The recently enacted changes following the 2014 budget proposals include some key changes to the corporate taxation regime as well as other tax law provisions:
- Reduction in the rate of corporate income tax, from 25% to 23%, for 2014;
- Expanded tax loss carry forward period of 12 years for amounts assessed after 1 January 2014 (in place of the previous carry forward period of five years);
- Minimum holding requirement reduced from 90% to 75% for a company to be part of a tax group for the purposes of group relief.
- Further limitation of the deduction of tax losses (limited to 70% of taxable profit, in place of 75%);
- Modified state surcharge; taxable profits exceeding EUR 35 million are now subject to a rate of 7%, instead of 5%; the previous rules imposed a 3% rate on profits between EUR 1.5 million and EUR 7.5 million and a 5% rate on profits exceeding EUR 7.5 million;
- Limited deduction of interest and other financing expenses (threshold reduced from €3 million to €1 million, with any net financing expenses exceeding this threshold carried forward for five years);
- A “global” participation regime for exemption of foreign income;
- An optional participation exemption regime for foreign PEs;
- Changes to the research and development (R&D) tax benefit system.
- A new patent box regime— only 50% of income from patents and certain other intangibles, registered after 1 January 2014, will be taxable;
- Amortization of certain intangible assets allowed over a 20-year period; and
- No deduction by employers for health and life insurance premiums paid on behalf of employees or their family members.
