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TAX RATES AND CREDITS
|Standard tax rate||20%||20%|
|Higher tax rate||40%||40%|
|Standard rate bands|
|Married couple/civil partnership one income||€44,300||€44,300|
|Married couple/civil partnership two incomes||€70,600||€70,600|
|One parent family||€39,300||€39,300|
|Home carer credit||€1,500||€1,600|
|Earned income credit||€1,350||€1,500|
|Universal Social Charge (USC)||2019||2020|
|Balance over €70,044||8%||8%|
|Relevant income > €100,000||11%||11%|
Income tax rates and bands
- No change to the 20% and 40% income tax rates.
- No change to the standard rate bands.
- The home carer credit and earned income credit have been increased by €100 and €150 respectively. USC
- No changes to the rates or thresholds
- The reduced rates for medical card holders are extended to the end of 2020. Social Protection
- The Living Alone Allowance to increase by €5 per week.
- Earnings disregard to increase by €15 per week for the One Parent Family Payment and Jobseeker Transition Payment.
- Qualified child allowance for weekly social welfare payments to increase by €2 for qualified child dependants up to age 12 and by €3 for qualified child dependants aged 12 and over.
- A 100% Christmas bonus will be paid to social welfare recipients in 2019.
Capital gains tax Farm restructuring relief is extended to the end of 2022, with no change being made to the conditions for the relief. The decision to extend the relief follows on from a review of the relief earlier this year but is subject to EU State Aid approval.
Corporation tax rate The Minister reaffirmed Ireland’s commitment to the 12.5% corporation tax rate. Research & development tax credit The Minister announced a number of changes to the R&D tax credit, with a particular focus on small and micro companies accessing the credit
- The R&D tax credit will increase from 25% to 30% for small and micro companies.
- A new provision is introduced which will allow small and micro companies conducting pre-trading R&D to claim the credit before the business commences to trade. The credit will be limited to offset against VAT and payroll tax liabilities only. These provisions are subject to state aid approval.
- The limit of outsourcing to third-level institutions of education will be increased from 5% to 15%. The Minister outlined that this measure is aimed at benefiting smaller companies that rely on outsourcing to undertake R&D, and to also support R&D activities in the third-level sector.
International tax update The Minister referred to Ireland’s Corporation Tax Road Map, published in September 2018, which sets out progress on corporate tax reform and the next steps required to implement the EU Anti-Tax Avoidance Directive and the recommendations of the 2017 Coffey Review on Corporation Tax. Two measures referred to in the Road Map were announced by the Minister. Finance Bill 2019 will provide for the introduction of anti-hybrid rules which will be effective from January 2020. These rules are an anti-abuse measure designed to prevent arrangements that exploit differences in the tax treatment of an instrument or entity under the tax laws of two or more jurisdictions to generate a tax advantage. Ireland’s transfer pricing rules will be amended to transcribe the OECD 2017 Transfer Pricing Guidelines into Irish legislation. The rules will also be extended to cover cross-border non-trading and material capital transactions, and to extend the application of transfer pricing rules to SMEs, subject to a Ministerial Commencement Order. The detail of these amendments will be included in Finance Bill 2019. With effect from 9 October 2019, a technical amendment to the exit tax provisions will take effect. Employee taxation
- The zero rate of benefit in kind on electric vehicles will be extended until 2022.
- There is a 0.1% increase in Employer’s PRSI for 2020 to 11.05% as previously announced.
Employment Investment and Incentive Scheme The Department of Finance carried out a review of the Employment and Investment Incentive scheme (EIIS) earlier in the year. The main changes announced are aimed at enhancing the scheme and improving its operation, and are as follows:
- An increase in the annual investment limit from €150,000 to €250,000 and an increase to €500,000 for investments made for a minimum period of 10 years.
- Full relief will be available in the year in which investment is made. Currently relief is given in two stages: 30% in the year of investment and 10% in year 3, subject to certain conditions. Key Employment Engagement Programme The Key Employment Engagement Programme (KEEP) scheme is available for qualifying share options granted between 1 January 2018 and 31 December 2023. It provides for capital gains tax treatment on the disposal of shares acquired under a share option agreement instead of income tax, USC and PRSI on exercise of the option. The scheme will be amended as follows:
- The definition of qualifying companies and holding companies will be amended to allow group structures to qualify.
- The conditions for a qualifying employee are to be amended to accommodate working practices such as part-time working and flexible working arrangements, and employee movement within group structures.
