Budget 2027: Key Tax Measures and What They Mean

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Budget 2027 Analysis

Budget 2027 At A Glance

Budget 2027, delivered on 6 October 2026, is best characterised as a relatively targeted budget which attempts to balance immediate cost pressures with the longer-term fiscal risks created by Ireland’s dependence on corporation tax receipts from a small group of companies.

Overall, Budget 2027 is fiscally cautious rather than transformative. It seeks to provide meaningful personal tax reliefs, cushion households against rising energy costs, and commits significant resources to housing and infrastructure but avoids spending the full benefit of buoyant revenues on permanent tax reductions. From a tax-advisory perspective, its strongest feature is arguably this combination of modest income tax reform with continued balance-sheet resilience, particularly given the unusually concentrated nature of Ireland’s corporation tax base.

Personal Tax Relief and PRSI

For taxpayers, the principal theme is reducing fiscal drag and rewarding employment rather than delivering exceptionally large tax reductions. The standard rate income tax bands are being increased by €2,500, while personal, employee and earned-income tax credits rise by a modest €125 to €2,125. Changes are also being made to the entry point for the 3% USC band.

However, the personal tax reductions need to be considered alongside PRSI increases already legislated. Employee PRSI increased to 4.35% on 1 October 2026 and is scheduled to rise to 4.50% from October 2027. Accordingly, part of the benefit arising from Budget 2027’s income tax measures will ultimately be offset by increasing social-insurance contributions.

Capital and Investment Measures

There are also important measures affecting capital and investment taxation. The increase in the Capital Acquisitions Tax (Inheritance/Gift Tax) tax exempt thresholds and the introduction of new personal investment accounts under which individuals may hold up to €50,000 tax-free, potentially represent a shift towards encouraging personal investment and capital accumulation.

Housing and First-Time Buyer Support

Housing remains a major policy priority. More than €9 billion has been announced for new housing, while support for first-time buyers is being increased and the rent-a-room exemption rises from €14,000 to €16,000 and the definition of qualifying dwellings expanded. The measures recognise that supply remains the fundamental constraint in the housing market. Their success will consequently depend less on the headline expenditure commitment than on whether increased capital allocation translates into additional completed units.

SME Incentives and Employment Costs

For the SME sector, the extension to various tax incentive schemes and enhancements to the Research & Development Tax Credit regime are welcomed. However, the package nevertheless has an important employment cost dimension. The national minimum wage is increasing to €14.94 per hour. For businesses, therefore, the benefit of stronger employee disposable income must be considered alongside rising payroll costs. This is particularly important for hospitality, retail and other labour-intensive businesses.

Conclusion

Overall, Budget 2027’s taxation strategy is incremental and employment focused. Rather than introducing substantial structural reforms to the tax system, the Government has concentrated available resources on widening income tax bands, increasing credits and alleviating household costs. For practitioners, the key issue will now be the detailed implementation of these measures, particularly the capital, investment and property provisions, in the Finance Bill.

View the Budget 2027 highlights here.

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Budget 2027 Highlights

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Budget 2027 HighlightsTánaiste and Minister for Finance, Simon Harris, and Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Jack Chambers, delivered the final Budget today, 6 October 2026. Below we outline the highlights of Budget 2027.

Personal Tax

  • Income tax standard rate bands, standard rate cut off point for single person increasing €2,600 to €46,500, with the married single earner band moving to €55,500, and the married dual income band to a maximum of €93,000.
  • Personal, PAYE, Earned Tax credits show a slight of €125 to €2,125.
  • Home carer tax credit increasing by €100.
  • Small change to the 3% rate-band of Universal Social Charge to €30,300.
  • Threshold for tax relief on Tuition Fees will be decreased to align with the Student Contribution Fee.
  • Increase in the Childcare Service Relief income ceiling to €20,000 and remove the cap on the number of children minded.

Capital Acquisitions Tax

  • Exemption Thresholds increasing for Group A to €420,000, Group B to €44,000 and Group C to €22,000. Increased rates take effect from 7 October 2026.

