that reassures foreign investors and strengthens Ireland’s standing as a hub for research and innovation. With the other, he sees another missed opportunity to reward and encourage those building businesses from the ground up.

And that, he suggests, is a dangerous imbalance. Without greater attention to indigenous enterprise, Ireland risks constructing an economy on one pillar alone. When the next global shock comes, that imbalance could prove costly.

“Entrepreneurs are creating jobs, paying payroll taxes, paying VAT,” Murphy says. “They should be rewarded. Right now, they’re not.”

The Currency’s coverage of Budget 2026 is supported by Baker Tilly Ireland.