Minister of Finance, Paschal Donohoe, delivered his 3rd budget today, 8th October
- He confirmed that there is no change to the current corporation tax rate of 12.5%.
- Two changes to the Dividend Withholding Tax (DWT) regime were introduced:
- From 1 January 2020, the DWT rate is increasing from 20% to 25%.
- From 1 January 2021, a modified DWT regime will be introduced which applies a personalised DWT rate for each taxpayer. The personalised rate will be based on the actual rates of tax payable by that individual, taken from real-time data collected under the new PAYE system.
- R&D Tax Credit changes:
Increase in the R&D credit from 25% to 30% for micro and small companies
New provision for micro and small companies to claim the R&D tax credit on qualifying pre-trading R&D expenditure. The credit for pre-trading expenditure will be limited to offset against VAT and payroll taxes
Increasing the current limit to third level institutes of education from 5% to 15%
- Changes to the Employment and Investment Incentive (EII) scheme to take effect from 9th October 2019 include:
full income tax relief @ 40% to be provided in the year of investment rather than splitting it over years one and four
increase the annual investment limit for the incentive to €250,000 and provide for a new €500,000 annual investment limit being introduced for those investors who are prepared to invest in EII for ten years or more
- Further changes are being made to the Key Employee Engagement Programme (KEEP) to encourage use of the scheme. The KEEP scheme is an incentive to facilitate the use of share- based remunerations by unquoted SME companies to attract key employees. This scheme is available for qualifying share options granted between 1 January 2018 and 31 December 2023. The amendments to the scheme are:
- To allow companies who operate through a group structures to qualify for KEEP
- To allow for part-time and family-friendly working arrangements
- To allow exiting shares to qualify for KEEP
- The Special Assignee Relief Programme and the Foreign Earnings Deduction have both been extended to the end of 2022.
- Farm Restructuring Relief with regards to Capital Gains Tax has been extended to the end of 2022.
- A review of Entrepreneurial Relief in relation to Capital Gains Tax has been commissioned.
A PDF version of the Republic of Ireland Budget 2020 - Summary of Facts is available to download.
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