BUDGET2015

Financial Statement of The Minister for Finance 14th October 2014.

This commentary is published by Chartered Accountants Ireland as

a service to Chartered Accountants. ISSUED October 2014.

Presented by

Tax rates 2014 2015Standard tax rate 20% 20%Higher tax rate 41% 40%

Standard rate bandSingle/widowed €32,800 €33,800Married couple one income €41,800 €42,800Married couple two incomes €65,600 €67,600One parent family €36,800 €37,800Tax credits and allowances No Change

Universal Social Charge (USC)2014 2015First €10,036 2% First €12,012 1.50%Next €5,980 4% Next €5,564 3.50%Balance 7% Next €52,468 7% Balance over €70,044 8%Relevant income > €100,000 10% 11%DIRT/Exit tax rate 41% 41%**Relief from DIRT on savings used by first time buyers, up to 20% of purchase priceRent a room relief €10,000 €12,000

PensionsLevy 0.60% abolish w.e.f. 31.12.2014Levy 2014 - 2015 0.15% abolish w.e.f. 31.12.2015PRSI No change

PERSONaL Tax

Tax RaTES aND BaNDSFavourable adjustments to tax bandsand rates with the higher ratereduced to 40% and the standardrate band increased by €1,000 forsingle taxpayer and €2,000 formarried couple with two incomes.

USC BaNDS aND RaTESChanges in USC bands, effectivelyextending the lower rate bands andreducing the USC rate up to€17,576 but introducing anincreased rate of 8% for incomeover 70,044 and an 11% rate forrelevant income over €100,000.

INCENTIvES• home renovation incentive (HRI),

previously afforded to anindividual’s principal privateresidence will be extended torental properties, subject toconditions. HRI heretoforeafforded tax relief of 13.5% ofqualifying expenditure on homerenovation and improvementwork, with minimum expenditureof €5,000 up to a maximum of€30,000;

• EIIS – Minimum retention periodby the investors has beenincreased from three to four yearsand scope of relief extended;

• start-up relief for entrepreneurs(SURE) - extended to individualswho have been unemployed for upto two years; and

• foreign earnings deduction will beextended for a further 3 years until31 December 2017, with thenumber of qualifying days abroadreduced from 60 to 40 and theminimum stay reduced to 3 days.Qualifying countries extended toinclude Chile, Mexico and certaincountries in the Middle East &asia.

WaTER CHaRgES RELIEFTax relief, payable in arrears, at20% will be available for watercharges, subject to maximum taxcredit of €100 per annum.

RELIEF €100

aRTIST ExEMPTIONThreshold increased to €50,000(previously €40,000) and the reliefhas been extended to certain non-resident artists.

agRI SECTORThe threshold for qualifying leaseincome will increase by 50%, withthe introduction of a fourththreshold for lease periods 15 yearsor more. In addition the criteria tomeet the qualification for exemptionwill lessen – there will be nominimum age requirement for thelessor (previously 40 years), andqualification extends to where thelessee is a company.

BUSINESS Tax

FOREIgN DIRECTINvESTMENT (FDI)Ireland’s commitment to the 12.5%rate is reinforcedThe “Double Irish” structureabolished by new residence ruleswhich will require all companiesregistered in Ireland to be also taxresident in Ireland, with the likelyexception of companies tax residentin a tax resident jurisdiction. Thiswill take effect from 1 January 2015for new companies while atransition period until the end of2020 will be provided for existingcompanies.a new strategy for InternationalFinancial Services in Ireland to belaunched next year.Improvements to the specialassignee relief programme(“SaRP”) to be introduced.

INTELLECTUaL PROPERTyIntroduction of a “KnowledgeDevelopment Box” for intellectualproperty.Improvements to the existingintangible asset tax provisions to beintroduced.Further improvements in the R&Dtax credit relief with the phasing outof the base year from 1 January2015.

OTHER MEaSURESCorporation tax relief for start-upcompanies extended for a furtherthree years. accelerated capitalallowances for energy efficientequipment extended.Pension levy of .6% will not berenewed when it expires on 31December 2014. Levy of .15% willnot be renewed after 2015.

COMMENTThe abolition of the ‘Double Irish’had been anticipated, with the onlyquestion being whether Irelandshould take unilateral action inadvance of that of other countriescompeting with Ireland for foreigndirect investment. The transitionperiod will allow multinationalsarrange their affairs in an orderlymanner.The Knowledge Development Boxwill mirror a similar regime in placein the UK. a public consultationprocess will take place in order tolegislate in next year’s Finance Bill.The precise format may depend onEU and OECD developments intaxation policy.

CaPITaL TaxES• no change to CgT and CaT rates

of 33%• the 80% Windfall Tax on gains

arising from rezoning of land hasbeen abolished with effect from 01January 2015

• CgT relief in respect of propertiesbought before 31 Dec 2014 andheld for 7 years is not to beextended beyond 31 Dec 2014

• extension of farm restructuringrelief where first restructuringtransaction is carried out before 31Dec 2016

• CgT retirement relief expanded toinclude disposals of farm landwhich has been leased for up to 25years

• CgT retirement relief expanded toinclude disposals of farm land letunder conacre where disposed ofbefore 31 Dec 2016

• CaT agricultural Relief restrictedto gifts/inheritances of agriculturalproperty received by “activefarmers” or received by individualswho let the property on a long-termbasis to an active farmer

• introduction of stamp dutyexemption on agricultural leasesbetween 5 – 35 years granted toactive farmers

• extension of consanguinity relief to31 Dec 2017 for transfers of non-residential properties to certainrelatives, where the transferor isunder 66 years of age and thetransferee is an active farmer.

INDIRECT TaxES• retention of the 9% rate of vaT for

the tourism sector.• the farmer’s flat-rate addition has

been increased from 5% to 5.2%with effect from 1 January 2015.

• the excise duty on a pack of 20cigarettes is being increased by 40cents with effect from midnight.

• the excise duty on roll-your-owntobacco is also being increased by20 cents per 25g with effect frommidnight.

• the Minister confirmed that theBetting (amendment) Bill 2013will be enacted by the end of theyear for the extension of bettingduty to remote operators andbetting exchanges in 2015.

• the special relief on alcoholproducts tax on beers produced inmicrobreweries is being extendedto include microbreweries whichproduce not more than 30,000hectolitres per annum.

• the excise rate for natural gas andbiogas as a propellant will be set atthe current EU minimum rate andthis rate will be held for a periodof eight years.

• there are no changes to the motortax rates.

• there are no changes to the duty onalcohol, petrol or diesel.

This leaflet is only a summary of the Budget Speech and is not intended to be a comprehensive guide. 14/10/14. Printed by Unique Publishing (01) 860 3477

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BENEFIT