Business

The 12.5% Tax Rate

The 12.5% tax rate is, and will remain, a core part of Ireland's corporate tax policy.

SME Key Employee Engagement Programme (KEEP)

Changes will be introduced to increase the attractiveness of the KEEP scheme and to support SMEs in a competitive market. The changes announced include increasing the ceiling on annual market value of share options granted to match salary, replacing the 3 year-year limit with a lifetime limit and increasing the maximum amount of share options which can be granted to €300,000.

Reduced Rate of VAT

The reduced 9% VAT rate for the hospitality sector is to be abolished, with the rate increasing to 13.5% for all areas of the sector, apart from newspapers and sporting facilities. The VAT rate applied to electronic publications will also be reduced from 23% to 9%.

Employment and Investment Incentive Scheme (EIIS) 

A package of measures is to be included in Finance Bill 2018 to increase the efficiency and effectiveness of the EIIS with the intention of providing certainty to businesses to enable them to plan for the future.

Film Relief

The corporation tax credit, which was due to end in 2020, will be extended until December 2024. 

Tax Relief for Start-up Companies

This relief, which was due to expire at the end of 2018, has been extended for certain start-up companies until the end of 2021.

Crowdfunding

It was announced that steps will be taken with a view to regulating the industry. In addition, a review of certain tax implications of crowdfunding will take place, such as the application of withholding tax on peer to peer lending.

Betting Tax

Betting tax is to increase from 1% to 2%.

Excise Duties

Excise duties on cigarettes are to increase by 50 cent with a minimum excise duty being introduced for cigarettes costing below €11. These changes apply from midnight on 9 October 2018.

There are no increases in carbon tax or excise on diesel.

Vehicle Registration Tax (VRT)

VRT relief for hybrid vehicles will be extended until end of 2019. A 1% surcharge for diesel vehicles across all VRT bands will also be introduced.

Accelerated Capital Allowances (ACAs) on Gas Propelled Vehicles

To encourage the uptake of gas-propelled commercial vehicles as an alternative to diesel vehicles, an accelerated capital allowances scheme for gas-propelled vehicles and refuelling equipment is being introduced.

Extension of 0% BIK rate for electric vehicles 

The 0% BIK rate for electric vehicles is being extended for a period of 3 years, with a cap of €50,000 on the original market value of the vehicle. 

Future Growth Loan Scheme 

A loan scheme for SMEs and the agriculture and food sector is being launched which will provide up to €300m of funding to businesses.

Disruptive Technologies Innovation Fund 

A new fund will be established which will make €500m available for co-funded projects involving enterprise and research partners over the period to 2027.

Controlled Foreign Company (CFC) Rules

As expected, CFC rules will be introduced from 1 January 2019 which will be in line with the Anti Tax Avoidance Directive (ATAD). These rules are an anti-abuse measure which are designed to prevent the diversion of profits to offshore entities in low or no tax jurisdictions and will be provided for in the Finance Bill.

Transfer Pricing

The Minister committed to review and update transfer pricing principles in 2019 to ensure they are in line with best practice. This follows the public consultation on the Coffey review which made a number of recommendations which would significantly alter the application of the transfer pricing rules in Ireland.

Exit Tax

A new ATAD compliant exit tax regime will be introduced from midnight on 9 October 2018. The exit tax regime had an implementation deadline of 1 January 2020 under ATAD but has been introduced early to demonstrate Ireland's commitment in implementing the ATAD according to the Minister. An early announcement of the intended exit tax rate had been flagged in the Tax Strategy Group report issued by the Department of Finance in July 2018. However, the implementation of the new regime with immediate effect has come as a surprise to many.  While Ireland already has an exit tax regime in place, it was not as broad as its ATAD counterpart. The new regime will tax unrealised capital gains at a rate of 12.5% where companies migrate or transfer assets offshore such that they leave the scope of the Irish tax system. 

For further information on Budget 2019, please contact Brian Duffy or your usual William Fry Tax contact.