On 24th October 2013 the Finance (No. 2) Bill 2013 was published which confirmed the measures introduced by the Budget.
As the main priorities in Ireland at the moment are job creation and enterprise growth the following tax packages were introduced:
I. ENTERPRISE RELIEF– This is a new Capital Gains Tax relief which is aimed at entrepreneurs investing in assets used in new productive trading activities. The purpose is to encourage individuals to reinvest the sales proceeds from the sale/disposal of a previous asset into new productive trading or a new company. The main aspects of the relief are as follows:
(a) It applies to an individual
(b) who has paid Capital Gains Tax on the sale/disposal of an asset and
(c) invests in a new business
(d) at a cost of at least €10,000
(e) between 1st January 2014 and 31st December 2018.
(f) The investment cannot be disposed of earlier than three years after the investment date.
(g) Once the new investment is sold the Capital Gains Tax arising with be reduced by the lower of:
What type of assets are involved?
The assets must be chargeable business assets. Goodwill is included in this definition as are new ordinary shares in micro, small or medium sized enterprises after 1st January 2014. The main conditions are:
NOTE: Please be aware the commencement of this measure is subject to E.U. State Aid approval.
II START YOUR OWN BUSINESS – This is an exemption from Income Tax but not from Universal Social Charge and PRSI for a long term unemployed individual who is starting up a new, unincorporated business.
What is meant by long term unemployed?
It means some one who is continuously unemployed for the previous fifteen months.
What does this measure actually provide?
The first €40,000 of profits earned per annum will be exempt from Income Tax for two years.
III ENHANCEMENT OF EMPLOYMENT & INVESTMENT INCENTIVE – The main points of this new measure are:
IV STAMP DUTY – The transfer of shares listed on the ESM (Enterprise Securities Market) of the Irish Stock Exchange will be exempt from Stamp Duty. The ESM is the ISE’s market for growth companies.
The current stamp duty rate is 1%.
NOTE: Please be aware that this measure is subject to a commencement order.
V RESEARCH & DEVELOPMENT TAX CREDIT – The aim of this change is to assist smaller companies to access the tax credit without reference to the base year. The following changes have been made and will take place in the accounting periods starting on or after 1st January 2014:
VI VAT – There have been two major VAT changes:
The construction and building sectors saw the introduction of welcome changes:
I LIVING CITY INITIATIVE – The urban regeneration initiative has been extended to include residential properties constructed up to and including 1914 and covers the cities of Cork, Dublin, Galway and Kilkenny.
The aim is to stimulate regeneration of retail and commercial districts as well as to encourage families to return to historic buildings in Irish city centres.
II HOME RENOVATION INCENTIVE – This is a new incentive for home owners who:
What kind of relief is available?
Relief is available in the form of an Income Tax Credit of 13½% on qualifying expenditure between €5,000 (minimum) and €30,000 (maximum).
What does “Qualifying Work” mean?
Building extensions, window fittings, plumbing and tiling, plastering, etc. carried out by tax compliant builders.
How does the relief work?
Note: It is essential to keep in mind that the Revenue on-line system will track information on contractors involved and work carried out.
There were a number of other budget changes which will have a huge impact on our economy:
One Parent Family Tax Credit
Medical Insurance Tax Relief
Top Slicing Relief
Top Slicing Relief has been abolished completely for all ex-gratia lump sums paid on or after 1st January 2014.
D.I.R.T. (Deposit Interest Retention Tax)
COMPANY TAX RESIDENCE
There were changes to the company tax residence rules.
The company will be regarded as Irish resident for tax purposes where an Irish incorporated company is managed and controlled in another E.U. member state or treaty state and is not regarded as tax resident in any territory.
This applies from 24th October 2013 for companies incorporated after that date or 1st January 2015 for companies incorporated before 24th October 2013.