On 21 December 2021, President signed the 2021 Finance Bill into Finance Act 2021, which provides for the implementation of the 2022 Budget measures as well as some necessary anti-avoidance measures and technical changes to the tax code. Some of the changes in this Act are given below:
- The Finance Act will provide for new interest limitation rules. These rules are intended to limit base erosion through the use of excessive interest deductions. The rules will take effect for accounting periods of companies beginning on or after 1 January 2022.
- New anti-reverse-hybrid rules in line with Article 9(a) ATAD are introduced, which addresses tax mismatches that arise in certain circumstances where an entity is a reverse hybrid entity.
- According to the Act, the individual income tax rate thresholds is increased from EUR 35,300 to EUR 36,800 for single individuals and from EUR 44,300 to EUR 45,800 for married couples / civil partners with one earner.
- A new tax credit for the digital gaming sector is introduced under the Act. The relief will be available at a rate of 32% on eligible expenditure of up to a maximum limit of €25m per project.
- New rules are introduced to apply the Authorized OECD Approach for the attribution of income to a branch of a non-resident company operating in Ireland, which applies transfer pricing rules to the taxation of permanent establishments or branches in Ireland by attributing the profit of a permanent establishment or branch on a separate entity or arm’s length basis.
- The relief for certain start-up companies is extended for a period of five years to 31 December 2026, with the relief also enhanced such that companies may avail of the relief within their first five years of commencing a qualifying trade, instead of three years, if the trade is commenced on or after 1 January 2018.
- The Act provides the waiver of excise duty on Special Exemption Orders granted to holders of on-licences fees, which is being applied by Revenue on an administrative basis at present.
