Budgetary Measures

The Minister for Finance announced a total budget package of €10.5bn, consisting of €6.9bn in expenditure, €1.4bn in net taxes, and €2.2bn in cost-of-living expenses.

Corporation Tax

The Minister noted that tax revenue was forecasted to reach €105.7bn for 2024, an increase of €13.6bn on what was announced in the Spring forecast and mostly due to the “windfall” receipt from the “Apple” case.

Whilst the Minister noted that Ireland’s corporation tax receipts are a highly concentrated revenue stream, he reported that €6.3bn had been invested in the State’s two new investment funds, the Infrastructure, Climate and Nature Fund and the Future Ireland Fund.

International

Following the announcement in Budget 2024, the Minister confirmed that a participation exemption on foreign dividends will come into effect on 1 January 2025. The exemption aims to simplify the existing double taxation relief provisions for Irish companies with foreign subsidiaries and ensure that Ireland remains attractive to foreign direct investment. Further details will be set out in the Finance Bill.

The Research and Development (R&D) Tax Credit, which provides for a 30% tax credit for all qualifying R&D expenditure, has been amended so that the first-year payment threshold will be increased from €50,000 to €75,000. The Minister also announced that the Department of Finance will review the R&D tax credit over the next year.

Domestic

The Minister has announced that the extension of the upper age limit for Retirement Relief from Capital Gains Tax from 65 until 70 will be retained. In addition, the Minster outlined that where there are disposals by the child or children above €10m within 12 years of receiving the assets, a clawback of the relief will apply.

The Group Thresholds for Capital Acquisitions Tax will be increased for the first time since 2019.

Property

A third rate of stamp duty on the acquisition of residential property will be introduced: 6% of the value of any residential property over €1.5m. The existing rate of 1% on the first €1m will continue, with the 2% rate of stamp duty applying to the value of residential property acquired between €1m and €1.5m.

The higher rate of stamp duty for bulk acquisitions of ten or more residential properties (other than apartments) in a 12-month period will be increased from 10% to 15%.

The increased stamp duty rates will apply to all instruments executed on or after 2 October 2024, with transitional measures applying to any instruments executed before 1 January 2025 that contain a statement certifying that the instrument is executed in pursuance of a binding contract entered before 2 October 2024.

The Residential Zoned Land Tax (RZLT) applies to land that is zoned as suitable for residential development but is not currently developed for housing. From 1 February 2025, RZLT will apply at 3% of the land’s market value.

The Minister announced that to avoid unduly impacting certain landowners, landowners will be provided with an opportunity to avail of an exemption from RZLT in 2025 if they apply to have land within the scope of RZLT rezoned to reflect the genuine economic activity conducted on the land.

Small and Medium Enterprises

The Minister announced a range of measures to support small and medium enterprises (SMEs), including start-up and scaling businesses.

The Employment Investment Incentive Scheme, the Start-Up Relief for Entrepreneurs Scheme and the Start-Up Capital Incentive Scheme will all be extended for a further two years until the end of 2026. The limit on the amount an investor can claim relief on for Employment Investment Incentive Scheme investments will be increased from €500,000 to €1m. The relief available under the Start-Up Relief for Entrepreneurs Scheme will be increased from €700,000 to €980,000.

In the previous budget, the Minister announced a new relief to encourage angel investment for innovative start-ups. The relief allows angel investors to benefit from a reduced CGT rate when they dispose of a qualifying investment. The Minister announced that the lifetime limit on gains to which the reduced rate of CGT will apply has been increased from €3m to €10m.

Employment and Income Tax

The Minister announced a wide range of amendments to various personal tax credits and USC rates that will positively impact the overall tax paid by most workers.

Some changes were also announced to the Small Benefit Exemption, which allows an employer to provide limited non-cash benefits or rewards to their workers without the payment of income tax, PRSI, and USC. The annual limit provided for in the exemption will be increased from €1,000 to €1,500. In addition, the number of non-cash benefits which an employer may grant in a single year under this exemption will be increased from two to five.

Consultations and Initiatives

The Minister referenced the Funds Sector Review 2030 (Review), which was previously announced on 6 April 2023. The report was recently made available to the Minister and will be brought to the government before it becomes publicly available. The Review was undertaken to ensure Ireland’s competitiveness in an evolving industry. After considering its findings, the Minister will outline the next steps.

