Budget Update > 2020 Highlights

INCOME TAX

  • Earned Income Credit is increased by €150 to €1,500
  • €100 increase in Home Carer Credit to bring it to €1,600
  • No other changes in personal tax rates, bands or credits

BUSINESS TAX MEASURES

  • R&D tax credit is increased from 25% to 30% for micro and small companies.  Micro and small companies will be allowed claim pre-trading expenditure against VAT and payroll tax liabilities.  In addition, the outsourcing limit in relation to third level institutions is being increased from 5% to 15% for all R&D Claimants.  
  • KEEP (Key Employee Engagement Programme) rules are to be amended to allow companies who operate through group structures to qualify.  Conditions relating to employees are amended to allow for part-time or flexible working arrangements.
  • SARP (Special Assignee Relief Programme) and Foreign Earning Deduction extended to 2022.
  • EIIS scheme will be improved, full relief will be available in the year the investment is made (previously 30% relief was available in year of investment and a further 10% relief after 4 years). The annual investment limit will be raised from €150,000 to €250,000 (or €500,000 for investors who invest in the EIIS for a minimum of 10 years).

CAPITAL ACQUISITION TAXES

  • The tax-free threshold for gifts and inheritances within Category A (generally parents to their children) is increased from €320,000 to €335,000. This applies to gifts and inheritances taken on or after 9 October 2019.

PROPERTY

  • The rate of stamp duty on non-residential property transactions is increased from 6% to 7.5% with effect from 9 October 2019.
  • The Help to Buy Scheme is extended to the end of 2021.

PAYROLL TAXES

  • The zero rate of benefit in kind on electric vehicles will continue until 2022.
  • 0.1% increase in Employer’s PRSI which was announced in last year’s Budget will bring Employers PRSI rate to 11.05% from 1 January 2020

DIVIDEND WITHHOLDING TAX (“DWT”)

  • From 1st January 2020, there will be an increase in the rate of DWT from 20% to 25%
  • From 1st January 2021, Revenue will introduce a modified DWT regime, utilising data from the PAYE system to create a personalised rate of DWT applicable to distributions received by Irish individuals.