With Ireland emerging from its IMF/EU bailout and returning to the debt market, Budget 2014 was delivered on October 15, 2013. It continued the theme of the last few years of tax austerity for individuals, whilst maintaining a clear and unambiguous fiscal proposition for international business conducted in and through Ireland. To implement Budget 2014 and deal with other matters, draft legislation will release upon the publication of the Finance Bill later this month.
As expected, Budget 2014 reaffirms the cornerstone 12.5% corporate tax rate for any trading activity by a corporate in Ireland. With Ireland's EU membership, its active participation in OECD matters including the OECD Base Erosion and Profit-Shifting initiative, automatic exchange of information, FATCA agreement with the USA and its network of 69 double tax treaties, the country remains one of the key EU locations from which to transact and establish investment platforms.
Key fiscal incentives in this year's Budget include:
Capital gains tax exemption for foreign and local property investors For those looking to invest in Irish property, an exemption from Irish capital gains tax of currently 33% is available for properties purchased between 7 December 2011 and 31 December 2014 (previously 31 December 2013). The exemption provides that if property purchased in this period is held for seven years, the gains accrued in that period will not attract Irish capital gains tax.
Refinement of Research and Development Credits In 2013 Ireland reviewed its R&D credit regime. The regime remains with further enhancements. The current regime provides a tax credit of 25% of qualifying expenditure together with, in certain circumstances, a corporation tax deduction of 12.5%. The relief is targeted at incremental expenditure over that spent in base year 2003.
Budget 2014 provides:
Incremental spend of 300,000 now qualifying for relief regardless of the 2003 base year amount, A commitment to abolish any reference to the 2003 base year in future Budgets, Ability to claim R&D credits on 15% (previously 10%) of outsourced activity, A non-specific commitment to make it easier for companies to transfer the tax-free benefit of the R&D tax credit to key employees. International Tax Charter and Irish Incorporated Non-Resident Companies
Additionally, to further demonstrate Ireland's commitment to its low tax regime, whilst being one of the most open economies in the world, the...