The Minister acknowledged the important role played by share-based remuneration. An independent review of this area was commissioned and the report was published on 1 October. The Minister will consider its recommendations.

The Minister announced a personal income tax package to the value of €1.6bn, the key measures of which are discussed below.

Standard Rate Band

The 20% standard rate band cut-off point will be increased by €2,000 for all earners. The following rate bands will apply for 2025:

Tax Credits

The Personal Tax Credit, Employee Tax Credit and Earned Income Credit will be increased by €125 from €1,875 to €2,000 from 1 January 2025.

In addition, there have been a number of other increases announced to specified personal tax credits:

• The Home Carer Tax Credit will be increased by €150 from €1,800 to €1,950.
• The Incapacitated Child Tax Credit will be increased by €300 from €3,500 to €3,800.
• The Single Person Child Carer Credit will be increased by €150 from €1,750 to €1,900.
• The Blind Tax Credit will be increased by €300 to €1,950.
• The Dependent Relative Tax Credit will be increased by €60 from €245 to €305.

The Sea-going Naval Personnel Tax Credit will be extended for five years to the end of 2029.

Rent Tax Credit

A rent tax credit was introduced in Budget 2023 for taxpayers who rent their principal primary residence and are not in receipt of any State housing support. The credit increased from €500 to €750 last year. The credit will be increased by €250, bringing it to €1,000 and €2,000 for a jointly assessed couple for 2024 and 2025.

Universal Social Charge (USC)

The first USC reduction in five years was announced in last year’s budget. The Minister announced that the ceiling for the 2% rate of USC will be increased by €1,622 to €27,382. The 4% rate of USC will also be reduced to 3%. These changes, which will come into effect from 1 January 2025, are proposed to increase the take-home pay of low and middle-income earners.

The following USC rates will apply from 1 January 2025:

Relief for Pre-Letting Expenses for Landlords

The Minister announced that existing relief for pre-letting expenses for landlords will be extended for a further three years, to the end of 2027.

Mortgage Interest Relief

In Budget 2024, a temporary tax break was provided for taxpayers with a mortgage on their principal private residence whose balance outstanding on 31 December 2022 was between €80,000 and €500,000. To avail of the relief, taxpayers must have complied with all local property tax obligations in respect of their principal private residence and were entitled to tax relief at 20% of the increase in interest payable on their mortgage in 2023 compared to 2022. The maximum relief available to taxpayers was €1,250.

This relief will be extended for one further year. This extension means that the relief will also be made available to assist mortgage holders in respect of the increase in interest paid in 2024 over 2022.

Employment Investment Incentive scheme (EII)

The amount an investor can claim will be doubled to €1m. The EII scheme has also been extended by two years to the end of 2026.

Start-Up Relief for Entrepreneurs (SURE)

The SURE scheme is an income tax refund for people who leave employment to become entrepreneurs and start up their own companies.

It will be extended by two years to the end of 2026 and the relief available will increase from €700,000 to €980,000.

Start-Up Capital Incentive (SCII)

The SCII scheme provides tax relief to family members who invest in early-stage micro-enterprises. The scheme will be extended by two years to the end of 2026.

Vehicle Registration Tax (VRT)

The Minister has announced that an amendment will be made in relation to battery electric commercial vehicles so that they can qualify for the €200 VRT rate.

The Minister has also introduced an emissions-based approach to VRT for category ‘B’ commercial vehicles. This measure will provide for a lower 8% rate for vehicles with CO2 emissions of less than 120 grams per kilometre.

Capital Acquisitions Tax (CAT)

The Group Thresholds for gifts or inheritances taken on or after 2 October 2024 are being increased for the first time since 2019.

The Group A Threshold will increase from €335,000 to €400,000. The Group B Threshold will increase from €32,500 to €40,000. The Group C Threshold will increase from €16,250 to €20,000.

Agricultural Relief

Agricultural relief provides for a 90% reduction in the taxable value of certain gifts and inheritances of agricultural property.

The Minister has announced that the six-year active farmer test, which is required for the relief to apply, will be extended to the person who provides the gift or inheritance.

Capital Gains Tax Angel Investor Relief

A new relief was announced in Budget 2024 to encourage angel investment for innovative start-ups. The relief allows angel investors to benefit from a reduced CGT rate when they dispose of a qualifying investment. Qualifying investors can avail of an effective reduced CGT rate of 16% (or 18% if through a partnership) on a gain of up to twice the value of their initial investment.