 Enterprise/SMEs

  • The rate of Capital Gains Tax reduced to 31% with effect from 7 October 2026.
  • Employers will be able to choose from 1 January 2027 to report payments to employees under ERR to either real time or on a monthly basis.
  • Employer PRSI weekly earnings level increasing from €552 to €600.
  • Minimum wage increasing to €14.94 per week.
  • Corporation Tax start up relief extended to 31 December 2030.
  • Corporation Tax Preliminary Tax:
    • Preliminary tax requirements are satisfied where at least 80% of the current year liability has been paid by the final preliminary tax instalment date and a top-up payment to reach 100% of the liability is made within four months of the end of the accounting period.
    • Removal of a 45% deeming provision, such that an underpayment of the second instalment of preliminary tax does not result in a deemed underpayment of the first instalment, where the first instalment payment was not of an amount at least equal to 50% of the prior year liability.
    • An increase in the small company threshold from €200,000 to €350,000.
  • EIIS, SCI, SURE and Angel Investor Relief schemes to be extended.
  • R&D Tax Credit:
    • Subcontractor limits increasing to 20% or €200,000
    • First year payment threshold increasing to €105,000
    • Claimant companies to increase qualifying base cost by 5% for qualifying wage costs.
    • Tax Credit to be taken into account for preliminary corporation tax.
    • Science test will be met if where a clinical trial is regulated.
  • Knowledge Development Box scheme extended to end of 2031 and provide limited option to opt out of the regime.
  • PSWT is being modernised by moving to personal deduction rates rather than the current 20% rate on gross payments.

Housing Measures

  • The income exemption ceiling for the Rent-a-Room Relief scheme is increasing by €2,000 to €16,000, will now apply to newly installed auxiliary dwellings (garden rooms).
  • Rent Tax Credit increased to €1,150 per claimant.
  • Help to Buy increase in the maximum relief up to €35,000 for first time buyers
  • Residential Zoned Land Tax, scheme being amended to provide a further opportunity for landowners to request a change in zoning of land.

 VAT

  • Charity VAT Compensation Scheme fund increasing to €15m.

 Agriculture

  • Tax Credit for succession farm partnerships increasing to €10,000 and removal of the three-year holding period.
  • Accelerated Capital Allowances on farm safety equipment to 2029.
  • Farmers VAT flat rate to 4.8%.

Climate/Energy

  • Cut in Carbon Tax on home heating oil and gas back to €48.50 per tonne.
  • Carbon tax increases postponed.
  • Deferral of the phased restoration of Mineral Oil Tax on petrol/diesel/MGO to 28 February 2027, and full restoration to take place at the end of June 2027.
  • Increase to €600 in the exempted profits arising from the domestic generation of electricity.
  • Category A VRT band increasing by 1%.
  • VRT relief on electric vehicles extended to end of 2028.

New Savings Investment Scheme

  • New saving scheme commencing 1 July 2027.
  • Available to Irish resident individuals.
  • Tax rate of 1% on the value above the threshold of €50,000.
  • Maximum annual contribution limit of €12,000.
  • Current taxation treatment of retail investment, including the deemed disposal rule, will not apply to funds held in the new scheme.

Other Measures

  • The bank levy will remain for a further year.

Read our tax team’s analysis of Budget 2027.

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New €3 customs duty for low-value parcels imported into the EU

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New €3 customs duty for low-value parcels imported into the EU

From 1 July 2026, low-value parcels imported into the European Union will no longer benefit from customs duty relief. Instead, a fixed customs duty of €3 will apply to goods valued at less than €150 entering the EU, a change that is expected to have a significant impact on cross-border e-commerce and import compliance.

How the new €3 duty will apply

The new €3 duty will be applied to each different item in a consignment according to its tariff heading, meaning that a single parcel containing multiple product types may attract more than one charge. For example, a parcel contains 1 blouse made of silk and 2 blouses made of wool. Due to their different tariff headings, the parcel contains two distinct items and €6 in customs duty should be paid.

