Ireland has published the Finance Act 2024 (Act No. 43 of 2024) in the Official Gazette. This legislation was enacted on 12 November 2024 and includes provisions introduced in the Budget 2025 along with various administrative and technical amendments to the tax code.

Key highlights of Finance Act 2024

  • Global minimum tax guidelines: The Act modifies existing tax regulations to comply with the EU Minimum Tax Directive, ensuring a global minimum tax for multinational enterprises.

  • Transfer pricing: A new section (835DA) has been added to the Taxes Consolidation Act to simplify transfer pricing for marketing and distribution arrangements. This aligns with OECD guidelines and includes documentation and anti-avoidance provisions.

  • USC changes: The Universal Social Charge (USC) has been updated to provide targeted relief while maintaining a progressive structure. Key changes include raising the 2% band ceiling by EUR 1,622 and reducing the 4.0% rate to 3.0%, with the income exemption threshold held steady at EUR 13,000. The revised rates are 0.5% on income up to EUR 12,012, 2% on income from EUR 12,013 to EUR 27,382, 3% on income from EUR 27,383 to EUR 70,444, and 8% on income above EUR 70,445. A 3% surcharge remains applicable for self-employed earnings exceeding EUR 100,000.

  • Participation exemption for foreign dividends: A new exemption simplifies double taxation relief for dividends from subsidiaries in EU/EEA jurisdictions, effective from 1 January 2025.

  • Research & development tax credit: The Act raises the first-year payment threshold for the 30% Research and Development (R&D) Tax Credit from EUR 50,000 to EUR 75,000. This means that claims up to this amount can be fully paid in the first year, rather than being spread over three years.

  • VAT rate extension on gas and electricity: The Act extends the 9% reduced VAT rate on gas and electricity, originally introduced on Budget night, for an additional six months, until 30 April 2025.

  • Reduced VAT rate on heat pumps: The Act introduces a reduced VAT rate of 9% on heat pumps that meet certain technical standards, effective from 1 January 2025. This initiative aims to encourage homeowners to adopt heat pump installations.

  •   Extension of Revised Bank Levy: The Act extends the revised bank levy introduced in 2024 to also apply in 2025. The updated levy will continue to affect banks that received state financial assistance during the banking crisis, including AIB, EBS, Bank of Ireland, and PTSB.

  •   Increase in VAT registration threshold: The Act mandates an increase in VAT registration thresholds starting from 1 January 2025. The threshold for services rises from EUR 40,000 to EUR 42,500, while the threshold for goods increases from EUR 80,000 to EUR 85,000.

Earlier, Ireland’s Senate passed the Finance Bill 2024 on 6 November 2024.On 5 November 2024, the lower house of parliament approved the bill which outlined various tax measures as part of the Budget 2025.