CORPORATION AND BUSINESS TAXES
Corporation Tax
Ireland's world-famous Corporation Tax rate remains at 12.5%
Entrepeneur Relief
Budget 2017 increases entrepreneur relief by reducing the rate of tax from 20% to 10%. The lifetime cap of €1,000,000 is also to be reviewed in future budgets.
Entrepreneur relief, introduced by Section 45 of Finance (No 2) Act 2013, applies from 1 January 2014 to individual entrepreneurs who:
The relief is given on the tax due on any chargeable gain arising on the future disposal of the chargeable business assets after a minimum period of 3 years and amounts to the lower of:
Entrepreneur relief, introduced by Section 45 of Finance (No 2) Act 2013, applies from 1 January 2014 to individual entrepreneurs who:
- have made disposals of assets since 1 January 2010 on which they have paid capital gains tax
- invest at least €10,000, in the period from 1 January 2014 to 31 December 2018, in acquiring chargeable business assets that will be used in a new business and have subsequently (after a minimum period of 3 years) dispose of those chargeable business at a gain giving rise to a capital gains tax liability.
The relief is given on the tax due on any chargeable gain arising on the future disposal of the chargeable business assets after a minimum period of 3 years and amounts to the lower of:
- the full amount of capital gains tax paid on the initial disposal made since 1 January 2010 or
- 50% of the CGT payable on the disposal of the new chargeable business assets.
Knowledge Development Box
Budget 2017 announced that the Knowledge Development Box was to be changed to provide additional benefits to smaller companies. The details remain to be clarified.
The Knowledge Development Box (or "KDB") was introduced in Budget 2016 to enable companies who have engaged in research and development in Ireland and who now earn profits from patents and copyrighted software resulting from that R&D to avail of tax relief. The profits connected with the Irish R&D are taxable at a reduced effective rate of 6.25%, equivalent to half the headline corporation tax rate.
The Knowledge Development Box (or "KDB") was introduced in Budget 2016 to enable companies who have engaged in research and development in Ireland and who now earn profits from patents and copyrighted software resulting from that R&D to avail of tax relief. The profits connected with the Irish R&D are taxable at a reduced effective rate of 6.25%, equivalent to half the headline corporation tax rate.
PAYE Modernisation
The Minister for Finance announced in Budget 2017 the commencement of a consultation process on the modernisation of the PAYE system to be effective from 1 January 2019. The consultation paper is available here.