The measure will apply to goods entering the EU where non-EU sellers are registered in the EU’s import one-stop shop (IOSS) for VAT.

Importantly, this customs duty is separate from the proposed handling fee that is to be introduced by all EU countries before 1 November 2026.

Interim Measure

This €3 duty is an interim measure and is expected to remain in place until 1 July 2028 but may be extended. It is designed to apply until the full EU customs reform package comes into effect. At that point, the current €150 threshold will be removed entirely and goods below that value will instead be subject to the normal EU customs duty rates for the relevant products.

Implications for Cross-Border e-Commerce Traders

This represents an additional cost for non-EU traders selling into the EU. Traders should review their pricing model for the EU market to ensure profitability and should work with their carriers to ensure tariff headings for parcels entering the EU are declared accurately.

Should you require any assistance in this area, please contact us.

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Revenue Announce Change to Territorial Scope of VAT Groups

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Revenue has published eBrief No. 216/25 confirming significant changes to its interpretation of VAT grouping rules in Ireland.

What’s Changed?

  • VAT grouping is now limited to Irish establishments only – a head office or branch located in Ireland.
  • Non-Irish head offices or branches of VAT group members are no longer considered part of the Irish VAT group.
  • This new guidance applies immediately to VAT groups established from the date of publication (19 November 2025).
  • Existing VAT groups have a transitional period until 31 December 2026 to comply.

Previous Position

Revenue previously treated the entire legal entity (including overseas branches) as part of the Irish VAT group. This interpretation has now changed.

Impact

From 1 January 2027, transactions between Irish VAT group members and their overseas branches will generally fall within the scope of Irish VAT.

Next Steps

Revenue advises:
“Those existing VAT Groups impacted by this change can contact their Revenue District to agree suitable transitional arrangements to ensure compliance with this guidance.”

If you have any queries, please contact us.

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Budget 2026: Strategic Certainty for Irish Business in Uncertain Times

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Budget 2026 Analysis: Strategic Certainty for Irish Business in Uncertain Times

Budget 2026 was delivered by Minister Paschal Donohoe with a clear commitment of investing in the future to safeguard Ireland’s economic stability. For business leaders, the message is one of prudent optimism: the government is balancing fiscal discipline with targeted supports to help enterprises navigate global volatility and seize new opportunities.

Economic Resilience and Fiscal Prudence

Minister Donohoe’s speech underscored Ireland’s robust economic fundamentals – record employment, robust growth in domestic demand, and a healthy public finance position.

Budget surpluses are being used to reduce public debt and build up the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, projected to reach €24 billion by the end of next year. This approach is intended to shield the economy from external shocks and provide a buffer for future demographic and structural challenges.

Housing and Infrastructure: Unlocking Growth

For those looking to buy a home, the government’s focus on housing and infrastructure is particularly significant. Over €5 billion in capital investment is earmarked for housing delivery in 2026, with reforms to planning and design aimed at boosting supply and affordability. Key measures include:

  • VAT reduction on apartment sales (from 13.5% to 9%) to stimulate construction and address viability gaps.
  • New Derelict Property Tax and extension of the Residential Development Stamp Duty Refund Scheme to incentivise regeneration and development.
  • Additional funding for Home Building Finance Ireland, including €200 million for SME builders.

These initiatives are designed to ease housing pressures, support workforce mobility, and enhance Ireland’s attractiveness as a location for investment.

Taxation and Business Supports

Budget 2026 introduces several measures to support enterprise competitiveness and innovation:

  • Reduced VAT for hospitality and hairdressing to 9% effective July 2026, supporting over 150,000 jobs.
  • Enhanced R&D tax credit, increased to 35%, and improvements to the Key Employee Engagement Programme (KEEP) to help SMEs attract and retain talent.
  • Revised Entrepreneur Relief, raising the lifetime gains limit from €1 million to €1.5 million, and a new stamp duty exemption for SMEs and start-ups trading on regulated markets.
  • Participation exemption and interest regime reforms to simplify the tax code and align with international best practice.

