Corporation tax rate
Finance Bill 2023 will introduce a minimum effective corporation tax rate of 15% for companies which are members of a multi-national group with turnover in excess of €750 million. These rules will be in line with the OECD’s Global Anti-Base Erosion rules, aimed at reforming the taxation of multi-national enterprises.
The rules are expected to apply from accounting periods commencing on/after 31 December 2023.
Participation exemption for dividends
A new exemption on the taxation of dividends from abroad has been announced. Previously such dividends would be subject to corporation tax in Ireland and double taxation relief claimed. This new measure would exempt certain qualifying dividend income and remove the administrative burden of taxing such income and applying double taxation relief.
This measure is in a consultation phase and is expected to be included in Finance Bill 2024, to take effect from 2025.
Research & Development tax credit
Finance Bill 2023 will introduce changes to the rate of credit which can be claimed, increasing from 25% to 30%. SMEs will directly benefit from the increase in credit due to them.
In addition, the first-year claim threshold is being increased to €50,000 from €25,000. This will mean that smaller businesses will be able to claim up to €50,000 of their credit in year one. The rules on claiming the balance of the credit remain the same.
Capital gains tax angel investor relief
This new relief being introduced encourages angel investors to invest in innovative start-ups. Qualifying investors can avail of new reduced rates of CGT (16%, or 18% if the investment is made through a partnership) on gains at a value of up to twice the value of the investor’s initial investment. There is a lifetime limit of €3 million of gains upon which the new reduced rates will apply.
The qualifying investment(s) must be made in innovative SMEs and must be held for a minimum of three years. Qualifying investments must represent new fully paid-up share capital which constitutes between 5% and 49% of the investee’s issued share capital. The minimum investment requirement is €10,000. This new scheme will see investees being reviewed and certified by Enterprise Ireland to ensure that they meet the innovative start-up requirement.
The upper age limit for claiming the higher level of relief is increasing from 65 to 70 years of age from 1 January 2025.
A new limit of €10 million will apply on disposals to a child from 1 January 2025.
Employment Investment Incentive (EII)
From 1 January 2024 the holding period required to avail of this relief is being standardised at four years, with the limit on the qualifying amount of the investment being increased to from €250,000 to €500,000. Until now, investments in excess of €250,000 were required to be held for a minimum of seven years.
Key Employee Engagement Programme (KEEP)
EU approval has been given to the outstanding 2022 amendments.
Benefit in kind for motor vehicles
The temporary universal relief of €10,000 to the original market value on certain categories of vehicles announced previously is extended to the end of 2024. There will also be no tapering of the preferential BIK relief on electric vehicles. Accordingly, the existing €35,000 original market value reduction will apply for 2024 and 2025.
Energy efficient equipment
This existing scheme for accelerated capital allowances is extended until 31 December 2025.
Section 481 film relief
The cap on the maximum qualifying expenditure in respect of which the 32% credit is calculated is increased to €125 million from €70 million.