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Department of FinanceBudget 2014

Budget 2014 was announced today, Tuesday 15 October 2013. Below are a number of the key points to come out of today’s budget:

Income Tax
Top Slicing Relief will cease to be available from 1 January 2014 in respect of all ex-gratia lump sum payments.

The Employment and Investment Incentive will be removed from the high earner’s relief restriction for a period of 3 years. This will apply to share subscriptions made on or after 16 October 2013 and on or before 31 December 2016.

A flat DIRT rate of 41% will apply to interest payments (and deemed payments) made on or after 1 January 2014 (whether the interest is payable annually or less frequently). The rate of exit tax applicable to life assurance policies and investment funds will also increase to 41% on the same basis.

A new 2 year income tax exemption for trading income of up to €40,000 per annum will be available for individuals who set up a qualifying unincorporated business where they have been unemployed for a period of at least 15 months prior to establishing the business.

From 16 October 2013, tax relief for annual medical insurance will be restricted to the first €1,000 per adult insured and the first €500 per child insured.

Tax relief for interest on a loan to acquire an interest in a partnership will no longer be available for new loans taken out from 15 October 2013.  Relief in respect of loans taken out prior to 15 October 2013 will be withdrawn on a phased basis over four years.

Business Taxation
The Minister announced that the start date for the new film tax relief scheme will be brought forward to 2015 from 2016. The Minister also announced plans to extend the definition of an “eligible individual” to include non-EU talent in order to attract additional film productions to Ireland. This extension will require EU State Aid approval and it will be coupled with a withholding tax regime.

Capital allowances and losses on plant and machinery used in manufacturing trades which are claimed by passive investors will become subject to the high earners’ restriction.

The range of qualifications required to become eligible for young trained farmers relief will be extended to include three additional qualifying courses. This will apply for the 100% rate of stock relief and for the stamp duty relief for the purchase of agricultural properties.

Indirect Tax
The Minister announced that there will be no increase in the rates of Duty on diesel, petrol or home heating oil in 2014.

Stamp Duty
Stamp duty levy on pension funds increased from 0.6% to 0.75% for 2014. The levy will be reduced to 0.15% for 2015.

Business Taxation
Over the last 12 months there has been much debate in relation to the taxation of multi-nationals, base erosion and profit shifting. The Minister has published a new international tax strategy statement which sets out Ireland’s objectives and commitments in this regard.

Indirect Tax
The Minister announced that there will be no increase in the rates of Duty on diesel, petrol or home heating oil in 2014

Income Tax
The Government has confirmed that there will be no increase in income tax or USC rates.

Capital Taxes
Extension of retirement relief to disposals of long term leased farm land in order to encourage older farmers to grant long term leases of farm land to younger farmers, in circumstances where the older farmers do not have children interested in engaging in farming activities.

Indirect Tax
The Minister has confirmed that there will be no changes to the reduced VAT rate of 13.5% or the standard VAT rate of 23% in 2014.

Business Taxation
The government has reaffirmed its 100% commitment to the 12.5% rate of corporation tax.

Business Taxation
The restriction on the ability of banks which transferred loans to NAMA to use tax losses carried forward will be removed.

Indirect Tax
The Minister announced a number of increases to the rates of Excise Duty on alcohol and tobacco.
Duty on a packet of cigarettes will be increased by 10 cents from midnight tonight.
Duty on beer and spirits will be increased by 10 cents per measure from midnight tonight.
Duty on a .75 Litre bottle of wine will be increased by 50 cents from midnight tonight.

Capital Taxes
Capital gains tax relief for entrepreneurs who re-invest the proceeds from the disposal of assets, on which CGT has previously been paid, into a new investment in productive trading activities. The relief will be a tax credit equal to the lower of the CGT paid on the previous asset disposal or 50% of the CGT due on any gain from the future disposal of the new investment. EU state aid approval will be required.

Business Taxation
An independent review of the tax reliefs and incentives available in the agri-food and fisheries sector will be undertaken in order to maximise the benefits of this; sector of the economy.

Property
The Immigrant Investor Programme will be extended to include investments in Real Estate Investment Trusts in Ireland, subject to conditions relating to the minimum level of investment and withdrawal of funds.

Other Measures
Seven new measures to be introduced to assist the Revenue Commissioners to tackle tax evasion.

Other Measures
Reform of Appeal Commissioners to take place in 2014.

Other Measures
New exemption for transfers of shares traded on the Enterprise Security Market of the Irish Stock Exchange.

Indirect Tax
The VAT cash receipts basis will be increased from the current threshold of €1.25 million to Euro 2 million with effect from 1 May 2014.

Property
Extension of the property regeneration programme, which previously applied only to Limerick and Waterford, to Cork, Galway, Kilkenny and Dublin.

Capital Taxes
Extension of capital gains tax exemption for real estate to commercial property acquired in 2014.

Business Taxation
Introducing amendments to ensure that an Irish incorporated company must have tax residence status in at least one jurisdiction.

Property
New Home Renovation Incentive announced. Income tax credit available at a rate of 13.5% in respect of expenditure of between €5,000 and €30,000 on renovation of principal private residence. Credit payable in 2 years following the period in which expenditure is incurred. Builder must be tax compliant.

Other Measures
The Minister has confirmed Air Travel Tax will be reduced to zero from 1 April 2014.

Other Measures
The flat rate farmer addition will be increased from 4.8% to 5% from 1 January 2014.

Indirect Tax
The Minister has confirmed the reduced 9% rate of VAT for the tourism and hospitality will be extended.

Budget Framework
25 new pro-business pro-jobs measures to be introduced.

 

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