Tax rate

The higher tax rate will remain at 40% for 2018.

Standard rate cut-off point

The entry point to the higher rate of tax for single earners has increased from €33,800 to €34,550.

Universal Social Charge (USC)

The USC has been cut for lower and middle income earners. The 2.5% and 5% rates have been reduced by 0.5% and 0.25% respectively.

The entry threshold for USC will remain at €13,000. However, there has been an increase in the 2% band threshold from €18,772 to €19,372 to benefit employees earning the minimum wage.

Corporation tax rate

As in previous years, there is a firm commitment given to retain the 12.5% corporation tax rate as a key part in Ireland’s strategy to attract foreign direct investment.

Employer’s PRSI

As a result of changes in the training levy, employer’s PRSI will increase to 10.85% in 2018, proposed 10.95% in 2019 and 11.05% in 2020.

Capital allowances for intangible assets

A tax deduction for capital allowances on intangible assets and any associated interest cost will now be limited to 80% of the relevant income arising from the intangible asset in the accounting period.

Key Employee Engagement Programme (KEEP)

This is a new scheme aimed at improving the ability of SMEs to attract and retain key staff. Where an SME grants share options to employees between 1 January 2018 and 31 December 2023, gains from exercising these options will be taxed at a CGT rate of 33% rather than being subject to income tax, USC and PRSI at rates of up to 52%. The tax becomes payable when the shares are sold.

Accelerated capital allowances for expenditure on energy-efficient equipment

The current scheme is being extended for a further three years to the end of 2020.

The Minister introduced a VAT compensation scheme in order to compensate charities for VAT incurred on expenditure. This scheme will take effect from 1 January 2018 but will be paid one year in arrears (i.e. some element of VAT costs arising in 2018 may be reclaimable in 2019). Charities will be entitled to a refund of a proportion of their VAT costs based on the level of non-public funding they receive. The Minister also confirmed that a capped fund of €5 million will be available to fund the scheme in 2019.

The reduced VAT rate of 9% for goods and services, mainly related to the tourism and hospitality industry, will remain for 2018.

In accordance with the Government’s National Cancer Strategy, the 13.5% VAT rate applicable to sunbed sessions will increase to the standard 23% rate of VAT.

Capital Gains Tax

The relief on certain disposals of land or buildings previously known as the 7-year CGT relief has been relaxed and disposals of qualifying assets between years four and seven post-acquisition are now exempt.

Capital Acquisitions Tax

Group thresholds remain unchanged, as follows:

Stamp duty

Increase from 2% on commercial property to 6% with effect from midnight 10 October 2017. 

A stamp duty refund scheme is to be introduced for commercial land purchased for the development of housing, subject to conditions to include the development occurring within 30 months of the purchase of the land.

Farming Measures

Stamp duty

Stamp duty rate of 1% continues on inter-family farm transfers for a further three years.

Young trained farmers

Continuation of stamp duty exemption for young trained farmers on agricultural land transactions.

Solar farms qualifying for CAT and CGT relief

Agricultural land placed under solar infrastructure will continue to be classified as agricultural land. In order for CAT agricultural relief and CGT retirement relief to apply, no more than 50% of the land holding can be used for solar infrastructure.

Brexit loan scheme

A new Brexit loan scheme has been introduced by the Minister to assist SMEs with the impact of Brexit over the coming years. A loan scheme of up to €300 million will be made available to SMEs at competitive rates, with particular focus on the food business industry given the sector’s close links to the UK market. This new loan scheme intends to provide SMEs with time to develop and change as necessary so that they can continue to grow their businesses in the post-Brexit market.

Increased funding

The hiring of an additional 40 staff members across the Department of Business, Enterprise and Innovation and agencies in 2018 has been announced. Their main focus will be on realising and responding to opportunities and challenges arising from Brexit.

Funding for the Department of Agriculture, Food and the Marine will be increased to €64 million. Of this, €25 million will be provided to develop further Brexit loan schemes for the agrifood sector, separate to the Brexit loan scheme mentioned above. These measures aim to strengthen the sector’s ability to meet the challenges of Brexit.