The Minister announced that the lifetime limit on gains to which the reduced rate of CGT will apply has been increased from €3m to €10m.

Retirement Relief

As announced in last year’s budget, from 1 January 2025, the upper age limit for the higher level of Retirement Relief will be extended from 65 years to 70 years. After this age, the reduced relief, which was previously available for individuals aged 66 and over, will apply.

Last year’s budget also announced a new limit of €10m, for disposals to a child on the relief, up to the age of 70, from 1 January 2025.

The Minister has announced that the extension of the upper age limit for the relief from 65 until the age of 70 will be retained.

In addition, the Minster outlined that where there are disposals by the child or children above €10m within 12 years of receiving the assets, a clawback of the relief will apply.

Small Benefits Exemption

The Small Benefit Exemption allows an employer to provide limited non-cash benefits or rewards to their workers without the payment of income tax, PRSI and USC.

The Minister has announced that the annual limit provided for in the exemption will be increased from €1,000 to €1,500. In addition, the number of non-cash benefits that an employer may grant in a single year under this exemption will be increased from two to five.

Participation Exemption for Foreign Dividends

Following the announcement in Budget 2024, the Minister confirmed that a participation exemption on foreign dividends will come into effect on 1 January 2025. The aim of the exemption is to simplify the existing double taxation relief provisions for Irish companies with foreign subsidiaries and to ensure that Ireland remains attractive to foreign direct investment. The new rules will apply to dividends received from subsidiaries in the EU / EEA or in a tax treaty country. A company will have the option to claim the participation exemption or to continue to use existing tax-and-credit relief by way of an election in the company’s annual corporation tax return. Further details will be set out in the Finance Bill. The Minister also commented that a foreign branch exemption, as well as the geographical scope of the exemption, would continue to be considered further.

Benefit-in-Kind – Motor vehicles

The temporary universal relief of €10,000, which is applied to a vehicle’s Original Market Value, has been extended for a further year to 31 December 2025.

From 1 January 2025, a BIK exemption for the provision of electric vehicle chargers by an employer at the home of a director or employee will also be introduced.

R&D Tax Credit

The first-year payment threshold for the R&D Tax Credit will be increased from €50,000 to €75,000. The R&D Tax Credit is currently at a rate of 30% tax for all qualifying R&D expenditures. The Minister also announced that a review of the R&D tax credit will be undertaken by the Department of Finance over the next year.

Small company start-up relief from corporation tax

The Start-Up Relief from corporation tax is available to certain new small companies and provides relief of up to €40,000 per year against corporation tax liabilities in the first five years of trading, where trading commenced on or after 1 January 2018.

The relief is currently calculated by reference to employer PRSI paid up to €5,000 per employee. To support owner-managed start-up companies, Class ‘S’ PRSI contributions will, subject to certain caps, be allowed when calculating the amount of relief available.

Relief for listing expenses and equity investment

Relief will be available for expenses incurred with a first listing on an Irish or European stock exchange. The measure will apply to expenses wholly and exclusively incurred for the purposes of the listing in the year of the listing and the three preceding years, subject to a €1m cap. The new measure will apply for listings completed on or after 1 January 2025.

It was also announced that a stamp duty exemption would be introduced for Irish SMEs accessing equity via financial trading platforms. This is subject to State Aid approval.

Audio and visual tax credits

In the audio-visual sector, a new relief and an amendment to an existing relief were announced as part of Budget 2025, both of which are subject to European Commission approval.

A credit of 20% of qualifying expenditure of up to €15m will be introduced for “Unscripted Production”. Additionally, a new 8% uplift under the existing film tax credit was announced, which will apply to feature film productions with a maximum qualifying expenditure of €20m.

Share-based remuneration

The Minister acknowledged the important role played by share-based remuneration. An independent review of this area was commissioned, and the report was published on 1 October. The Minister will consider its recommendations.

Agri-Sector

The Minister announced a number of measures which will benefit the Agri-sector.

An extension of the General Stock Relief, Stock Relief for Young Trained Farmers, and Stock Relief for Registered Farm Partnerships was announced for three more years to the end of 2027.

The range of farm safety equipment qualifying for accelerated capital allowances will also be expanded.

The VAT recovery rate applicable to the flat-rate scheme rate for unregistered farmers will increase from 4.8% to 5.1% from 1 January 2025.