The government is also investing in digitalisation, green transition, and access to finance, with continued support for the Digital Games Tax Credit, Accelerated Capital Allowances for energy-efficient equipment, and targeted grants for sustainability projects.

Labour Market and Cost Pressures

With the minimum wage rising to €14.15 per hour and ongoing cost-of-living challenges, the Budget includes adjustments to the Universal Social Charge (USC) to ensure low earners are not penalised. The increased minimum wage though will add to the cost pressures that many small businesses are operating under.

While the extension of the Foreign Earnings Deduction (FED) and Special Assignee Relief Programme (SARP) and supports international mobility and export growth, the increase in the minimum entry salary threshold for the latter to €125,000 is restrictive.

Climate and Sustainability

Budget 2026 maintains Ireland’s commitment to climate action, with increased carbon taxes, extended supports for retrofitting and electric vehicles, and incentives for renewable energy generation. Revenues from carbon taxes are ring-fenced for social welfare and just transition measures, ensuring a balanced approach to sustainability.

Conclusion: Certainty, Competitiveness, and Confidence

For now, the days of “one-off’’ relief measures and ‘’give away budgets” are over. Budget 2026 is not about satisfying short-term objectives. People are now being asked to commit to strategic choices that will sustain Ireland’s economic success and competitiveness and enable a more balanced return for all in the future. That’s the theory anyway!

View the Budget 2026 highlights here.

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Budget 2026 Highlights

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Budget 2026 HighlightsMinister for Finance, Paschal Donohoe delivered the final Budget today, 7 October 2025. Below we outline the highlights of Budget 2026.

Personal Tax

  • No changes announced to Income Standard Rate Bands with the single band remaining at €44,000, with the married single earner at €53,000, and the married dual income band at €88,000.
  • Personal, PAYE, Earned Tax credits: similarly no changes to personal tax credits.
  • Rent Tax Credit: while remaining at €1,000, a commitment to increase over time was announced along with an extension of the credit to the end of 2028.
  • Small change to the second rate-band of Universal Social Charge to €28,700. The concession for full medical holders earning less than €60,000 is to be extended by two further years.
  • Mortgage Interest Tax Relief extended for a further two years with a reduced value applying in the final year.

 Enterprise/SMEs

  • Entrepreneur Relief: the lifetime threshold increases to €1.5m from 1st January 2026.
  • Key Employee Engagement Programme (KEEP) is being extended to the end of 2028.
  • The Special Assignee Relief Programme is being extended for a further five years, with the minimum qualifying income increasing to €125,000 to ensure the relief is appropriately calibrated. Measures to be introduced in the Finance Bill to streamline the administration process.
  • Foreign Earnings Deduction extended for a further five years.
  • The Research & Development Tax Credit is increasing from 30% to 35% and first year payment threshold increased from €75,000 to €87,500.
  • Participation Exemption extended to jurisdictions where no refundable withholding taxes apply.
  • Subject to commencement orders, the Section 481 Film Tax Credit is being enhanced to provide for a new 40% rate of relief for productions of at least €1m qualifying expenditure on visual effects work.
  • Digital Games Tax Credit extended to 2031, however this is subject to a commencement order.
  • A joint Department of Finance and Revenue along with public consultation on Withholding Taxes.

Housing Measures

  • A further opportunity for exemption in 2026 from the Residential Zoned Land Tax (RZLT) if landowners seek to have their lands re-zoned.
  • Exemptions or reductions in Corporation Tax on profits from the sale of some apartments, included in Cost Rental Schemes.
  • An enhanced Corporation Tax deduction for construction and conversion of apartments – from 8 October to end of 2030.
  • A Derelict Property Tax will replace the site levy which currently is charged at 7%. No rate yet announced but it is anticipated that it will not be less than 7%. Preliminary registers of dereliction will be published in 2027, with the tax being applied soon afterwards.
  • VAT rate of 9% on sale of new apartments from 8 October.
  • Residential Development Stamp Duty Refund Scheme is to be extended to 2030.
  • Living City Initiative extended to 2030 in special regeneration areas, an increase scope of properties for those constructed prior to 1975 and extending to “over the shop” properties. Five new regional centres being introduced into the initiative. Finally, relief is being increased from €200,000 to €300,000.
  • The deduction for Pre-Letting Expenditure from rental income will be extended for a further three years, to the end of 2030. The deduction is capped at €10,000 per property.
  • Home Building Finance Ireland to have additional funding of €200m to support home builders.

