Entrepreneurship

Key measures

Last year’s Budget announced a number of amendments to the capital gains tax (“CGT”) retirement relief regime which included an increase in the upper age limit from 66 years old to 70 years old. A cap of €10m of proceeds / market value was also introduced on this relief and these changes were to come into effect on 1 January next. Budget 2025 retains the upward change to the age limits and also introduces a clawback period of 12 years.

A reduced CGT rate was introduced in last year’s budget for disposals made by “Angel Investors” where certain criteria are met. The relief will apply to gains up to twice the value of the initial investment. The limit on this relief has been extended from €3m to €10m in Budget 2025.

The Employment Incentive Investment (“EII”) Scheme has been amended such that the maximum relief available to an investor under the scheme has been doubled from €500,000 to €1,000,000 and the relief available under the Start-Up Relief for Entrepreneurs (“SURE”) scheme increased from €700,000 to €980,000.

The Start Up Exemption from corporation tax which allows a complete exemption from corporation tax for the first five years of trading up to €40,000 per annum and partial relief up to €60,000 has been enhanced to take into account PRSI paid by owner-directors.

Tax relief has also been introduced for expenses of up to €1m incurred over a three year period on the listing of a company on a relevant stock exchange.

An increase in the first year cash repayment of the research and development tax credit from €50,000 to €75,000 has also been announced. This was announced in tandem with a commitment to review the R&D tax credit regime next year.

A proposed exemption for Stamp Duty on a listing of Irish shares was also announced subject to satisfying EU State Aid considerations.

A commitment to consider the recommendations of the report on share ownership schemes was also announced in Budget 2025.

Who will be affected?

Entrepreneurs, start up and scaling businesses will be impacted by a number of key measures announced in Budget 2025. 

When? What to do now?

The changes referred to above will take effect from 1 January 2025 onwards. The reduced CGT rate for Angel Investors will take effect from 2025 but the first year in which this relief may be availed of will be 2028 on the basis that the investment must be held for a period of three years prior to its disposal.

Our view

Indigenous entrepreneurs are the bedrock of the Irish economy. We welcome the changes which were introduced on foot of Budget 2025 and are of the view that measures will encourage Domestic Direct Investment and create an enhanced entrepreneurial landscape for growth. 

As set out in our pre-budget submission, we had hoped to see the introduction of certain measures to allow entrepreneurs to access efficient financing arrangements. We welcome the proposed Stamp Duty exemption on the listing of Irish shares and welcome the Minister’s commitment to a review of Ireland’s interest regime in the coming year. The increase in the limit available in respect of the Angel Investor Relief is also welcome and should help to provide much needed finance to start-up and scaling businesses. 

The amendments to the EII Scheme and SURE Scheme are welcome and should grant Irish entrepreneurs access to the funding that they need to grow their business. The expansion of Start Up Relief to self-employed individuals is also welcome and will provide Irish small businesses the opportunity to grow.

The amendments to the R&D tax credit and the changes in the VAT thresholds will provide a welcome cash flow boost to indigenous enterprises. The proposed relief for expenses incurred in connection with the listing on an Irish or European stock exchange, subject to a cap of €1m, is very welcome. The proposed participation exemption on foreign dividends will also encourage expansion abroad which will in turn benefit the Irish economy, whilst also providing a benefit from a cash flow perspective.

We also welcome a number of changes which will impact the agricultural sector (such as extensions of stock relief and agricultural stamp duty reliefs) which are discussed as part of the personal taxes article on Deloitte Ireland’s website.