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EisnerAmper Ireland | Budget 2021 | Tax Services Insights | EisnerAmper Ireland Ireland

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15.10.2020

Budget 2021

Budget 2021 | Tax Services | EisnerAmper Ireland | Financial Services

With Budget 2021 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.

The government has announced the extension to the accelerated capital allowances for energy savings plant and machinery to the end of 2023.

2. Indirect Tax

– VAT

The rate of VAT for the hospitality and tourism sector, currently 13.5%, will be reduced to 9% from 1 November 2020 until 31 December 2021.

The standard rate will revert from the current 21% to 23% from 1 March 2021 as outlined in the July Stimulus Plan.

The Flat rate of VAT for Farmers will increase from 5.4% to 5.6%.

– Other Indirect Tax considerations

The rate of carbon tax on fuel has increased from €26 to €33.50 per tonne of CO2. This has been applied to diesel and petrol as of midnight on 13 October 2020 which is approximately 2.5 cent a litre, with the increase to home heating oil being deferred until May 2021. This will increase by €7.50 per year until 2029 with a €6.50 increase in 2030 to bring the tax to €100 per tonne of CO2.

VRT reliefs for conventional and plug-in hybrid vehicles will finish at the end of 2020.

Budget 2021 | Tax Services | EisnerAmper Ireland | Financial Services

3. Employment and Personal Tax

– Income Tax, USC and PRSI

The Dependent Relative tax credit has increased by €175 to €245 and the Earned Income tax credit for Self Employed individuals has increased by €150 to €1,650 for 2021. The Sea-going Naval personnel Tax Credit has been extended until 31 December 2021 and increased from €1,270 to €1,500.

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 for another year, until 31 December 2021.

Due to an increase in the National Minimum Wage from €10.10 to €10.20 per hour on 01 January 2021, the threshold for the 2% rate of USC has increased from €20,484 to €20,687.  This is to prevent full-time workers on minimum wage from paying USC at the top rates.

The weekly threshold for the higher rate of Employer’s PRSI has been increased from €394 to €398.  The higher rate, which was expected to increase, remains at 11.05% for 2021.

Employee’s PRSI is unchanged.

– Benefit in Kind (BIK)

There was no change to the 0% BIK rate for employers providing electric cars or vans, which is due to remain in place until 31 December 2022.

– Tax Debt Warehousing

The tax debt warehousing scheme has been expanded to include Temporary Wage Subsidy Scheme repayments for employers. For self-employed taxpayers it has been extended to include the 2019 and 2020 preliminary tax liabilities.

4. Other Taxes

– Capital Acquisitions Tax (CAT)

No change was made to CAT rates in the Budget.

– Stamp Duty (SD)

The consanguinity relief, which reduces the rate of stamp duty on land transfer to children, has been extended by 3 years.

The farm consolidation relief, which allows farmers to pay 1% stamp duty when buying and selling land within 24 months in a bid to consolidate land parcels, has been extended by 2 years.

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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Authors

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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