08 October, 2019 in Industry News

Republic of Ireland Budget 2020 - Business Tax

Minister of Finance, Paschal Donohoe, delivered his 3rd budget today, 8th October

Business Tax

  • 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.

Back to Summary of Republic of Ireland Budget 2020.

A PDF version of the Republic of Ireland Budget 2020 - Summary of Facts is available to download.

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