Budget Update > 2020 Highlights
- 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.
- 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.
- 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.