Finance Bill 2024

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Summary

Corporation tax

Protecting Ireland’s position as a corporate location and supporting entrepreneurs and private businesses have been core aims of budgetary policy.

A participation exemption for foreign dividends will take effect on 1 January 2025. This will help reduce complexity and provide certainty in a competitive global environment.
The foreign subsidiary must be tax resident in an EU/EEA state or in a jurisdiction with which Ireland has a double tax treaty.
While this is an extremely welcome move, it is hoped that in future the geographic scope will be widened and a similar exemption for foreign branch income will be introduced.
The Bill confirms the welcome changes earmarked in Budget 2025 to the R&D Credit and Angel Investor Schemes as well as the relief for expenses incurred in respect of first listings on a stock exchange in the EEA. These measures will help drive investment in the SME sector.

Stamp duty

Significant changes flagged on Budget Day were fleshed out in the Bill.

The Bill confirms the imposition of a 15% stamp duty rate on bulk purchases of houses but not apartments. This will be a further disincentive for domestic and international investors in this portion of the residential market while potentially favouring individual home buyers.
A 6% rate will apply in respect of the acquisition of residential property on the portion of the price in excess of €1.5m. It appears to apply to multiple purchases of houses – e.g. a purchaser of three houses for a total price of €2m may be impacted. However, the rate will not apply to purchases of three or more apartments acquired in the same block as had been feared by many in the sector on Budget day.
The extension on widening of various farm related stamp duty reliefs has been legislated for in the Bill.

The new 6% rate on prices over €1.5m will apply to residential property and up to two residential units in an apartment block. This rule does not apply to those buying three residential units or more in an apartment block, and therefore excludes transactions whereby an investor is acquiring an entire apartment block.

Robert Fitzgerald Partner - Tax

Pensions

The Bill includes significant pension changes – both signalled and unexpected.

Owners of smaller family-owned businesses are most likely to be impacted by a measure not announced on Budget Day, but included in the Finance Bill, which relates to a new restriction being introduced to employer contributions to PRSAs.
- This measure will limit tax relieved PRSA contributions to 100% of an employee’s salary in any one year. This change will mean PRSAs, in most cases, being treated less advantageously than occupational pension schemes for funding purposes. This results in additional complexity in respect of company pension funding in a world seeking simplification across the pensions landscape.
Following an independent examination of the Standard Fund Threshold (SFT) and the Minister’s report published on the 18th of September, the SFT is set to increase from €2,000,000 to €2,800,000 in stages from 2026 to 2029. This is a welcome increase given the historic trend of reductions applied to the SFT and added pressure on individuals to provide their own private pension funding for retirement.
The Bill confirms that Auto-Enrolment will come into being subject to a commencement order to be made by the Minister for Finance.

Capital taxes

The changes to the CAT thresholds announced on Budget Day have been provided for in the Bill. These take effect from 2 October 2024.
The Bill clarified that an individual who gifts or bequeaths agricultural land can either be an active farmer or lease the land to an active farmer in the 6 years immediately prior to the gift or inheritance.
An additional reporting requirement has been made around the filing of returns related to loans between family members, including loans to and from family-owned companies. Legislation around reporting on low-interest loans has been tightened to ensure that reporting cannot now be avoided by paying minimum interest. With effect from January 1 2025, all low interest loans above €335,000 have be reported to Revenue. It’s important those who may be impacted are aware of their obligations.
The Bill confirms that a 12-year clawback will apply on disposals by children of family businesses which were valued in excess of €10m at the time of transfer where a parent is aged between 55 and 69 at the time of the gift. The clawback will be borne by the child rather than the parent.

An additional reporting requirement has been made around the filing of returns related to loans between family members, including loans to and from family-owned companies.

Una Ryan Director - Tax

VAT

In a surprising change, VAT at the standard rate is to be applied to plant based drinkable products – specifically juices and drinkable products extracted from or derived from plants, grains, seeds or pulses.

Standard rate VAT already applies to beverages such as fruit and vegetable juices, but it is clear the net is widening.

In particular, retailers and consumers may be concerned that the legislative change proposed will also extend to non-dairy based milk alternatives (e.g. oat milk, almond milk, soya milk etc) as the 0% rate currently applied to these milk alternatives only operates by Revenue concession and not by operation of law.

Otherwise, there were no major surprises and the proposed legislative changes had either been flagged in the Budget Day speech or were already ‘on the radar’.

Following calls from across the funds industry, a change to clarify the scope of VAT exemption for the management of EU Alternative Investment Funds (AIFs) by Irish and EU managers has been included in the Bill.
The Bill also introduces what Revenue describe as “clarifications” on the operation of VAT recovery rules, including for taxpayers in receivership/liquidation and for certain non-deductible items (food, drink, accommodation and personal services).
Payment Services Providers (PSPs) will note the express introduction of penalties for CESOP non-compliance. This was not unexpected following the introduction of CESOP reporting across the EU last year.

Emma Broderick Head of Indirect Tax

Employment tax

As flagged on Budget day, the annual Small Benefit Exemption, whereby an employer can provide a voucher or non-cash benefit to an employee, has increased to €1,500 (from €1,000). The number of qualifying vouchers or benefits has also increased from two to five. The change is effective from 1 January 2025. The Finance Bill also notes this provision will cease to apply from 31 December 2029.
From 1 January 2025, a BIK exemption will apply to the installation of e-charging facilities at an employee’s or director’s home. To avail of this exemption the employer must provide the employee with an electric vehicle. A further condition is that the employer must retain ownership of the charging facility.
For company provided vehicles, the temporary reduction of €10,000 in the Original Market Value for the purpose of determining the BIK payable, continues to apply up to 31 December 2025. Additionally, the lower mileage limit in the highest mileage band which applies to employer-provided cars will remain at 48,001 until 31 December 2025.