Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe presented the government’s budget for 2024 to the Dáil Éireann on Tuesday 10th October.
The proposals included a €14bn public spending package, with cuts to personal tax and a raft of measures to assist with the rising cost of living, particularly fuel inflation, among the headlines.
As always, the budget also laid out the government’s tax policies for the year ahead. So what are the changes that will have the biggest impact on business when the Finance Bill is put forward? Here are five things we’ve picked out.
Corporate Tax will rise to 15%
This is not news, and has been flagged up well in advance as part of the government’s commitment to international reforms engineered by the OECD aimed at making business tax more consistent across territories. But Michael McGrath confirmed in his Budget speech that the rise in Corporate Tax from 12.5% to the agreed 15% global minimum rate would be included in the Finance Bill.
Double boost for investors
The Employment Investment Incentive (EII), which offers tax relief on equity-based investments, is to be extended. The investment period will be standardised to four years, and the maximum amount investors can claim relief on will be doubled to €500,000.
Elsewhere, a new relief on Capital Gains Tax has been announced for angel investors backing innovative start-ups. The relief is available on the sale of stakes at valuations up to twice the original amount invested, with a €3m limit.
More incentives for innovation
The Research and Development (R&D) tax credit scheme is to be expanded, with the rate increased from 25% to 30%. Michael McGrath said in his Budget speech that part of the rationale behind this was to give some mitigation to businesses affected by the change in corporate tax by ensuring the net value of the existing credit stays the same. This is intended to head off the possibility of firms may choosing to cut R&D budgets to offset their higher tax liabilities.
But the higher rate will also serve as a real increase in the value of the credits for smaller businesses. The government has a clear eye on encouraging more R&D activity among SMEs, as it is also proposing to double the first-year payment threshold from €25,000 to €50,000.
Turnover thresholds on VAT to increase
The turnover threshold at which companies are obliged to register to pay VAT will increase from €37,500 to €40,000 for the supply of services and from €75,000 to €80,000 for the supply of goods.
Targeted support for SMEs to cope with inflationary pressures
Finally, stepping away from tax policy, Paschal Donohue also announced a €250m support package to help small businesses cope with continued inflationary pressures. Details of the scheme are to follow, although it is expected to focus heavily on support for energy costs, including a possible one-off grant to be paid this winter.
If you’d like to discuss how these or any other changes will affect your business in the next 12 months, get in touch with our tax planning and business advisory teams and start the conversation today.
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