EisnerAmper Ireland | Budget 2020 | Tax Services Insights | EisnerAmper Ireland Ireland

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Budget 2020

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With Budget 2020 announced earlier this week, EisnerAmper Ireland examines its effect on Irish-based businesses across the following four areas:

  1. Corporation Tax;
  2. Indirect Tax;
  3. Employment and Personal Tax; and
  4. Other Taxes.

1. Corporation Tax

– Corporation tax rate on trading profits

There has been no change to the 12.5% corporation tax rate applicable to the trading profits of a company.

– Research and Development (R&D) Credit

The R&D credit is being revised for small and micro companies to increase the R&D credit from 25% to 30% and to improve the current method of calculating the limit(s) on the payable credit. New legislation is also being introduced to allow small companies carrying out pre-trading R&D to avail of the credit before trading starts – however the R&D offset in these circumstances is confined to VAT and payroll tax liabilities only. The new rules for small and micro companies are both subject to State aid approval.

With regard to all R&D claimants, the existing limit on outsourcing to third level institutes of education will be increased from 5% to 15%.

Anti-hybrid measures

Finance Bill 2019 will introduce new anti-hybrid rules which will apply to all corporate tax payers from 1 January 2020. The introduction of these new anti-hybrid rules forms part of Ireland’s promise to implement the Anti-Tax Avoidance Directive (ATAD) and the new rules will be ATAD compliant. The rationale behind the introduction of the anti-hybrid rules is to preclude arrangements that abuse variances in the tax treatment applied under the laws of multiple jurisdictions to generate a tax benefit.

– Transfer Pricing (TP)

The Minister confirmed that updated TP legislation will be included in Finance Bill 2019. These updates will include the formal adoption of the OECD’s 2017 TP Guidelines into Irish domestic legislation and also the extension of transfer pricing rules to cover material capital transactions and cross-border non trading transactions. Subject to Ministerial Commencement Order, the new measures to be introduced will also expand the application of transfer pricing rules to SME’s.

2. Indirect Tax


The only change to VAT was the reduction in the qualifying CO2 threshold for reclaims on commercial vehicles.

– Other Indirect Tax considerations

The rate of carbon tax on fuel has increased from €20 to €26 per tonne of CO2. This has been applied to diesel and petrol as of midnight on 8 October 2019, with the increase to home heating oil being deferred until May 2020.

A Nitrous Oxide tax will replace the 1% VRT surcharge on new diesel engine passenger vehicles registered from 1 January 2020.

VRT reliefs for conventional and plug-in hybrid vehicles has been extended until the end of 2020.

Budget 2020 | Tax Services Insight | EisnerAmper Ireland

3. Employment and Personal Tax

– Income Tax, USC and PRSI

The Home Carer tax credit has increased by €100 to €1,600 and the Earned Income tax credit has increased by €150 to €1,500 for 2020. There was no other change to rate bands and credits.

The reduced rate of USC for medical card holders and people aged 70 and above whose income is €60,000 or less has been extended until 31 December 2020.

The rate of Employer’s PRSI will increase from 10.95% to 11.05% in 2020. Employee’s PRSI is unchanged.

– Benefit in Kind (BIK)

The 0% BIK rate for employers providing electric cars or vans has been extended to 31 December 2022.

– Special Assignee Relief Programme (SARP)

The SARP scheme has been extended until 31 December 2022.

– Key Employee Engagement Programme (KEEP)

Further amendments were announced to the KEEP scheme which was introduced in 2018. Under the new measures the scheme will also apply to:

  • Group corporate structures;
  • Part time employees; and
  • Existing shares.

4. Other Taxes

– Capital Acquisitions Tax (CAT)

The tax-free Group A threshold for gifts or inheritances from a parent to child has increased by €15,000 to €335,000.

– Stamp Duty (SD)

The rate of SD with regard to non-residential property has increased by 1.5% to 7.5% with effect from 9 October 2019. However, the old 6% rate will apply to instruments executed on or before 31 December 2019, where a binding contract was entered into prior to 9 October 2019 and is accompanied by a statement certifying this.

– Dividend Withholding Tax (DWT)

The rate of DWT will increase by 5% to 25% with effect from 1 January 2020.

How EisnerAmper Ireland Can Help

At EisnerAmper Ireland, we design and deliver business & compliance solutions to make trade happen. This is what we do every day.

EisnerAmper Ireland’s Tax Department provides support to the Firm’s Financial Services and International Business market groups. We advise corporates, their people and principals operating in the technology, life sciences, real estate, structured finance, aircraft leasing and investment funds industries. To find out more, visit our Tax Services page

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The content above is provided for general information purposes only and is not intended to provide, nor does it constitute, professional advice on any particular matter. If you would like more information or would like to discuss any of the topics raised above, please contact the author(s).

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