knowledge 14 October 2020 |

Budget 2021: Summary of Key Taxation Measures

Measures Effective on Wednesday 13 October

1. COVID-19 Restrictions Support Scheme (CRSS)

• CRSS will be effective from today until 31 March 2021. It will operate when Level 3 or higher restrictions are in place and will cease when restrictions are lifted.

• Qualifying businesses can apply to Revenue for a cash payment in respect of an advance credit for trading expenses for the period of the restrictions. The payment will be based on the average VAT exclusive turnover for 2019 and will be calculated as 10% of the first €1million in turnover and 5% thereafter.

• CRSS will be subject to a maximum weekly payment of €5,000. First payments will be made to qualifying businesses by mid-November.

2. Intellectual Property (IP) - Balancing Charge rules

• All intangible assets acquired after today will be fully within the scope of balancing charge rules to ensure that the Irish tax regime for IP, together with the broader corporation tax regime, remains competitive and sustainable.

3. Rainy Day Fund

• Rainy day fund of €1.5 billion will be utilised.

4. Technical Amendments

• Exit Tax: Technical amendment to clarify the operation of interest on instalment payments.

• Capital Gains Tax: Technical amendment to address an avoidance issue (currency speculation).

Measures to Support Enterprise and SMEs

5. Capital Gains Tax – Entrepreneur’s Relief

• Amendment of the holding requirement so that an individual that held at least 5% of the shares for a continuous period of any three year qualifies for this relief. Effective from 1 January 2021.

6. VAT: Hospitality and Tourism Sector

• VAT rate for the hospitality and tourism sector will be reduced to 9% (from 13.5%) from 1 November 2020 – 31 December 2021.

7. SME Supports

• €30m to be provided in funding through the Irish Strategic Investment Fund to support early stage seed and growth capital.

8. Employment and Investment Incentive Scheme (EIIS)

• Assessment to be undertaken to see how EIIS can be enhanced in light of the current economic situation.

9. Tax Warehousing Scheme

• To be extended to include repayments of Temporary Wage Subsidy Scheme funds owed by employers and preliminary tax obligations for adversely affect self-employed.

10. Employment Wage Subsidy Scheme

• Will continue during 2021 and the Government will decide on the form of its extension when economic conditions are clearer.

Corporation Tax Measures

11. 12.5% Corporation Tax Rate

• Government reaffirmed its commitment to the 12.5% corporation tax rate.

• Update on Ireland Corporation Tax Roadmap to be published reflecting significant actions taken to-date on corporation tax reform and will outline further areas for consideration including tax challenges of digitalisation.

12. Knowledge Development Box (KDB)

• To be extended for a further two years until December 2022.

13. New tax credit for Digital Gaming Sector

• Government to commence work on the development of a tax credit for the digital gaming sector, with a view to supporting qualifying activity from January 2022 onwards.

14. Accelerated Capital Allowance Scheme: Energy Efficient Equipment

• To be extended for a further 3 years. The categories of equipment eligible for the scheme will be assessed to ensure that their inclusion remains appropriate.

15. Commission on Taxation and Welfare

• An independent Commission will be established to consider how best the tax system can support economic activity and promote increased employment and prosperity. Details to be announced over the coming weeks.

Stamp Duty Measures

16. Stamp Duty Residential Development Refund Scheme

• To be extended until end of December 2022.