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Ireland: Tax provisions in budget 2019

Ireland: Tax provisions in budget 2019

Ireland’s government today announced the details of budget 2019 and the proposed tax measures that would affect certain businesses and individuals.

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In brief, the tax provisions in the budget 2019 include:

  • Proposed tax measures affecting businesses, such as:
    • A “strong reaffirmation” to the 12.5% corporation tax rate
    • A 0.1% increase in employers’ share of pay related social insurance (PRSI) in 2019 and 2020 (increased to 10.95% and 11.05%, respectively)
    • Increases to limits on tax relief for certain share remuneration provided to key employees by certain small and medium size enterprises
    • Exit tax at a rate of 12.5% to apply from midnight 9 October 2018 for companies ceasing to be Irish tax residents
    • Controlled foreign corporation rules to be effective from 1 January 2019
    • Film tax relief corporate tax credit regime extended to December 2024
    • Start-up relief from corporate tax extended until end of 2021
       
  • Proposed tax measures affecting individual taxpayers, such as:
    • Increase in the standard band of income tax by €750 for a single earner
    • Marginal rate of tax on income up to €70,000 now 48.5%
    • Benefit in kind at 0% on electric cars extended to 2021 subject to a €50,000 cap in car value 
    • The tax-free threshold for gifts and inheritances within Category A (generally parents to children) increases from €310,000 to 320,000, for gifts and inheritances from 10 October 2018
       
  • The budget also proposes the following property tax and indirect tax measures:
    • Tax deductibility on interest paid on loans used to acquire or repair rented property, increasing from 75% to 100% from 1 January 2019
    • The reduced 9% rate of value added tax (VAT) for certain activities within the tourism and hospitality sector to revert to 13.5% from 1 January 2019
    • The 9% VAT rate on the provision of facilities for taking part in sporting activities and for certain printed material (newspapers) to continue  
    • The standard VAT rate applying currently to certain on-line publications to be reduced to 9%
    • Excise duty on a packet of 20 cigarettes to increase by 50 cent (including VAT) from midnight tonight (9 October 2018), with a pro-rata increase on other tobacco products
    • Betting duty (bets entered into by bookmakers with persons in Ireland) to increase from 1% to 2% and the duty on commissions earned by betting exchanges and intermediaries utilised by persons in Ireland to increase from 15% to 25%, from 1 January 2019
    • Vehicle registration tax relief for hybrid vehicles extended until the end of 2019
    • Vehicle registration tax surcharge at a rate of 1% for diesel passenger vehicles registered from 1 January 2019 introduced

 

Read commentary and in-depth analysis of the tax provisions in the budget 2019, as prepared by the KPMG member firm in Ireland

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