Q1 2026 update

Market update

M&A – Resilient amid uncertainty

Despite continued global geopolitical and macroeconomic volatility, M&A activity in Q1 involving Irish businesses remained resilient. Alkermes closed its US$2.37bn acquisition of Avadel Pharmaceuticals, Willis Towers Watson completed its US$1.3bn acquisition of Newfront and bolt-on activity continues apace across tech/AI, life sciences, financial services and energy/infrastructure. 

Separations – Unlocking value

Corporate separations remain a dominant theme as companies work to simplify their business operations and unlock value by shedding non-core assets and refining their capital allocation strategies. Irish law offers a high degree of flexibility to facilitate spin-offs, split-offs and other separation transactions, supporting both in-bound and out-bound structures (e.g. separations into a new US company). Notable recent activity has included:

• Medtronic’s separation of its diabetes division (MiniMed) into a US-incorporated, publicly traded company by way of an IPO (which completed in March) and proposed subsequent split-off transaction;   
• Eaton’s proposed spin-off of its Mobility business into a new public company;
• Swedish company Hexagon AB’s proposed spin-off of its Asset Lifecyle Intelligence and Safety, Infrastructure & Geospatial divisions into a standalone Irish‑incorporated, dual‑listed technology company; and
• the separation of the generics and sterile injectables business of Keenova (the combined company created in the Mallinckrodt/Endo merger) into Par Health.

Fundraising – Debt over Equity: Not unexpectedly given market volatility, equity fundraising remained muted. Where issuers have urgent funding needs, there has been a shift toward alternative fundraising options, including through private placements/ private investments in public equity (PIPEs) and standby equity facilities with cornerstone investors.

Prior to the most recent escalation of hostilities in the Middle East, the debt markets were more active with issuers taking advantage of financing conditions to refinance and reprice debt and in some cases, take on new debt to fund transformational acquisitions. Alongside this, we saw a continued focus on balance sheet optimisation, including selective deleveraging through repayments and, where appropriate, equitisation of existing debt.

Proxy season and shareholder activism – Steady start, continued preparedness

Proxy season has commenced but there have been no major developments or any unusual shareholder proposals to date. Following changes in ISS guidance in 2023, it has become relatively standard for Irish incorporated, US‑listed companies to seek annual renewal of their allotment and pre‑emption authorities capped at 20% (with only a small number pursuing broader authorities where this can be specifically justified to shareholders based on capital raising needs).

While there have been no public activist campaigns involving US listed, Irish companies to date in 2026, we expect activist shareholder activity will continue. Companies should remain vigilant and focus on preparedness, including regularly reviewing defence strategies, and in some cases, considering the adoption of a shareholder rights plan.

Key Irish/EU legal and regulatory developments

CSRD and CSDDD Developments: The Omnibus Directive amending the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) was published by the EU on 26 February 2026. In a welcome development, the Directive significantly narrows the scope of both regimes (meaning that fewer entities will be within scope). Click here for more detail: Directive amending CSRD and CSDDD published.

EU Pay Transparency Directive: The EU Pay Transparency Directive is due to be transposed into Irish law by 7 June 2026 and forms part of the EU’s strategy seeking to tackle concerns about the enforcement of the principle of equal pay between men and women in the EU. This will be relevant for companies with employees in Ireland. Click here for more detail: Update on the EU Pay Transparency Directive.

Pensions auto-enrolment: Pensions auto-enrolment launched on 1 January 2026 meaning that employees who are paid through Irish payroll who are not a part of a “qualifying pension arrangement” are automatically enrolled in the State’s automatic retirement saving system. Click here for more detail: Key Takeaways for Employers on AE and Updates on the Minimum Standards.

EU Inc.: In March, the European Commission published its proposal for legislation establishing a new optional EU‑wide company form, “EU Inc.”. The initiative is aimed at making it easier to start and scale companies across the EU, attract investment and lower the cost and complexity of business failure. National tax and employment rules will continue to apply such companies. The proposal must still be approved by both the European Parliament and the Council, with the first EU Inc. companies expected from 2027.

Irish tax developments

Participation exemption for foreign dividends: Following its introduction last year, Ireland’s participation exemption for foreign dividends has been substantially amended with effect from 1 January 2026 to ensure the regime functions as intended for groups with global structures. Updates include:

• extending the exemption to dividends paid by subsidiaries tax resident in jurisdictions that apply a non-refundable withholding tax, broadening access to the exemption for multinational groups with subsidiaries tax resident in non-EEA/treaty jurisdictions or emerging markets;
• reducing the look-back period for the “excluded acquisition” rule, which disapplies the exemption where a dividend‑paying company had acquired a business carried on by an entity tax resident in a non-EEA/treaty jurisdiction, from five to three years;
• clarification that the excluded acquisition rule does not apply to share acquisitions or situations where the acquired business was previously carried on by an Irish tax resident company;
• allowing companies tax resident in new treaty jurisdictions to qualify immediately upon signing of the treaty; and
• introducing a mechanism to determine tax residence for companies in jurisdictions without a formal residence concept.

Interest regime reform – Department of Finance Consultation: The Irish government published its Phase One Feedback Statement on potential changes to Ireland’s long-standing interest taxation regime, including potential adoption of a profit-motive-based test, improved alignment in the treatment of different categories of interest income and expense, and broader updates to ensure the regime remains resilient, competitive and aligned with international tax commitments. Stakeholder responses to the first public consultation highlighted the complexity of the existing rules and the need for more detailed consideration before introducing legislative reform. Reflecting this, the government’s action plan provides for a phased approach to reform, with Phase One addressing priority issues identified by stakeholders with further changes to be considered in subsequent phases. The consultation on the Feedback Statement closed on 16 January 2026, and the Department is now assessing submissions to inform the next stage of the reform process. A&L Goodbody’s response to the Public Consultation on the Tax Treatment of Interest can be found here.

Research and Development Tax Credit and Innovation Compass: The Irish government continues to enhance its R&D tax credit regime by:

• increasing the rate of the credit from 30% to 35%, alongside an uplift in the first-year payment threshold; and
• publishing the R&D Tax Credit and Innovation Compass, which identifies areas for further potential reform including qualifying expenditure, outsourcing rules and capital expenditure treatment, which reflects the need to ensure continued alignment with industry practice and international competitiveness. Additional targeted amendments are expected to follow later in 2026.

Tax Appeals Commission – Proposed hearing reforms: The Irish government continues to pursue legislation towards a more transparent tax appeals process which would result in all Tax Appeals Commission hearings being held in public by default, with determinations published in full with only a limited ability to seek private hearings and redacted determinations. This would represent a significant departure from the current practice under which the vast majority of cases are heard in private. Further developments are expected later this year.

Market capitalisation stamp duty exemption: To support smaller publicly listed companies and increase the competitiveness of Ireland’s capital markets, an exemption from the 1% charge to Irish stamp duty for transfers of shares in listed companies with a market capitalisation below €1bn has been introduced effective from 1 January 2026 through to 31 December 2030. To qualify, the shares must be admitted to trading on a “relevant market”, and a notification to Irish Revenue is required. Irish Revenue are maintaining a published list of all valid notifications received. As of 4 March 2026, 21 companies have made a valid notification to Irish Revenue however, as expected, uptake by US-listed companies has been limited given the existing stamp duty exemption for shares traded through DTC.

Date published: 30 March 2026