Special Assignee Relief Programme (SARP) and Foreign Earnings Deduction (FED) Both the SARP and the FED are to be extended by three years until 2022. The SARP is an income tax relief measure for foreign executives who come to work in Ireland. The FED is an income tax relief for Irish employees who go to work abroad in certain qualifying countries.
CAPITAL AND TRANSACTION TAXES
- No change to CGT and CAT rates.
- The Group A CAT threshold, which typically applies to gifts and inheritances from parents to children, has been increased by €15,000 to €335,000, with effect from 9 October 2019.
- The rate of stamp duty on non-residential property transactions has increased from 6% to 7.5% with effect from 9 October 2019.
- The Department of Finance will undertake a review of the CGT entrepreneur relief, but there are no changes at this time.
Excise The excise duty on a packet of 20 cigarettes is being increased by 50 cents with a pro-rata increase on other tobacco products. This will bring the price of 20 cigarettes in the most popular price category to €13.50. Vehicle Registration Tax (VRT) There will be a change in the way vehicle emissions are taxed going forward:
- The 1% diesel surcharge introduced on VRT last year will be replaced by a nitrogen oxide (NOx) emissions-based charge that will be applied to all new cars and used imports from January 2020.
This leaflet is only a summary of the Budget Speech and is not intended to be a comprehensive guide. 8 October 2019.
Help to Buy scheme The Help to Buy scheme will be extended in its current form to 31 December 2021.
Living City Initiative This initiative in its present form will be extended until 31 December 2022.
- An increase in carbon tax of €6 per tonne will apply from 9 October 2019 to petrol and diesel – a typical increase of 2 cent per litre. The increase to other fuels will come into effect in May 2020.
- The Minister announced that he intends to increase carbon taxes to €80 per tonne by 2030.
- Some of the revenue raised from the increase in the carbon tax is to be ring-fenced for assisting communities adversely affected.
BUDGETING FOR BREXIT
With the prospect of a no-deal Brexit looming large, the Minister has announced a contingency package of €1.2 billion (excluding EU funding) to respond to the challenges Brexit presents. The Minister has also explicitly pointed out that if a no-deal Brexit does not occur, no additional funding will be secured. The total no-deal package supports the agriculture, tourism and enterprise sectors, with €500 million set aside from the ‘Rainy-Day fund’. €110 million will be deployed to support businesses of all sizes with a particular focus on food, manufacturing and internationally traded services. Supports will be in the form of a variety of grants, loans and equity investments. An additional €110 million will be provided through the Department of Agriculture. The beef sector has been highlighted as the priority, followed by the fishing industry. €40 million of funding will be provided for the tourism sector to help mitigate the impact of a no-deal Brexit in the border counties, and for targeting key markets such as the UK, North America and continental Europe. Other allocations will be determined closer to the time. There will also be another €365 million provided for social protection expenditure, and €45 million provided to assist
TAX RATES AND CREDITS
Tax rates 2018 2019
Standard tax rate 20% 20%
Higher tax rate 40% 40%
Standard rate band
Single/widowed €34,550 €35,300
Married couple/civil partnership one income €43,550 €44,300
Married couple/civil partnership two incomes €69,100 €70,600
One parent family €38,550 €39,300
Home carer credit €1,200 €1,500
Home carer income threshold €7,200 €7,200
Earned income credit €1,150 €1,350
Universal Social Charge (USC)
First 12,012 0.5% First €12,012 0.5%
Next €7,360 2% Next €7,862 2%
Next €50,672 4.75% Next €50,170 4.5%
Balance over €70,044 8% Balance over €70,044 8%
Relevant income > €100,000 3% Relevant income > €100,000 3%
Income tax rates and bands
• No change to the 20% and 40% income tax rates.
• The standard rate band has been increased by €750 for a single person and €1,500 for a married
couple/civil partnership with two incomes.
• The home-carer credit and earned income credit have been increased by €300 and €200
Universal Social Charge (USC) and bands
• From 1 January 2019, the third USC rate of 4.75% will be reduced to 4.5%.
• In order to avoid minimum wage earners paying USC at the third rate, the threshold above which
the 4.5% USC rate will apply is to increase to €19,874.
Minimum wage will increase from €9.55 per hour to €9.80 per hour, from 1 January 2019.
• Weekly social welfare payments will increase by €5 per week from March 2019.
• A full 100% Christmas bonus will be paid to social welfare recipients in 2018.
Young Trained Farmer Relief, which exempts the transfer of agricultural land to a ‘young trained farmer’,
has been extended for a further three years to 31 December 2021.
