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Budget 2015

Main Points of Budget 2015
Personal Tax
• A €1,000 increase in the entry point to the marginal rate of income tax from €32,800 to
€33,800 for a single person and from €41,800 to €42,800 for a married couple with one
earner. The band will increase by €2,000 for a married couple with two earners.
• A 1% decrease in the marginal rate of income tax from 41% to 40%.
• An increase in the USC exemption threshold from €10,036 to €12,012.
• A restructuring of the USC bands and rates:
• The extra 3% USC for self-employed individuals earning more than €100,000 has been
retained (increasing the rate from 10% to 11% for 2015). As such, the marginal rate for the
self-employed remains at 55% on income above €100,000.
• Medical card holders and those over 70 earning less than €60,000 will pay a maximum USC
rate of 3.5%.
Corporate Tax
12.5% Corporation Tax Rate will not change.
Company Residence Rules
The current tax residence rule will be amended so that all companies incorporated in Ireland
will be tax resident in Ireland. The change will take effect from 1 January 2015 for new
companies. Existing companies must be compliant with the change by the end of 2020.
IP Capital Allowances Regime
The current 80% cap on the aggregate amount of IP capital allowances and related interest
expense that may be claimed will be removed. The definition of “specified intangible assets”
will be amended to ensure that allowances are available in respect of “customer lists”.
Knowledge Development Box
A public consultation will be held in late 2014 on creating a knowledge development box and
legislation will be introduced in next year’s Finance Bill or as soon as EU and OECD
discussions on the issue conclude.
ISME had requested changes to this initiative in it’s Pre-Budget Submission.
R&D tax credit regime
The R&D tax credit “base year” restriction will be fully phased out on the 1st of January
2015. Revenue will also publish new guidelines to enhance clarity on the administration of
the R&D tax credit.
ISME had requested changes to this initiative in it’s Pre-Budget Submission.
SARP- Special Assignee Relief Programme
SARP is being extended for a further 3 years until the end of 2017 and the upper salary
threshold (currently €500,000) is being removed. The residency requirements are being
amended and the restriction on working abroad is also being removed. The requirement for
the individual to have been employed abroad by the employer is being reduced from 12 to 6
months.Revenue resources
Revenue will be allocated additional resources to strengthen their ability to act as a transfer
pricing competent authority. The number of transfer pricing disputes is expected to increase
as a result of international tax reforms and these additional resources will assist Revenue to
deal with this increase.
Tax treaties
Ireland will continue to expand its extensive network of tax treaties and tax information
exchange agreements.
Open and transparent tax regime
Ireland will continue to support exchange of information and the OECD’s proposals on
country by country reporting. An analysis of the impact of the Irish tax system on developing
economies will be published.
Measures to Support the SME Sector
Start-up relief for companies
The relief from corporation tax on trading income and chargeable gains for start up
companies will continue to apply to businesses that commence to trade in 2015. Relief
applies where the total corporation tax payable for a period does not exceed €40,000. The
amount of relief available is linked to employer’s PRSI paid in a period.
ISME had requested changes to this initiative in its Pre-Budget Submission.
Seed Capital Scheme (SCS)- Rebranded as SURE
The scheme is to be rebranded as “Start-up Relief for Entrepreneurs” and will be extended to
those who have been unemployed for up to two years.
Employment Investment & Incentive Scheme (EII)
A number of changes are being made to the EII regime but these changes require EU
• The limit that companies can raise under the EII is being increased to €5 million annually,
with a lifetime cap of €15 million.
• The period for which shares must be held is increasing from three to four years.
• The list of qualifying companies which can raise funds under the EII will be extended to
include medium sized companies in non-assisted areas and internationally traded financial
• Hotels, guest houses and self-catering accommodation will remain eligible for relief for a
further three years.
• The operation and management of nursing homes will be included for three years.
ISME had requested changes to this initiative in it’s Pre-Budget Submission.
Foreign Earnings Deduction (FED)
Foreign earnings deduction (‘FED’) extended to time spent in Mexico, Chile, as well as
certain countries in the Middle East and Asia. The number of days required to be spent
abroad will be reduced to 40 days. Travel time will count towards time spent abroad.
• It is being extended until the end of 2017.• The list of qualifying countries will be extended to include Mexico, Chile and certain
countries in the Middle East and Asia. The full list of countries has not yet been confirmed.
• The number of qualifying days which must be spent abroad is being reduced from 60 days
to 40 days.
• The minimum stay in a country is now reduced to three days and travel days can be
included when calculating the days spent abroad.
In our response to the recent Department of Finance consultation on the FED, the Association
called for an extension to the range of qualifying countries and a reduction in the number of
days that must be spent abroad.
ISME had requested changes to this initiative in it’s Pre-Budget Submission.
Indirect Taxes (incl 9% VAT rate)
The Minister confirmed that the reduced 9% rate of VAT for the tourism and hospitality
sector will be retained. There will be no changes to the reduced VAT rate of 13.5% or the
standard VAT rate of 23% in 2015.
The Minister said that it is incumbent on the industry to ensure that this relief continues to be
passed through fully to the consumer and “if prices begin to rise, the case for retaining the
measure diminishes.”
ISME had requested changes to this initiative in it’s Pre-Budget Submission.
