Ireland: Irish Budget 2015 – Rate, Regime, Reputation

Our Reaction

The Irish Minister for Finance delivered his Budget 2015 (the "Budget") speech this week.   

There was considerable domestic and international anticipation in advance of the Budget against a backdrop of significant recovery in the Irish economy and also international focus (including, in particular, under the OECD BEPS project) on tax planning engaged in by certain multinational businesses. 

Our view is that this is a mature, sophisticated and considered Budget, which will provide guidance and certainty to the international businesses we advise who invest in and through Ireland.

The Budget was created for the "post-BEPS" world – it saw a unilateral phasing out of the so-called "Double Irish" structure used by certain operating businesses, with a range of responsible but competitive new tax measures introduced for operating companies locating for Ireland.

Separately, the Minister announced that a new Strategy for Financial Services in Ireland is being launched to grow this sector and increase the numbers employed. We advise many international investment managers and banks who structure investments through Irish investment funds and Irish debt issuing companies and they will welcome this news. It should be noted, of course, that the abolition of the Double Irish structure has no relevance to these Irish investment funds and debt issuing capital markets companies. 

Ireland – An Even Better Place for International Companies to Do Business

The Irish Government issued a strong signal of intent with the publication of a policy document, Competing in a Changing World - Road Map for Ireland's Tax Competitiveness, and also an International Tax Strategy Paper. These papers, together with proposed Budget measures, highlight Ireland's commitment to enhancing Ireland's tax regime for international companies that locate here, and to ensure that Ireland remains the country of choice for foreign direct investment. 

Phasing out of the Double Irish Structure

Ireland has taken the proactive step of phasing out of the Double Irish structure through reform of its corporate residency rules, while allowing existing structures a generous grandfathering period until 2020 to deal with the change.  Further details will be published in the Finance Bill. The removal of the Double Irish structure is counterbalanced by the Government's reaffirmed commitment to the 12.5% corporate tax rate and the other measures detailed in this paper.

Increased Revenue Resources in acting as Competent Authority 

The Government announced that significant additional resources will be dedicated to the Revenue Commissioners in their role as Ireland's "competent authority" for double tax treaty based disputes such as the existence of a "permanent establishment" or transfer pricing matters. 

We consider this to be highly significant and a statement of confidence by the Irish authorities in a post-BEPS world that they will assert the taxing rights of Ireland in the event of a countermanding claim by a foreign revenue authority through the "competent authority" mechanics in the relevant double tax treaty.

This move should provide comfort to companies basing themselves in Ireland that they will be able to ensure their rights under the various tax treaties are protected, especially in relation to transfer pricing. 

Key Enhancements to the Corporate Tax Regime

The key measures intended to enhance Ireland's reputation and competitive tax regime are: 

Low Corporate Tax Rate
(a)  The importance of Ireland's 12.5% corporation tax rate was reiterated by the Government.  The Government said it is "settled policy" and "will not change".

Intellectual Property Incentives
(a)  The Budget included the announcement of a significant improvement of the existing capital allowances regime for intellectual property. 

(b)  In addition, the Government announced its intention to introduce a Knowledge Development Box similar to the "patent box" regimes in place in the UK and Netherlands, but with broader focus.  They state it will be "best in class" and will be launching a public consultation process.  Whereas the existing capital allowances regime is based on expenditure, this new regime will be an income based regime the effect of which should be to introduce a "low competitive and sustainable tax rate" on income earned from the exploitation of IP. 

Enhanced R&D Tax Credit 
(a)  Previously, the R&D tax credit of 25% could only be claimed in relation to incremental expenditure on R&D over the amount of spend on R&D in a base year.  This base year test has been abolished for the purposes of calculating the credit from 1 January 2015.  This is a significant boost for existing companies which invested in R&D previously in Ireland and means there is no volume threshold to claim the credit. 