The restriction that operated to disallow income averaging relief for farmers with off-farm income has
The three separate measures of stock relief for income tax have all been extended for an additional three
years to 31 December 2021.
CAPITAL AND TRANSACTION TAXES
• No change to CGT and CAT rates.
• The Group A CAT threshold, which typically applies to gifts and inheritances from parents to
children, has been increased by €10,000 to €320,000, with effect from 10 October 2018.
• No change to stamp duty rates.
Corporation tax rate
The Minister reaffirmed the Government’s commitment to the 12.5% corporation tax rate.
Corporation tax exemption for start-ups Corporation tax relief for certain start-up companies has been extended for a further three years to 31 December 2021.
International tax update
Ireland’s Corporation Tax Road Map, published in September 2018, sets out progress on corporate
tax reform and the next steps required to implement the EU Anti-Tax Avoidance Directive and the
recommendations of the 2017 Coffey Review on Corporation Tax. The Minister announced the
commencement of two measures referred to in the Road Map:
• Finance Bill 2018 will provide for the introduction of new Controlled Foreign Company (CFC)
rules, which will be effective for accounting periods beginning on or after 1 January 2019.
These rules will be designed to prevent the diversion of profits to CFCs in low- or no-tax
• With effect from midnight on 9 October 2018, a new exit tax of 12.5% has been introduced to tax
unrealised capital gains where a company migrates or transfers assets offshore, such that they leave
the scope of Irish taxation.
There will be a review and update of Ireland’s transfer pricing regime in 2019.
• The Department of Finance and Central Bank of Ireland will review crowdfunding and introduce
• As part of this review, there will be an assessment of withholding tax rules in respect of peer-to- peer
• A new scheme of accelerated capital allowances for acquisition of gas-propelled vehicles and
refuelling equipment is to be introduced; details are expected in Finance Bill 2018.
• Legislation providing for accelerated capital allowances for employer-provided fitness and
childcare facilities was included in Finance Act 2017 and will commence from January 2019. It was
announced that amendments will be made to the legislation but no details are yet available.
• The exemption from BIK on electric vehicles is being extended for three years to the end of 2021,
subject to a cap of €50,000 on the original market value of the vehicle.
• From 1 January 2019, the weekly income threshold for the higher rate of Employer’s PRSI will
increase from €376 to €386.
• The Minister announced a 0.1% increase in Employer’s PRSI for both 2019 and 2020, to 10.95%
and 11.05% respectively.
Employment Investment and Incentive Scheme (EIIS)
Following on from a recent review of this incentive, the Minister announced that he:
“…intend[s] to bring forward a priority package of measures in the Finance Bill to address the
main problems identified and to increase its efficiency and effectiveness.”
• The corporation tax credit available in relation to film production has been extended for a further
four years to 2024.
• A new tapered regional uplift to the credit, commencing at 5%, has been announced and this will be
subject to EU State aid approval.
Key Employment Engagement Programme (KEEP)
The Budget provides for increases in scheme limits in respect of the market value of share options that
can be granted to a key employee/director. The market value of share options cannot exceed:
1. €100,000 in any one tax year (no change);
2. €300,000 over a lifetime (increased from €250,000 over a three-year consecutive period); or
3. 100% of the salary of the employee/director in the year of grant (increased from 50%).
The tax deduction available in respect of interest on loans used to purchase or repair rented residential
property will increase to 100% from 1 January 2019.
Local Property Tax (LPT)
A review of LPT is ongoing and will be complemented by a consultation process. In his Budget speech,
the Minister restated his commitment that:
“… any future changes will be moderate and affordable.”
• Excise duty on a packet of 20 cigarettes is being increased by 50c with effect from midnight on 9
October 2018. There will be a pro-rata increase on other tobacco products.
• There are no changes to the duty on alcohol, petrol or diesel.
From 1 January 2019, there will be an increase of 1% (to a rate of 2%) on bets placed in the State with
bookmakers, as well as an increase to 25% (from 15%) on commission earned by betting intermediaries.
• The VAT rate applicable to the tourism and hospitality sectors reverts to the 13.5% VAT rate, with
effect from 1 January 2019.
• Printed newspapers and access to sporting facilities will continue to be subject to the 9% VAT rate.
• The rate applicable to electronic publications will reduce to 9% from January 2019.
Vehicle Registration Tax (VRT)
• The VRT relief available for conventional hybrids and plug-in electric hybrid vehicles is extended
for a period of one year, until the end of 2019.
• A 1% VRT surcharge will apply to all diesel passenger vehicles registered from 1 January 2019.
• No changes were made to the rates of carbon tax.
• The Minister announced that he intends to introduce a long-term plan for increasing carbon taxes
over the period to 2030.
PREPARING FOR BREXIT
While no specific tax measures relating to Brexit were introduced, the various tax reliefs available for
SME businesses and the agriculture/food sector are a general support to those exposed sectors. As in his
2017 Budget speech, the Minister’s main focus was on the allocation of additional funds to support
Human Capital Initiative
A fund of €300 million is being made available throughout the period 2020 to 2024 to increase
investment in higher education courses across the country.
Future Growth Loan Scheme
Following on from the €300 million Brexit Loan Scheme made available to SMEs last year, a further
€300 million will be made available to lend at a competitive rate to SMEs and the agriculture/
Funding for Brexit measures across government departments
€110 million is to be made available for Brexit measures across a number of departments, including
funding for customs requirements and other targeted measures.
Increased funding for farm and food sectors
€60 million of funding is being made available to improve resilience in the farm sector and productivity
in the food sector, and to provide additional resources in relation to the regulatory requirements
Increased funding for the PEACE Programme
The aim of this funding is to support economic and social stability in the border region during the
Income tax band:
Tax credits The earned income credit has been increased from €950 to €1,150. This credit is available to taxpayers earning self-employed trading or professional income and to business owners/managers who are ineligible for a PAYE credit in respect of their salary. The home carer tax credit has been increased from €1,100 to €1,200.
Universal Social Charge (USC) Entry level for USC remains unchanged at €13,000. The increase of €650 in the second USC band combined with a reduction in the second and third rates of USC should result in an annual tax saving of up to €178. Increasing the ceiling for this new rate from €18,772 to €19,372 should ensure that full-time workers on the increased national minimum wage of €9.55 per hour do not pay the upper rates of USC.
Employees and company vehicles From 1 January 2018 a zero percent BIK rate is proposed for electric vehicles for a period of one year. Electricity used in the workplace for charging vehicles will also be exempt from BIK.
Share incentives for key employees (Key Employee Engagement Programme (KEEP) A tax efficient share-based remuneration incentive is being introduced to facilitate the use of share-based remuneration by unquoted SME companies to attract key employees.
Gains arising to employees on the exercise of KEEP share options will be liable to CGT on disposal of the shares in place of the current liability to income tax, USC and PRSI on exercise. This incentive will be available for qualifying share options granted between 1 January 2018 and 31 December 2023.
Minimum wage Minimum wage increased from €9.25 per hour to €€.55 per hour.
Home owners Tapered extension of mortgage interest relief will continue past 31 December 2017 for owner occupiers who took out qualifying mortgages between 2004 and 2012. The tapered extension will be effected by allowing interest relief of 75% of the existing 2017 relief in 2018, 50% in 2019 and 25% in 2020.
Social protection Weekly social welfare payments will increase by €5 per week from last week of March 2018. An 85% Christmas bonus will be paid for social welfare recipients in 2017.
Corporate tax The Minister of Finance confirmed Ireland’s continued commitment to maintaining the 12.5% corporation tax rate to attract and retain foreign direct investment.
International tax update As initiated in Budget 2017, a Review of the Irish Corporate Tax Code (the Review) was carried out by Mr Seamus Coffey and published on 12 September 2017. This review included a number of recommendations to be considered by the government following the completion of a consultation phase prior to the introduction of the recommended changes.
As part of the Budget papers, the Government issued an Update on Ireland’s International Tax Strategy which benchmarks Ireland’s progress on meeting international tax standards and instigated the consultation process recommended in the Review.
Capital Allowances on Intellectual Property (IP) One of the key recommendations within the Review was a restriction on the capital allowances available for capital expenditure on IP to 80% of the relevant income arising from that IP. The Minister has now implemented this recommendation from 11 October 2017.
It is important to note that this restriction applies only in respect of new expenditure incurred on or after 11 October 2017. Relief arising from intangible assets acquired prior to this date will not be restricted.
Notably full relief will still be granted for the cost of acquiring the IP albeit over a longer time period. The above restriction results in an effective 2.5% tax rate on income arising from such IP, restoring the position previously in place prior to 2014.
Accelerated capital allowances for energy efficient equipment This measure originally introduced in Finance Act 2008 to incentivise companies to purchase energy efficient equipment has been extended until the end of 2020. This measure allows companies to claim 100% capital allowances for the cost of qualifying energy efficient equipment in the year the asset is acquired and brought into use.