A number of indirect tax and excise measures were announced in the Budget:
• As noted above, Minister Noonan confirmed that the 9% VAT rate for the hospitality sector
will continue.
• The flat-rate addition for non-VAT registered farmers will be increased from 5% to 5.2%
from 1 January 2015.
• Finance Act 2011 introduced legislation to apply betting duty to “remote” bookmakers and
betting intermediaries. The provisions have yet to be activated. The Budget documents note
that the enactment of the Betting (Amendment) Bill 2013 (which is currently before the
Seanad) will allow for the extension of Betting Duty to remote operators and betting
exchanges to be applied in 2015. This will raise €25 million per annum.
• The price of 20 cigarettes will increase by 40c with effect from midnight tonight.
• The VRT reliefs available for the purchase of hybrid electric vehicles, plug-in hybrid
electric vehicles, plug-in electric vehicles, and electric motorcycles are being extended to 31
December 2016.
• The special relief reducing the standard rate of Alcohol Products Tax by 50% on beers
produced in microbreweries which produce not more than 20,000 hectolitres per annum is
being extended to apply to microbreweries which produce not more than 30,000 hectolitres
per annum.
• A 30 day deferral of excise duty will be provided for mineral oil (subject to a
commencement order).
• The excise rate for Natural Gas and BioGas as a propellant will be set at the current EU
Minimum rate and this rate will be held for a period of eight years.
It was also noted that the change in the VAT place of supply rules coming into place for
supplies of electronic services from 1 January 2015 are expected to increase Irish VAT
revenue by circa €100 million in 2015.Property Issues
Minister Noonan announced a number of changes to taxation of property and construction.
His stated intention is to remove “blockages from the system to get the market moving, to
generate building activity and to increase supply“.
• The CGT 7 year exemption will expire at the end of 2014.
• The Home Renovation Incentive is being extended to include work carried out on rented
residential properties, once the landlord is subject to income tax. The measure will be
available for work carried out from Budget night until the end of 2015.
ISME had lobbied for this change in it’s Pre-Budget Submission.
• The 80% windfall tax applying to gains attributable to rezoning of land is being abolished
from 1 January 2015. The normal CGT rules will apply to gains arising after this date.
• The “Living City Initiative” announced in Budget 2013 and extended last year will be
launched in early 2015 once EU State Aid approval is obtained.
• A DIRT refund scheme is being introduced for first time buyers of residential property.
DIRT charged on savings in the 48 months prior to purchase which are used as a deposit to
purchase a residential property will be refunded. The savings that can qualify for this relief
cannot exceed 20% of the purchase price. The relief will apply from Budget night until the
end of 2017.
A consultation will be held in the coming months to examine the issue of zoned and serviced
land not being developed. A Vacant Site Levy is to be included in new planning legislation.
This levy will allow local authorities to charge a levy of 3% of value on undeveloped sites in
urban areas.
Farming and Agriculture
• VAT: The flat rate farmer addition will be increased from 5% to 5.2% from 1 January 2015.
• Increasing the income tax exempt thresholds by 50% and introducing a new threshold for
leases of 15 years and over.
• Relief will also be allowed where the lessee is a company.
• Removing the current 40 years of age threshold for leasing relief.
• Broadening CGT retirement relief so that, for example, individuals can now lease out their
land for up to 25 years prior to disposal and still be eligible for CGT retirement relief.
• Extending CGT retirement relief to land let under conacre, which is disposed of, or
converted to long term leasing before the end of 2016.
• Extending of the 50% stamp duty relief for non -residential land transfers between certain
close relatives for a 3 year period in circumstances where the transferor is 65 years or under
and the transferee is an active farmer.
• Removing stamp duty on agricultural leases in excess of 5 years.
• Extending CGT farm restructuring relief to the end of 2016 and broadening it to allow for
restructuring through whole farm replacement.
• CGT retirement relief to be extended to land let under conacre which is disposed or
converted to long term leasing before the end of 2016.
• CAT relief for agricultural property to be targeted to ensure it is used by active farmers.
Income averaging restrictions were increased to five years.
The Minister also announced that a consultation is to be published to review the taxation of
the marine sector.Miscellaneous Provisions
Tax relief will continue to be available at the marginal rate for pension contributions.
The 0.6% levy on pension fund assets will be abolished from the end of 31 December 2014.
The Minister has confirmed that the additional levy of 0.15% will expire at the end of 2015.
ISME had requested changes to this initiative in it’s Pre-Budget Submission.
Tax relief for water charges
Income tax relief at the standard rate will be available on water charges up to a maximum of
€500 per household. The maximum tax relief available per household will be €100. Relief
will be given on a prior year basis. It is not yet clear how relief claims will be administered.
Rent-a-room relief
Currently, where an individual lets a room in their sole or main residence as residential
accommodation, the income may be exempt from income tax where the aggregate sums
received are below €10,000. This exemption threshold is being increased to €12,000.
Artists’ exemption
The threshold for the artists’ exemption is being increased by €10,000 from €40,000 to
€50,000. The relief is also being extended to artists who are resident or ordinarily resident in
another EU Member State or an EEA State.
Capital Taxes
The Capital Gains Tax and the Capital Acquisitions Tax rate will remain unchanged at 33%.