 VAT

  • In addition to the changes applying to the sale of new apartments, the reduced 9% rate will apply from 1 July 2026 for food catering businesses and hairdressing.
  • The 9% VAT rate for Gas and Electricity supplies is extended to the end of 2030.
  • Revenue are to introduce a phased role out of domestic electronic invoicing.

 Agriculture

  • The four Agricultural Tax Reliefs pertaining to Stamp Duty and Capital Gains Tax have been extended to 2029. The Farm Restructuring Relief is being expended to include woodlands and forestry.
  • The Extended Capital Allowance regime for slurry storage facilities has been extended for a further four years.

Climate

  • The Carbon Tax increase to €71 per tonne of CO2 emitted applies to auto fuels from 8 October and to all other fuels from 1 May 2026.
  • VRT Relief on electric vehicles extended for a further one year.
  • The Universal Relief on the OMV on electric vehicles will remain at €10,000 in 2026 and taper off to €5000 in 2027, €2,500 in 2028 and cease in 2029.
  • Accelerated Capital Allowances on Energy Efficient Equipment extended for a further five years to end of 2030.
  • Income tax disregard of €400 for income received by households who sell electricity to the grid extended to 2028.

Other Measures

  • The rate of tax on offshore funds and foreign life assurance products is to be reduced from 41% to 38%.
  • The bank levy will remain for a further year.
  • A separated Pool Betting charge to be announced after consultation in Budget 2027.
  • Excise Duty on tobacco products will increase by 50 cent from 8 October.

Read our tax team’s analysis of Budget 2026.

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Understanding the EU VAT in the Digital Age (ViDA) Reforms: Key Points for Irish Businesses

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Understanding the EU VAT in the Digital Age (ViDA) Reforms: Key Points for Irish Businesses

The EU’s VAT in the Digital Age (ViDA) package will enter into force on 14 April 2025 and will be rolled out in stages. ViDA has been called the biggest VAT reform since the Single Market, but what is it and what does it mean for Irish businesses?

There are three pillars to the ViDA package:

  With effect from Key Points
Pillar 1 – Digital Reporting Requirements & eInvoicing 1 July 2030
  • eInvoicing will be mandatory for intra-Community B2B and B2G transactions
  • Data from the eInvoice must be reported in real-time to revenue authorities
  • Withdrawal of VIES returns/ EC Sales List reporting
Pillar 2 – Updated rules for the platform economy 1 July 2028 (voluntary)

1 July 2030 (mandatory)
  • Platforms facilitating supplies of passenger transport or short-term accommodation will become responsible for collecting and remitting VAT to tax authorities when their users do not
Pillar 3 – Single VAT Registration 1 January 2027

 

 
  • OSS Scheme extended to include B2C supplies of electricity and natural gas
1 July 2028
  • OSS Scheme further extended to include B2C supply and install contracts, and certain domestic supplies of goods and services by taxable persons not established in the Member State of consumption
  • New OSS module to report intra-Community movement of own goods
  • Mandatory reverse charge on B2B services received from non-established suppliers

Explanatory notes with detailed guidance on how ViDA should be implemented are currently being drafted at EU level. It is expected that Irish Revenue will publish implementation guidance for Irish businesses during 2025. Aligned with this, Irish Revenue is looking to modernise Ireland’s administration of VAT generally so there could be further changes to the Irish VAT system.

How Should Irish Businesses Prepare for ViDA Changes?

Irish businesses selling goods or services within the EU should take this opportunity to evaluate how the ViDA package will affect their VAT processes and registrations and take necessary actions to ensure they are ready for the ViDA changes.

