At time of writing (mid-November), the 2019 Finance Bill is meandering through the Oireachtas. In broad terms, it was a quiet budget day on 8 October last in tax terms due to stated concerns about the potential impact of a no deal (or “hard”) Brexit. Minister Donohoe announced the availability of €1.2 billion to support those most affected if a no deal Brexit happens, with about half that for the agriculture/enterprise/tourism sectors and badly hit regions.
A very brief outline of tax changes to date (under summary headings) is:
Personal/Employee Taxes
There is no change to income tax bands or rates. Other than extending (by a year; to 31 December 2020) the reduced 2% rate of for medical card holders earning less than €60,000, there are no USC changes.
The home carer credit is increased again (to €1,600; from €1,500).
The earned income credit increases by €150 to €1,500, which is €150 short of the PAYE credit but perhaps that final gap can be bridged next year. The selfemployed can also now “signon” if their business fails, claiming similar benefits to employees made redundant.
The 0% BIK rate for electric vehicles has been extended (by a year) to 31 December 2022 for vehicles with an original market value (OMV) of €50,000 or less. More places to plugin to recharge on the way too.
The special assignee relief programme (“SARP”) and the foreign earnings deducotin (“FED”) have both been extended (by two years) to 31 December 2022.
The Group A CAT threshold increases from €320,000 to €335,000.
Following much lobbying, an increase in the current €1 million lifetime limit for CGT entrepreneur relief was widely anticipated to bring it more in line with the UK £10 million limit. The pause button was hit on that for now, though it seems likely to be revisited again.
Business Taxes
The EII scheme, now based on a self-certification model since changes last year, has been tweaked again. With effect from 9 October, full EII relief is now available in the year of investment (rather than the current 30/40 with the remaining 10/40 four years later if conditions are met). Also, from 1 January next, the annual investor investment limit increases to either €250,000 (from €150,000) or, if the investor agrees to hold the shares for ten years, €500,000.
The R&D tax credit regime is to be (once EU State Aid approval comes through) improved for small and micro
(essentially, SME) companies. The two main changes (there are a few) are the rate of credit is increased (from 25% to 30%) and pre-trading spend qualifying for R&D credit can be offset against VAT/PAYE costs in the same period.
As transfer pricing is becoming a bigger deal internationally, our rules are again being updated from 1 January next, and flagged as also due to apply to the SME sector once a ministerial order is signed.
The employer PRSI rate increases again (from 10.95% to 11.05%) from 1 January 2020.
Due to concerns about individual investors underpaying tax on dividends, the rate of dividend withholding tax (“DWT”) increases (from 20% to 25%); further changes may be on the way in 2021.
There are minor changes to the Key Employee Engagement Programme (“KEEP”), which is designed to help SMEs attract/retain talent by deferring taxation of gains on employee shares until sold.
Property Sector
The non-residential stamp duty rate jumped again (from 6% to 7.5%). A rate of 2% was often seen as palatable in transferring assets as part of a lifetime succession planning exercise but 7.5% can prove expensive and means many may now simply transfer assets under a will (so no stamp duty applies).
Two year extensions were announced for Help to Buy (to 2021) and the Living City Initiative (2022).
Agri Sector
Another quiet Budget/Finance Bill for the farming community (so far…) with no new tax measures, just a three year extension (to 2022) of CGT farm restructuring relief. But Brexit is out there…
Other
From 1 January next, lots of orally consumed food supplements will be more expensive as the “concessional” VAT zero-rating is replaced by the 13.5% rate.
And finally, as our planet is apparently under threat from carbon dioxide emissions, there are a few “green”inspired changes in areas like carbon tax, VAT and VRT.