Amongst other things, Budget 2024 made some changes to the Employee Investment Incentive, how BIK will be calculated and flagged the upcoming change to Corporation. DHKN’s tax experts summarise these below.
Corporation Tax Rates
The current 12.5% Corporation Tax Rate remains unchanged.
In the Finance Bill new provisions will be introduced to implement the 15% minimum effective tax rate for large companies, i.e., companies that are part of a group with turnover of €750 million and more per annum.
The Minister also confirmed that a participation exemption regime for foreign sourced dividends would be introduced, with the provision to be included in next year’s Finance Bill.
PRSI
PRSI contribution rates will increase by 0.1% from 1 October 2024.
Research and Development Tax (R&D) Credit
The R&D tax credit provides a 25% tax credit for qualifying R&D expenditure. The rate is being increased from 25% to 30% in respect of 2024 expenditure, for which claims will be filed in 2025.
Under the current system a company has the option to call for payment of their eligible R&D tax credit or to request for it to be offset against other tax liabilities. The first year payment threshold allows for a claim up to the threshold amount to be paid in full in the first year, rather than over three years. The current threshold of €25,000 is being increased to €50,000.
EIIS Employment Investment Incentive (EII)
The EII provides income tax relief for risk capital investments in qualifying small and medium enterprises.
From 1 January 2024, the minimum holding period required to obtain relief is being standardised to four years for all investments, and the limit on the amount that an investor can claim relief on for such investments is being increased to €500,000. Further changes will be made to the scheme to reflect amendments to the EU General Block Exemption Regulation and details will be set out in the Finance Bill.
BIK Measure: Original Market Value Deduction for Certain Categories of Vehicles
The temporary universal relief of €10,000 applied to the Original Market Value of a vehicle (including vans) for vehicles in Category A-D and the amendment to the lower limit of the highest mileage band is being extended to 31 December 2024.
BIK Measure: Relief for Battery Electric Vehicles
The tapering mechanism applied to benefit in kind relief for electric vehicles is being enhanced by extending the current Original Market Value deduction of €35,000 until end 2025, followed by a reduction to €20,000 in 2026 and €10,000 in 2027.
Taken together with the extension of the universal Original Market Value relief of €10,000, this measure will mean that an employee with an electric company vehicle will see an overall BIK Original Market Value relief of €45,000 in 2024.
Bank Levy
A revised bank levy is being introduced for 2024. It will apply to those banks that received financial assistance from the State during the banking crisis, (AIB, EBS, Bank of Ireland and PTSB). It will have a revenue target of €200 million.
Section 481 Film Relief
Film relief provides relief in the form of a corporation tax credit for the qualifying costs of certain audiovisual productions. The maximum qualifying expenditure in respect of which the 32% credit can currently be granted is capped at €70 million. This cap is being increased to €125 million.
Accelerated Capital Allowances – Energy Efficient Equipment
The Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment (EEE) provides a tax incentive for companies and unincorporated businesses who invest in highly-EEE. The scheme is being extended for a further two years to 31 December 2025.
For further details please contact Robert Lohan rlohan@dhkn.ie.
This newsletter is intended as a general guide to the subject matter and should not be used as a basis for decisions. Whilst every effort has been made to ensure the accuracy of the content, no liability can be taken for any omissions or errors. Professional taxation advice should always be taken prior to proceeding with any transaction giving rise to tax consequences.