Please contact us if you require assistance with preparing for these changes.

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New VAT Rules for Small Businesses | EU VAT SME Scheme

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New VAT Rules for Small Businesses (VAT SME Scheme)

The domestic VAT SME scheme allows small businesses to sell goods and services to their customers without charging VAT. In Ireland, the VAT registration thresholds are:

  • €42,500 for businesses supplying services; and
  • €85,000 for businesses supplying goods.

Irish businesses operating below these thresholds making supplies of goods and services within Ireland are not required to register and charge for VAT. However, up to 31 December 2024, if the Irish business made supplies in another EU Member State, there was no registration threshold and the business could have registration and filing obligations in the Member State where the supply took place.

From 1 January 2025, the EU VAT SME scheme allows these small businesses the option to avail of the registration thresholds in other Member States. If eligible, these businesses will not have to register for VAT when supplying goods and services there.

To be eligible to use this EU VAT SME scheme in another Member State, an Irish business must:

  • be established for VAT purposes in Ireland only,
  • not exceed the domestic turnover threshold(s) of the other Member State(s) where supplies are made,
  • not exceed the Union turnover threshold of €100,000,
  • be registered in Ireland to use the scheme and file quarterly reports once registered. These reports declare the turnover of the small business in all EU Member States.

An Irish business wishing to register to use the scheme in other Member States must make a formal application to Revenue. If successful, it will receive an individual identification number with the suffix “EX”. This number must be provided on any invoices issued by the business.

Business customers located in other EU countries who receive an invoice with “EX” are not obliged to account for VAT using the reverse charge mechanism on that invoice. It is the business customer’s responsibility to check the VAT exempt status of the small enterprise using the SME verification check.

The EU VAT SME scheme is only open to small businesses established within the European Union. It does not apply to small businesses established in the United Kingdom, including Northern Ireland.

It is possible for a small business to avail of the EU VAT SME scheme in some Member States and the standard VAT regime or One Stop Shop scheme in others. As businesses that avail of the VAT SME schemes cannot reclaim VAT on their costs, each small business must assess the best option for them.

However, this new scheme will significantly reduce compliance for small EU-based businesses selling to other EU countries.

If you require further information or assistance, please contact us.

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New EU VAT Rules on Live Streamed & Virtual Events from 1 January 2025

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New EU VAT Rules on Live Streamed & Virtual Events from 1 January 2025

What are the new EU VAT changes?

Previously, VAT was applied to live-streamed and virtual events based on the location of the event itself, regardless of where the viewers were located or the status of the customer.

With effect from 1 January 2025, the provision of services such as live streaming of cultural, artistic, sporting, scientific, educational events, as well as online courses and conferences, provided to private individuals (i.e. not VAT registered), will now be subject to VAT where the customer is located.

The applicable VAT treatment for live streamed and virtual events will now be as follows:

  1. For Business-to-Consumer (B2C) supplies – the supplier will now be responsible to collect and remit VAT in the EU country where the customer is located. A pan-European €10,000 registration threshold applies for EU and NI businesses, and a nil threshold applies for non-EU established businesses.
  2. For Business-to-Business (B2B) supplies – the EU business recipient will continue to self-account for reverse charge VAT in their EU country of establishment.

This change is intended to bring the VAT treatment of virtual events into alignment with that of other telecommunication, broadcasting and electronically (TBE) supplied services (including streaming services or the delivery of other pre-recorded content).

What is an “Event” for VAT purposes?

To determine whether a business’s service offering falls within these new VAT regulations, it is necessary to determine what constitutes an “event” for VAT purposes.

Although EU VAT legislation does not clearly define the term “event,” the interpretation of this concept has been subject to review by both the Advocate General, the VAT Committee and the Court of Justice of the European Union (CJEU) with regards to the case of Skatteverket v Srf konsulterna AB CJEU (Case C-647/17)(March 2019).

