Budget 2025: Business Taxation

Small benefit exemption

There will be an increase in the annual limit of the small benefit exemption from €1,000 to €1,500, and it will also permit five non-cash benefits (up from two) to be granted by an employer in a single year. The small benefit exemption allows an employer to provide limited non-cash benefits or rewards to their employees without the payment of income tax, PRSI and USC.

Participation exemption for dividends

The Minister confirmed that a participation exemption on foreign dividends received by a company will come into effect from 1 January 2025.

Retirement relief

Budget 2024 introduced a limit of €10 million applicable to disposals to a child from 1 January 2025, where previously no limit applied. This Budget provides that no limit will continue to apply to disposals within a family. However, where the child subsequently sells the assets for more than €10 million within 12 years of receiving them, there will be a clawback of relief.

Angel investor relief

The angel investor capital gains tax relief, which is targeted at encouraging business angel investment in innovative start-ups, was announced in last year’s Budget and will commence shortly. It is proposed to increase the lifetime limit on gains on which the reduced rate of CGT applies from €3 million to €10 million.

Research & Development tax credit

The R&D tax credit provides a 30% tax credit for all qualifying R&D expenditure. The first-year payment threshold will increase from €50,000 to €75,000. This is the amount up to which a claim can be paid in full in the first year, rather than being paid in instalments over three years. The increase will provide valuable cash flow support to companies undertaking smaller R&D projects or engaging with the credit for the first time.

In addition, there will be a review of the R&D tax credit carried out over the next year.

Relief for Investment in Corporate Trades

Following a tax expenditure review, it is proposed to extend the Relief for Investment in Corporate Trades, which comprises the Employment Investment Incentive (EII), Start-Up Relief for Entrepreneurs (SURE) and the Start-up Capital Incentive (SCI), for a further two years.

The limit on the amount that an investor can claim relief on for EII investments will be increased from €500,000 to €1 million. The maximum relief available under SURE will increase from €700,000 to €980,000 (€140,000 per year over seven years).

Start-up relief

Section 486C allows relief of up to €40,000 per year against corporation tax for new companies. The relief is calculated by reference to employer PRSI paid of up to €5,000 per employee. This does not include PRSI paid by owner-directors. Under changes proposed, up to €1,000 of Class S PRSI per individual will count toward this cap.

Film reliefs

There will be two new audiovisual incentives introduced. The first will be a new corporation tax credit for expenditure incurred on unscripted productions, the development of which was originally announced as part of last year’s Budget. The credit will be available at a rate of 20% of certain production expenditure up to a maximum of €15 million per project. A cultural test will be introduced as part of the measure in order to ensure that public funds under this incentive will be channelled to projects of cultural merit. The commencement of the credit will be subject to the receipt of State aid approval from the European Commission.

The second incentive is the Scéal Uplift for small to medium budget productions under the Section 481 film tax credit. Section 481 provides relief in the form of a corporation tax credit for the qualifying costs of certain audiovisual productions. The Scéal Uplift introduces an enhancement to Section 481 that provides for an uplift of 8% for certain feature film productions. The uplift will result in a tax credit rate of 40% for feature films in respect of projects with a maximum qualifying expenditure of up to €20 million. As the incentive will form part of section 481, it will be subject to the same sunset clause of 31 December 2028. The commencement of the uplift will be subject to the receipt of state aid approval from the European Commission.

Relief for listing expenses

It is proposed to introduce tax relief for expenses incurred on an initial stock market listing. The deduction will be for expenses incurred wholly and exclusively on a first listing (IPO) on a recognised stock exchange in Ireland or the EU/EEA area. The relief will be available to investment companies as an expense of management, or to trading companies as a trading deduction. An overall cap of €1 million of expenses per listing will apply. This will apply for successful listings completed on or after 1 January 2025.

Benefit in kind for motor vehicles

The temporary universal relief of €10,000 to the original market value on certain categories of vehicles announced previously is extended to the end of 2025.

Benefit in kind treatment of Battery Electric Vehicle (BEV) home chargers

A BIK exemption will apply where an employer incurs an expense in providing a facility for the electric charging of vehicles at the home of a director or employee.

Emission thresholds for vehicle capital allowances

The CO2 thresholds for claiming capital allowances on business cars will be reduced from 1 January 2027.

Capital Acquisitions Tax

The following changes to the CAT tax-free thresholds were announced.

Agricultural relief

The six-year “active farmer” requirement for donors of agricultural assets has been extended with the aim of protecting the relief for genuine farmers amidst fears it is being employed as a tax planning strategy for investors.