Budget 2020 highlights

Read our Budget 2021 highlights

Budget 2020 is dominated by Brexit, with the Minister setting out a range of measures to support businesses that will be negatively impacted by a no-deal Brexit. Brexit is also given as the reason for the minimal changes in personal tax, delaying or perhaps discontinuing a policy priority of recent budgets. Interestingly, this budget includes plans to tax dividend income in real time, which may become a feature of our tax regime in the not-too-distant future. While the budget includes the continuation or improvement of existing reliefs aimed at supporting businesses, many businesses may be impacted by changes to transfer pricing rules which are planned to apply to SMEs for the first time.

Should you have any taxation or business questions, our experienced team will be happy to share their insights with you.

Summary of measures

Personal Tax

• No changes to USC
• Income tax rates remain the same
• Earned income credit for self-employed individuals increased by €150
• Home carer tax credit increased by €100
• Dividend withholding tax increased from 20% to 25% with effect from 1 January 2020
• Changes to the Employment and Investment Incentive Scheme including full income tax relief of 40% when investment is made and increases in annual investment limits
• Special Assignee Relief Programme and Foreign Earnings Deduction extended to 31 December 2022

Business Tax

• Changes to the Key Employee Engagement Programme introduced in 2017 which treats profits subject to capital gains tax in place of income tax
• R&D tax credit increased from 25% to 30% for micro and small companies. Limit on outsourcing to third-level institutes increased from 5% to 15%
• Anti-avoidance measures introduced in relation to property funds and Section 110 companies
• 0% benefit-in-kind for electric vehicles extended to 2022

Stamp Duty

• Increase in stamp duty for non-residential property from 6% to 7.5%

Capital Acquisitions Tax

• Tax-free threshold for gifts/inheritances from parent to each child increased from €320,000 to €335,000

Other Taxes

• Price of 20 cigarettes to rise by 50c from midnight 8 October 2019
• Carbon tax increased by €6 per tonne
• Extension of VRT relief for hybrids and plug-in hybrid electric vehicles
• Replacement of 1% VRT surcharge on diesel vehicles with a nitrogen oxide (NOx) emissions based charge