The CJEU’s judgement in this case found that five-day accounting and management seminars provided by a Swedish company to private individuals in other EU Member States were taxable in each of those Member States as an admission to an “educational event” and subject to VAT where the customer was located.

In arriving at this decision, the CJEU considered a range of factors to determine what qualifies as an “event” for VAT purposes and these include:

  • Short Duration – An event is more limited in scope than an ongoing activity. An event typically lasts from a few hours to, at most, seven consecutive days. Longer-term courses/ training, which span weeks or months, are less likely to qualify as events.
  • Uninterrupted Activity – If a course runs over several consecutive days, it is more likely to be considered an event. A brief break in the schedule does not automatically disqualify it as such. In contrast, courses spread over several weeks with multiple breaks are less likely to be classified as events, falling instead under the category of training activities.
  • Planning – Events are typically planned in advance, with a predefined agenda and specific subject matter. This distinguishes them from more open-ended activities that may offer a general framework for education
  • Payment Method – The payment method – whether a subscription, periodic fee, or ticket – does not affect whether an activity qualifies as an event.

Businesses should carefully assess whether their services meet the criteria for an “event” under EU VAT regulations, taking into account factors like duration, continuity, planning, and the nature of the service.

What does this mean for providers of online events?

The VAT treatment for Business-to-Consumer (B2C) live streamed/virtual events has undergone significant changes, now requiring that VAT be due in the country where the customer is located. This shift will likely lead to increased compliance costs for businesses offering these services.

Suppliers of these events will now need to identify the location of their customers, and they may need to register and charge VAT in each EU country where their final customers reside (subject to relevant registration thresholds being exceeded).

There is a VAT registration simplification available, known as the VAT One Stop Shop (VAT OSS), to facilitate one single EU-wide registration to remit output VAT on supplies and to efficiently manage the VAT reporting for these services.

However, suppliers will face challenges in determining and monitoring the various applicable VAT rates across the EU for their service offerings which may impact pricing strategies, contracting processes, and invoicing procedures.

The impact on cross-border B2B supplies should be less significant, as business customers can continue to self-assess for VAT on the reverse charge basis in their country of establishment.

As the landscape for VAT compliance continues to evolve, seeking professional advice will be essential to navigating these changes effectively.

Should you require any assistance in this area, please contact us.

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Budget 2025 Highlights

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Budget 2025 Highlights

Minister for Finance, Jack Chambers delivered the final Budget today, 1 October 2023. Below we outline the highlights of Budget 2025.

Personal Tax

  • Income Tax Standard Rate Bands increase by €2,000 to €44,000 (single person), with the married single earner band increasing to €53,000, and the married dual income band increasing to €88,000.
  • Personal, PAYE, Earned Tax Credits to increase by €125 to €2,000.
  • Home Carer and Single Person Child Carer Tax Credits will increase by €150 to €1,950 and €1,900 respectively.
  • Incapacitated Child and Blind Person’s Tax Credits will increase by €300 to €3,800 and €1,950 respectively.
  • Small change to the second rate-band of Universal Social Charge which will increase from €25,760 to €27,382. The 4% rate is reducing to 3% from 1 January 2025.
  • Alignment to the tax treatment of Automatic Enrolment Retirement Savings Schemes so that they are similar to that of PRSAs. Employer contributions are tax relieved. Funds grow tax free and a tax-free lump sum can be taken on draw down of the fund up to a maximum of €200,000.

