Income tax
Benefits in kind
The Bill confirms that the small benefit exemption from income tax, USC and PRSI has been amended to allow for up to five non-cash benefits annually with a cumulative annual limit of €1,500. This takes effect for the 2025 and subsequent tax years.
A BIK exemption from tax has also been extended to the installation of electric charging facilities at an employee’s home for use in charging qualifying employer owned electric vehicles.
Pensions and related schemes
Employer contributions to PRSAs and PEPPs will be considered to be a BIK if they exceed an employer limit which is defined as 100% of an employee’s salary.
The Bill confirms the Budget measures to increase the standard fund threshold for pension schemes from €2m to €2.8m by 2030. Thereafter the threshold will increase annually in line with inflation.
The Bill legislates for the introduction of automatic enrolment pension schemes to align the tax treatment with the tax treatment of existing pension schemes.
Charities
The Bill introduces simplified administrative procedures for qualifying charities.
The Bill also introduces enhanced tax benefits for approved sports bodies and national governing bodies of sports. A more flexible system for individuals and companies to obtain tax relief on donations to such sports bodies or to also allow the benefit of the tax relief to be assigned to the sports bodies has also been legislated for.
Income tax
The Bill amends the tax treatment of individuals arriving in or leaving the State. Split-year residence will apply for the year of arrival and departure in cases where it is not sought by the resident individual during that year and where the individual is resident (arrival cases) or not resident (departure cases) in the State for the following year of assessment.
The Bill provides for exemption from tax for payments to Garda Reserve members and from recipients of payments from the Stardust ex-gratia payment scheme and the Cervical Check ex-gratia scheme.
Farming
The Bill confirms the extension of various farming related tax reliefs including: enhanced stock relief for registered farm partnerships, stock relief for young trained farmers and general stock relief. Change will also be made to agricultural stamp duty reliefs. The Bill also extends the list of farm safety equipment that qualify for accelerated capital allowances.
Business tax
Implementation of participation exemption for foreign dividends
Detailed legislation has been published in relation to the implementation of a new participation exemption for certain foreign sourced dividends and distributions from EU/EEA and tax treaty jurisdictions. The exemption will be introduced with effect from 1 January 2025 and will be subject to certain minimum shareholding requirements, amongst other conditions. A company must make a claim for the exemption in its tax return for the relevant period.
Deduction for listing expenses
The Bill introduces a corporation tax deduction for listing expenses of up to €1m relating to the first listing on an Irish/EEA stock exchange that takes place in the period from 1 January 2025 to 31 December 2029.
Amendments to Interest Limitation rules
The Bill includes amendments to certain aspects of the Interest Limitation legislation regarding the finance cost element of leases which seeks to align the operation of the provisions with the classification of leases for tax purposes as amended in Finance (No.2) Act 2023.
Amendments to Transfer Pricing and OECD Pillar 2 provisions
The Bill includes certain updates to provide for political commitment in respect of Amount B of Pillar One of the OECD’s two-pillar solution to address challenges arising from the digitalisation of the economy and the simplification of transfer pricing rules.
The Bill also includes further updates to the legislation relating to the implementation of the 15% minimum effective tax rate provided for under Pillar Two of the OECD’s two-pillar solution. The Bill includes amendments which (i) legislate for additional administrative guidance released by the OECD in December 2023 and June 2024 and (ii) seek to provide clarity on the operation of certain existing legislative provisions which also introducing a number of new technical adjustments.
Taxation of leases
The Bill proposes certain amendments to provisions regarding the taxations of leases, including: (i) amendments to the balancing allowance / charge provisions in the context of leased assets, (ii) amendments to the computational approach for lessors in respect of certain leases.
Start-up corporation tax relief
The Bill includes amendments to corporation tax start-up relief for new small companies, which provides for a reduction in corporation tax payable. The Bill introduces enhancements to ensure relief is also now available to small owner-managed companies by providing for Class S PRSI contributions paid by company directors to be considered when determining the maximum relief available to the company.
Research & Development tax credit
The Bill proposes an increase in the first-year payment threshold provided for in the Research and Development (R&D) regime from €50,000 to €75,000.
Property
Pre-letting expenditure in respect of vacant premises
The Bill provides for an extension of three years for relief for certain pre-letting expenses for landlords. The relief is to now expire at the end of 2027.
Residential premises rental income relief
The Bills provides for a number of technical amendments to the rental income relief for residential premises which was introduced in Finance (No. 2) Act 2023. In particular, the relief is being amended to ensure that no relief is available where the landlord has an overall rental loss and to also provide that relief will not be clawed back where a landlord dies.