VAT registration threshold

From 1 January 2025, the VAT registration thresholds for goods and services will increase from €80,000 to €85,000 for goods and from €40,000 to €42,500 for services.

Extension of reduced VAT rate of 9% for gas and electricity

The 9% reduced VAT rate for gas and electricity will be extended from 1 November 2024 to 30 April 2025.

Tax Measures to Support Climate Action

The Accelerated Capital Allowances scheme for gas and hydrogen-powered vehicles will be extended for another year to 31 December 2025.

The CO2 maximum thresholds for claiming capital allowances on business cars will be adjusted downward from 1 January 2027.

There will be an increase in Carbon Tax by €7.50 per tonne from 9 October for petrol and diesel. All other fuels will be impacted by the increase from 1 May 2025.

Compliance Regime

The Minister noted that the Revenue Commissioners will conduct a range of targeted compliance management activities in 2025, but no specific details were mentioned. Such interventions are anticipated to yield €70m in revenue.

Help-to-Buy Scheme

The help-to-buy scheme provides refunds of income tax and Deposit Retention Interest Tax (DIRT)  to first-time purchasers of residential property. It was originally due to expire at the end of 2025, but the Minister announced that it will be extended until the end of 2029.

Stamp Duty Rates

A third rate of stamp duty on the acquisition of residential property will be introduced at 6% of the value of any residential property over €1.5m. The existing rate of 1% on the first €1m will continue with the 2% rate of stamp duty applying to the value of residential property acquired between €1m and €1.5m.

The higher rate of stamp duty for bulk acquisitions of ten or more residential properties (other than apartments) in a 12-month period will be increased from 10% to 15%.

The increased stamp duty rates will apply to all instruments executed on or after 2 October 2024 with transitional measures providing that the increased rates won’t apply to any instruments executed before 1 January 2025 that contain a statement certifying that the instrument is being executed in pursuance of a binding contract entered before 2 October 2024.

Pre-Letting Expenses

The income tax relief of up to €10,000 available to landlords for certain pre-letting expenses incurred on qualifying homes which were vacant for the required period will be extended until the end of 2027.

Stamp Duty on Leased Farmland and Young Trained Farmer Stamp Duty Relief

The stamp duty relief for qualifying farmers who lease farmland for periods between six and 35 years will be amended to include farmers who carry on their farming business through a company. Similarly, the relief for Young Trained Farmers will be revised so that it will be available where it is claimed by an individual farmer who carries on the farm business through a company.

Vacant Homes Tax (VHT)

A new VHT was introduced in Budget 2023. It applies to residential properties occupied for less than 30 days in a 12-month period and is three times the property’s base Local Property Tax (LPT) liability. The rate of VHT was subsequently increased to five times the basic rate of LPT for 2024.

VHT will be increased to seven times that property’s base LPT liability. This change will take effect from the beginning of the next chargeable period which commences on 1 November 2024.

VAT Rate on Heat Pumps

The VAT rate on installation of heat pumps in homes will be reduced from 23% to 9%.

Residential Zoned Land Tax (RZLT)

The RZLT applies to land which is zoned as suitable for residential development but is not currently developed for housing. The RZLT will, from 1 February 2025, apply at a rate of 3% of the land’s market value.

The Minister announced that to avoid unduly impacting certain landowners, landowners who apply to have land within the scope of RZLT rezoned to reflect the genuine economic activity that the land is used for, will be provided with an opportunity to avail of an exemption from RZLT in 2025.

Bank Levy

The Minister confirmed that a revised bank levy introduced in 2024 will be extended for another year to 31 December 2025. Similar to 2024, the bank levy will have a revenue target of €200m for 2025.

Review of Funds Sector

The Minister referenced the Funds Sector Review 2030 (Review), which was previously announced on 6 April 2023. The report was recently made available to the Minister and will be brought to the government before it becomes publicly available. The Review was undertaken to ensure Ireland’s competitiveness in an evolving industry. After considering its findings, the Minister will outline next steps.

Tobacco and E-Cigarettes

The Minister announced a one-euro VAT-inclusive increase of excise duty on a pack of twenty cigarettes, with pro-rata increases for other tobacco products.

All e-cigarettes will also be subject to an excise duty of 50 cents per millilitre, subject to a commencement order in mid-2025.

Alcohol products

The Minister announced that the current excise relief for independent small producers of cider and perry is being extended to cover other fermented beverages, such as mead, wines, and higher-strength cider and perry.