 Enterprise/SMEs

  • Ireland is the only country in the EU which taxes dividends from foreign subsidiaries. It is proposed to introduce a participation exemption for Foreign Dividends to simplify the double taxation relief provisions. Companies will have an option to claim the exemption or continue to use the existing tax and credit relief by way of an election on the company’s annual Corporation Tax return. The exemption will apply for distributions received on or after the 1 January 2025.
  • Capital Gains Tax Relief for Angel Investment to encourage investment in innovative start-ups is to commence shortly. Qualifying investments will be certified by Enterprise Ireland with a minimum investment in new shares of at least €10,000. Relief will apply if shares are held for at least 3 years. A reduced rate of Capital Gains Tax of 16% will apply on a gain of up to twice the initial investment. A lifetime limit of €10m will apply to the relief.
  • A 12-year clawback period for Retirement Relief on disposals to children on businesses valued at over €10m.
  • The various reliefs for Investment in Corporate Trades are being extended for a further two years to 31 December 2025. The €500,000 investor limit on EII investment is being increased to €1m, while it is being increased to €980,000 for SURE investments.
  • The first-year payment threshold for the Research & Development Tax Credit is being increased to €75,000. The first-year payment threshold, which allows for a claim to be repaid in full rather than spread over 3 years.
  • The Section 486C Start Up Relief is currently calculated by reference to the amount of employer PRSI paid – up to €5,000 per employee. It is proposed that amounts paid under Class S will also be considered, subject to a maximum of €1,000 per individual.
  • New relief for up to €1m of expenses incurred on companies on their first listing on a recognised stock exchange in Ireland or the EU/EEA area. The relief is to support companies in the scale up phase of their growth and development.
  • The cumulative tax-free limit for small benefit exemption is being increased to €1,500 and the number of times an employer can provide a benefit is being increased from two to five per annum.
  • An exemption from taxable benefit in kind on the provision of EV home chargers.
  • The CO2 thresholds for claiming capital allowances on business cars is being revised downwards from 2027. An expenditure of €24,000 will be allowable for cars with CO2 emissions of 0-120g/km, a reduced €12,000 for vehicles with emissions of 121-140g/km and no zero for vehicles with CO2 emissions greater than 141g/km.

Agri-Food Sector

  • CAT Agricultural Relief will now require that the donor must meet a 6-year Active Farmer test.
  • The measures for Stock Relief which were due to expire at the end of 2024 are being extended to the end of 2027.
  • 50% Accelerated capital allowances for farm safety equipment.
  • Farmer’s Flat Rate VAT compensation being increased to 5.1%.

 Housing/Cost of Living Measures

  • The Rent Tax Credit is being increased by €250.
  • The deduction for pre-letting expenditure from rental income will be extended for a further three years, to the end of 2027. The deduction is capped at €10,000 per property.
  • The Help to Buy (HTB) scheme is being extended to the end of 2029.
  • The Stamp Duty rate applied where 10 or more residential properties are acquired in any 12-month period is being increased from 2 October 2024 from 10% to 15%. In addition, a 6% rate will apply to residential properties valued excess of €1.5m.
  • A temporary one-year Mortgage Interest Tax Relief introduced last year is being extended for a further year. Relief will be available for the increased mortgage interest paid in 2024 over 2022. The relief is capped at €1,250 per property and applies to mortgages outstanding of between €80,000 and €500,000 on the 31 December 2022 and fully LPT compliant. Relief is at the standard rate.
  • The rate of the Vacant Homes Tax is again increased with effect from 1 November 2024 to 7 times the property’s existing LPT liability.
  • The 9% VAT rate for Gas and Electricity supplies is extended to 30 April 2025.

 VAT

  • The registration thresholds are being slightly increased to €42,500 for the supply of services and €85,000 for the supply of goods from 1 January 2025.
  • The supply and installation of heat pumps is reduced from 23% to 9%.
  • The Farming VAT Flat Rate is being reduced to 5.1% from 1 January 2025.

Other Measures

  • The universal relief of €10,000 to the OMV for vehicles in Category A-D is extended for a further year to end 2025.
  • The Capital Acquisitions Tax thresholds are being increased as follows.
    • Category A threshold €400,000
    • Category B threshold €40,000
    • Category C threshold €20,000
  • Two new audio-visual incentives are being introduced. Both require European Commission approval.
    • A Corporation Tax credit for expenditure on unscripted productions. The credit will be granted at 20% of the expenditure up to a limit of €15m per project.
    • Scéal Uplift for film production up to a maximum expenditure of €20m. This incentive will form part of section 481 Film Relief.

Read our tax team’s analysis of Budget 2025.

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