Taxing Times - Finance Bill 2024

Finance Bill 2024 was introduced by the Minister for Finance on 10 October 2024 following a Budget package of €10.5 billion supported by buoyant corporation tax receipts over the previous year.

It was introduced with the minister’s stated aim of providing “additional supports” to individuals, families and businesses while continuing the Government’s work in “maintaining the long-term stability of the public finances”. The Bill legislates for the tax measures announced in the Budget while also introducing a number of technical changes and simplifications to the tax code.

The Bill brings forward a range of measures which will impact businesses and individuals alike. One particularly welcome development is the introduction of a participation exemption for foreign dividends, a move long advocated for by businesses and investors. This simplification measure is a welcome relief for businesses grappling with the ever-increasing complexity of the tax code. It is hoped that future Budgets will extend the project of streamlining the corporation tax system, to maintain Ireland’s position in an increasingly competitive international tax landscape.

While the overall economic outlook remains positive, certain challenges persist. In particular, businesses continue to contend with skills shortages, rising energy costs, and supply chain disruptions.

• An increase in the ceiling on the upfront year one payment of the R&D tax credit from €50,000 to €75,000;
•  An increase in the lifetime limit on CGT relief for angel investors from €3 million to €10 million, designed to promote further investment in fledgling businesses;
• Improvements in, and extensions to, the operation of the Employment Investment Incentive and other reliefs for investments in trading companies;
• An improvement in capital gains tax retirement relief which should, where certain conditions are met, allow for a full exemption from CGT for those under 70 who dispose of their businesses to their children;
• Relief for expenses incurred on an initial stock market listing.

The Bill also includes a number of provisions aimed at addressing the ongoing housing crisis, which poses challenges for businesses seeking to attract skilled employees to Ireland. Measures within the Bill designed to ease the strain on individuals and families still struggling with the rise in the cost of living in recent years include:  

• Increases in the PAYE, Home Carer, Dependant Relative, Incapacitated Child and other personal tax credits;
• A 1% cut in the rate of USC applicable to earnings between €27,382 and €70,044;
• A €2,000 increase in the standard rate income tax cut off to €44,000.

In 2024 Ireland finds itself in an enviable position with a Budget surplus estimated at €23.7 billion. This has provided the Government with the ability to implement the above measures to support economic growth, address societal and infrastructural needs, and promote the long-term sustainability of the country's finances. 

Notwithstanding the many welcome measures contained in Finance Bill 2024, continued focus is needed in future Budgets to maintain Ireland’s competitiveness on the international stage and sustain our position as a preferred location for foreign direct investment.