Property Budget 2018 concentrated on initiatives to address the issues in the housing market and consequently taxation measures that targeted the property market were prevalent. The primary aim appears to be the release of both existing residential property and development residential property into the market.
Stamp duty Non-residential property rate Since 14 October 2008 the stamp duty rate applicable to transfers of non-residential property reduced on a sliding scale from 9% to 2% with the aim of buoying the then very stagnant property market. Having achieved its objective the rate is now increasing from its current 2% to 6% for transfers of non-residential property on or after 11 October 2017.
Stamp duty refund scheme Commercial land purchased for the development of housing will be eligible for a stamp duty refund. The refund will be subject to certain conditions, including a requirement that the ‘relevant development’ is commenced within 30 months of the land acquisition.
Consanguinity relief The 1% rate applicable to transfers of farm land between related persons has been maintained
Young trained farmers The exemption from stamp duty on transfers of agricultural land to a young trained farmer has also been maintained.
Capital Gains Tax (CGT)
Seven year exemption An exemption from Capital Gains Tax (CGT) was introduced in Finance Act 2012 which provided an exemption from CGT on the disposal of residential and commercial property purchased between 7 December 2011 and 31 December 2014, and held for seven years. In order to free up stockpiled land banks of undeveloped property, the holding period has been reduced from seven years to four years with immediate effect.
Pre-letting expenses In order to encourage owners of vacant residential property to develop their property and bring it into the rental market, a measure has been introduced for the tax deduction of pre-letting expenses where that property remains in the rental market for a period of at least four years.
Vacant site levy Since 1 January 2017 local authorities have been tasked with the establishment and maintenance of a register of vacant sites zoned for residential or regeneration purposes, which measure in excess of 0.05 hectares. An identified vacant site can be entered on the register when the authority is of the opinion that it has been vacant for a minimum of 12 months preceding its entry on the register. From 1 January 2018 properties entered on the register are subject to an annual 3% levy on the market value of the site, which is payable in arrears at the beginning of 2019.
The vacant site levy has now more than doubled for second and subsequent years, rising from the current 3% rate that applies in the first year to 7% each year thereafter.
This measure will mean that any owner of a vacant site on the register who does not develop their property in 2018 will pay the 3% levy in 2019. If they continue to retain their vacant land then they become liable to the increased rate of 7% in 2020 meaning an effective total levy of 10% over a two year period.
Capital Acquisitions Tax (CAT)
Solar farms For the purpose of CAT and CGT, the leasing of agricultural land for solar infrastructure is classified as agricultural land and thereby eligible to qualify for relief under both agricultural relief and retirement relief. A condition has been imposed restricting the amount of the farmland that can be used for solar infrastructure to 50% of the total farm acreage.
Excise The excise duty on 20 cigarettes is being increased by 50 cent, including VAT, with effect from midnight 10 October, with pro-rata increases for other tobacco products. This will increase the price of the most popular brands to €12. There are no changes in the rates of duty on petrol, diesel or alcohol.
VAT The VAT rate applicable to the use of sun beds is being increased from 13.5% to 23% with effect from 1 January 2018 in line with the government’s national cancer strategy and the clear link between sun beds and skin cancer. There is no change to the 9% VAT rate applicable to many tourism related services.
Compensation scheme for charities A refund scheme will be introduced in 2019 to compensate charities for VAT they incur in 2018. The level of refund will be restricted in proportion to the level of non-public funding they receive. A capped fund of €5 million will be available and the scheme will be reviewed after three years. If total claims exceed €5 million, the individual claims will be paid on a pro-rata basis.
Sugar-sweetened drinks tax This will be introduced from 1 April 2018 in tandem with the UK. A rate of 20 cent per litre will apply to drinks with a sugar content between 5-8 grams per 100 ml. A higher rate of 30 cent per litre will apply where the sugar content is 8 grams or above.
Preparing for Brexit Whilst Brexit was mentioned throughout the Ministerâ€™s speech and is clearly at the forefront of many decisions being made, there were no tax measures introduced. The main focus was allowing for additional funds including the following:
Brexit loan scheme This loan scheme of up to €300 million has been made available at a competitive rate to SMEs to help them with their short-term working capital needs. This scheme is supported by the European Investment Bank Group, the European Commission and the Strategic Banking Corporation of Ireland. It will give SMEs time to put in place the necessary changes to help their businesses grow into the future.
Additional agriculture funding In addition to the Brexit loan scheme, an additional €25 million has been allocated to the Department of Agriculture, Food and the Marine to provide for the development of further Brexit response loan schemes for the agri-food sector.