Residential Zoned Land Tax and Vacant Homes Tax
The Bill introduces provisions to take account of the measures announced by the Budget.
Indirect tax
VAT
The Bill confirms a number of measures announced in the Budget such as the extension of the 9% rate of VAT for the supply of gas and electricity and the application of the 9% rate of VAT to the supply and installation of certain heat pumps.
The Bill includes measures to clarify the entitlement to VAT deductibility on costs related to the disposal of assets and the provision of services by certain parties (such as receivers and liquidators).
The Bill includes measures to clarify the circumstances where VAT can be recovered on expenditure related to the purchase of food, drink, accommodation and other personal services.
The Bill includes a measure which clarifies that the VAT exemption for the management of EU Alternative Investment Funds (AIFs) applies to the management of all EU AIFs including where the Alternative Investment Fund Manager (AIFM) is registered with a relevant competent authority.
Excise
The Bill includes a number of measures relating to the application of Betting Duty.
The Bill includes measures extending an excise relief scheme which applies to independent small producers of certain products such as cider and perry.
The Bill confirms the introduction of a tax on e-liquid products as announced in the Budget.
Capital gains tax
Retirement relief
The Bill confirms the introduction of a clawback period which was announced as part of the Budget for certain disposals qualifying for CGT retirement relief. In effect, this will provide for CGT relief on disposals to a child which are valued over €10 million, provided the relevant assets are retained for a 12-year period.
An additional anti-avoidance requirement has been introduced and a bona fides test must be met in order for a deferral of CGT to apply under the new provisions.
Relief for investment in innovative enterprises
In addition to the enhancement of the relief for angel investors announced in the Budget, additional administrative and reporting requirements are being introduced which include requiring qualifying companies to report certain details of the relevant qualifying investment to Revenue.
Relief for investment in corporate trades
The Bill includes legislation in relation to the various measures regarding the EII scheme and the Start-Up Capital Incentive schemes which were announced as part of the Budget, including the extension of the schemes to the end of 2026 and the increasing of the amounts qualifying for relief.
Capital acquisitions tax
Thresholds
The Bill confirms the following increases in lifetime thresholds which take effect from 02 October 2024 as follows;
- Group A; From €335,000 to €400,000
- Group B; From €32,500 to €40,000
- Group C; From €16,250 to €20,000
Agricultural relief
The Bill introduces significant changes to Agricultural Relief with effect from 1 January 2025.
The current relief includes a condition that the beneficiary must actively farm the agricultural property or lease it to a person who actively farms the agricultural property for the 6-year period following the valuation date of the gift or inheritance. This condition is being modified. The requirement to ‘farm’ the agricultural property is replaced with a requirement to use the agricultural property for the purposes of farming.
This means a beneficiary can satisfy this requirement by using part of the agricultural property for farming themselves and leasing the remaining part of the agricultural property to a person who uses the agricultural property for the purposes of farming. This should facilitate more flexible use of farm properties.
The amendment also provides that, for the 6-year period prior to the date of the gift or inheritance, the agricultural property must have been owned by the disponer and used for the purposes of farming by the disponer or a person to whom the property was leased. This six year holding condition is a new requirement. The provision for a beneficiary to qualify for agricultural relief on non-agricultural property where a gift or inheritance is made subject to the condition that it is invested in agricultural property within a 2-year period has been removed.
Stamp duty
Stamp duty rates in respect of residential property
The Bill confirms the introduction of a new higher 6% rate of stamp duty on the portion of the value of a residential property above €1.5 million. The new higher rate does not apply in cases involving the acquisition of three or more units in the same apartment block. The Bill also confirms the introduction of the new higher rate of 15% for certain bulk acquisitions of residential property.
The new rates will not apply in respect of instruments executed pursuant to a binding contract in place prior to the date of the Budget (2 October 2024) provided the instrument is executed before 1 January 2025.
Bank levy
The Bill provides for the extension of the existing Bank Levy for a further year.
Miscellaneous
Warehoused debt
The Bill provides for a reduction in the interest rate applying to warehoused debt across a number of tax heads, from 3% to 0%, where taxpayers have engaged with the Collector General in respect of such warehoused debt before 1 May 2024 to develop a payment plan. This was previously announced by the Minister for Finance in February 2024.
Get in touch
The measures unveiled in Finance Bill 2024 will have far-reaching implications for businesses across Ireland. If you have any enquiries, comments, or wish to explore further, we are here to assist.
Contact any member of our Tax team today.
Tom Woods
Partner, Head of Tax
KPMG in Ireland
Ciara Wrafter
Partner
KPMG in Ireland
