Tax rate

The 40% higher tax rate will remain for 2016.


Universal Social Charge (USC)

The entry threshold for USC will increase from €12,012 to €13,000. Approximately 700,000 income earners will not be liable to USC from the start of 2016.

The exemption from the higher rate of USC for medical card holders and people aged over 70 whose aggregate income is €60,000 or less will be retained in 2016. Those eligible will pay a maximum rate of USC of 3%. 

The 11% rate will continue to apply to self-employed income over €100,000. 

These measures will ensure that the marginal rate of tax for those earning up to €70,000 will be reduced to 49.5%

Employee PRSI

With effect from 1 January 2016, a tapered PRSI relief will be introduced to alleviate the step effect across a range of incomes for low pay workers. The relief will be subject to a maximum of €12 per week. It will commence at income of €352 per week and taper out at a rate of one-sixth of income in excess of the threshold. The relief will fully taper out where income reaches €424 per week. This should give rise to a significant improvement in the net incomes of low income workers.


Employer’s PRSI

The entry point for the top rate of Employer’s PRSI of 10.75% will increase by €20 per week from €356 to €376 per week.


Home Carer Tax Credit

The Home Carer Tax Credit will increase from €810 to €1,000. The income threshold up to which a home carer can earn will also be increased from €5,080 to €7,200.


Earned Income Credit

From 1 January 2016, an Earned Income Credit of €550 will be available to taxpayers earning self-employed trading or professional income and to business owners/managers who are ineligible for the PAYE credit on their salary income. The aim of this measure is to support entrepreneurs and small business-owners generating economic activity and contributing to economic recovery.


Employment and Investment Incentive Scheme (EIIS)

The changes announced to EIIS in Budget 2015 will take effect from midnight tonight (i.e. 13 October 2015). Amendments include the extension of the scheme to include companies operating qualifying nursing homes and the inclusion of small and medium sized operations irrespective of their geographical location.
In the case of companies owning and operating a qualifying nursing home the funds can be used for the purpose of enlarging the capacity of the qualifying nursing home.


High Earner’s Restriction

Profits or gains from the occupation of woodlands will be removed from the high earner’s restriction with effect from 1 January 2016.


Home Renovation Incentive (HRI)

The HRI Tax Credit is being extended until 31 December 2016.

Three-year Tax Exemption for Start-up Companies

As announced last year, this measure was reviewed prior to the Budget and this relief is being extended for companies commencing to trade before the end of 2018.

Film Relief

The cap on eligible film expenditure is being increased from €50 million to €70 million. This measure is subject to state aid approval.

Knowledge Development Box

In recognition of the importance of encouraging innovation to our economic policy, a knowledge development box regime will be provided for in the upcoming Finance Bill. The measure was first signalled in Budget 2015.

This tax incentive will ensure that profits arising from certain types of intellectual property will qualify for a reduced rate of corporation tax of 6.25%. It will further enhance the attractiveness of our corporation tax system to innovative industries and will complement the existing reliefs in place such as the R&D tax credit and the intangible asset regime.

As this will be the first OECD-compliant “patent box” system in the world it offers Ireland a competitive advantage over other countries in providing long-term certainty to companies planning their R&D activities.

Tax compliance measures

The Revenue Commissioners are to receive €75 million to fund increased audit and investigations activities.

International tax

In tandem with the Budget, the Government released a report on our International Tax Strategy. This report outlines our approach to the implementation of the OECD Base Erosion and Profit Shifting actions and how we will engage with the emerging EU tax agenda.

It explains the challenging steps already taken by Ireland in changing its tax residence rules to eliminate the “Double-Irish” and similar structures whilst stating our commitment to retaining a corporation tax system that will allow us to attract foreign direct investment. It also emphasises our willingness to cooperate with other developed countries in tackling aggressive tax avoidance by multinationals and identifies the opportunities that the new international tax landscape presents to us.

Furthermore, to enhance transparency, the Finance Bill will provide for the introduction of country-by-country reporting of information, in line with the OECD recommendations.

Extension of existing reliefs

A number of reliefs that were due to expire at the end of 2015 are being extended for another three years, namely:

• General Stock Relief
• Stock Relief for Young Trained Farmers
• Stock Relief for Registered Farm Partnerships
• Stamp Duty exemption for Young Trained Farmers

Farm Transfer Partnerships

A new Farm Succession Transfer Partnership Model is being introduced. This is subject to EU approval but is proposed to include an Income Tax credit of up to €5,000 per annum to the partnership for up to five years.

This will enable an existing farmer to enter into a partnership with a younger farmer so that knowledge and control of the farm can gradually be transferred with the aim of having the entire farm transferred to the younger farmer within a period of ten years.

Excise Duty on Micro-Breweries

Currently beer produced in micro-breweries qualifies for a 50% reduction in excise duty. It is available in the form of a rebate to the micro-brewery; in future it will also be available upfront.

Motor Tax

The motor tax regime on commercial vehicles has been simplified and the tax rate has been reduced for commercial vehicles with effect from 1 January 2016. The rate of motor tax is being significantly reduced for all commercial vehicles above 4,000kgs, with a flat annual rate of €500 for vehicles between 4,000kgs and 12,000 kgs and a flat rate of €900 for vehicles above the upper limit. The motor tax regime applicable to vehicles under 4,000kgs remains unchanged.

Housing

• NAMA, by working with developers is to deliver a target of 20,000 new homes, 90% of them in the Greater Dublin area, by the end of 2020.
• In excess of 9,500 new social housing units, with over 3,100 of them in 2016, will be funded through direct investment and Public Private Partnership (PPP).

Local Property Tax

• Property revaluation date for LPT postponed from 2016 to 2019.

Social Protection

• Pensions and carer’s allowance are to be increased by €3 per week.
• The Respite Care Grant is to be restored to its previous level of €1,700 per annum.

Minimum wage

• The hourly minimum wage to be increased by 50c to €9.15.