Income Tax Reliefs for Key Executives   
(a)  The Special Assignee Relief Programme ("SARP"), designed to encourage key executives and decision makers in multinationals to relocate here, has been extended to the end of 2017 and a number of improvements to the relief announced.  SARP operates by allowing a tax deduction of 30% of the difference between €75,000 and a ceiling of €500,000.  The improvements to the relief include the removal of the €500,000 ceiling, the removal of the requirement for employees to be solely Irish tax resident and the removal of the restriction on the relief where employees are required to perform certain duties outside Ireland.   

(b)  The Foreign Earnings Deduction ("FED") will also be enhanced.  This relief provides a tax deduction to an employee of an Irish company who spends time working abroad in respect of the income earned while working outside of Ireland.  The changes announced include a reduction in the number of days that must be spent outside Ireland.  The list of qualifying countries has also been extended to include Chile, Mexico and certain countries in the Middle East and Asia, and will be announced in the Finance Bill. 

Encouraging Establishment and Investment in Start Ups
(a)  The three year start-up relief from corporation tax on trading income for new companies will be extended to new start-ups in 2015. 

(b)  Employment and Investment Incentive ("EII") provides income tax relief for investments in certain companies.  Subject to European Commission approval, the amount a company can raise under EII will be increased to €5 million annually, with a lifetime maximum of €15 million per annum.  EII will now apply to investments in medium-sized companies in non-assisted areas and internationally traded financial services that are certified by Enterprise Ireland.  Investments under EII must now be held for four years. EII will remain available to hotels, guest houses and self-catering accommodation for three more years and become available to nursing homes for three years. 

(c)  The so-called Seed Capital Scheme will be re-introduced in the coming months as the "Start-Up Relief for Entrepreneurs" ("SURE") scheme.  Details will be included in the Finance Bill. 

Property and Construction 

With forecasted expansion of building and construction activity in 2015, together with concerns around supply shortages and rising property prices, it is unsurprising that significant focus has been placed on the Irish property and construction sector.  The Construction 2020 strategy will aim to generate building activity, get the market moving and increase supply.

These measures are of relevance to overseas investors, such as US and UK private equity groups, who see opportunities in construction and development in the Irish real estate sector, often with a local Irish JV partner. 

The following are some of the key initiatives by which the Government will aim to generate activity in the sector: 

(a)  Windfall gains tax provisions related to certain development lands, first introduced in 2009, will be abolished from 1 January 2015.  Windfall gains tax applies an 80% tax on certain profits and gains deriving from disposals of land attributable to planning decisions made since October 2009. The abolition of this tax should incentivise landowners to sell land which might otherwise attract a windfall gain.  This should, as a result, improve construction and development activity in many affected areas of Ireland. 

(b)  The Home Renovation Incentive ("HRI") introduced in Budget 2014 provided an income tax credit on qualifying expenditure by homeowners renovating and improving their principal private residence and to date has proven to be a very successful initiative.  HRI will be extended to rental properties owned by landlords who are subject to income tax until the end of 2015 and should generate further employment in the Irish property and construction sector and as well as in related businesses. 

(c)  The Budget announced that savings used by first time buyers towards a deposit on a home will be subject to a Deposit Interest Retention Tax refund which will run from 14 October 2014 until the end of 2017. The refund will be applicable to savings up to a maximum of 20% of the purchase price of the property.  This should incentivise the first time buyer market. 

(d) It is also significant that the seven year capital gains tax "holiday" will come to an end on 31 December 2014. This is a measure which was seen to have fulfilled its purpose during its lifetime.  Under this exemption, where a relevant property has been acquired between 7 December 2011 and 31 December 2014, and is held for seven years, a purchaser may avail of an exemption from capital gains tax on the gains accrued in the holding period.  With the 31 December 2014 deadline fast approaching, it is possible that Ireland will see a surge in purchasers attempting to avail of this relief in the next few months. Significantly, it appears that a sale need not complete before 31 December 2014, rather, provided a binding contract is in place before that date, the relief should be available.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

William Fogarty
Lynn Cramer
Similar Articles
Relevancy Powered by MondaqAI
Mason Hayes & Curran
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Mason Hayes & Curran
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions