Finance Bill 2024 commentary

Introduction

Finance Bill 2024 (“The Bill”) was published by the government on 10th October 2024.

The Bill contains the legislation providing for the €1.4 billion tax measures announced by the Minister for Finance Jack Chambers as part of Budget 2025. There are several measures in the Bill that were not announced, some surprising, some less so.

As expected, and eagerly anticipated, the Bill contains the proposed legislation for the new participation exemption for certain foreign distributions which is to take effect for relevant distributions made on or after 1 January 2025. We have been actively engaging with the Minister and his colleagues on the development of this new legislation, and in our view the legislation is an encouraging step towards a simplified corporate tax system. We await an announcement on the next phase towards introducing a foreign branch exemption. It remains our view that a full territorial system of taxation (substantial shareholding exemption, participation exemption on distributions and a foreign branch exemption) will only act to enhance Ireland’s competitiveness in both the international and domestic space. In our view, the introduction of a foreign branch exemption is the last missing piece.

We welcome the positive changes to the Small Benefits Exemption, particularly the increase in the value and the number of benefits that an employer can give from 2025. However, it is disappointing that this measure was not simplified to remove a limit on the number of qualifying incentives. It is also very surprising to see that the measure is due to cease from the end of 2029.

Somewhat expected, legislation for the measures to boost domestic direct investment (“DDI”) are included in the Bill. Interestingly new legislation is proposed for the reduced rate of capital gains tax on the sale of shareholdings in innovative start ups or “Angel Investor Relief”. This relief is subject to a commencement order. The changes announced to retirement relief on budget day are provided for in the Bill, however these changes appear to be unnecessarily complex.

Not announced on budget day, the Bill provides for changes to the tax treatment of employer contributions to a Personal Retirement Savings Account or “PRSA”. The BIK exemption on employer contributions introduced in Finance Act 2022 are curtailed by the introduction of a new employer limit which is linked to the employee’s salary.

New sections, subject to commencement order, are introduced to the tax code to deal with the tax treatment for contributions to the Automatic Enrolment Retirement Savings scheme. We look forward to seeing the necessary regulations underpinning the operation of this scheme in due course.

Next steps

As has been standard in recent years, at the time of writing, the Bill is expected to follow the timetable set out below. However, as there is a possibility of a general election sometime later this year the Bill may follow a more unusual trajectory, with the potential for a condensed timeline which may see the Bill signed into law much earlier than has been the norm in recent years.

Keep watch for our updated analysis of any amendments proposed at Committee Stage and Report Stage of the Bill.

To read our insights and perspectives on Budget 2025 visit our Budget 2025 hub.

Finance Bill 2024 Timetable – Subject to change
 

• Publication of Finance Bill 2024: 10 October
• Second Stage: 15 & 16 October
• Committee Stage: 5, 6 & 7 November
• Report Stage: 19 & 20 November
• Seanad Second Stage: 27 November
• Seanad Committee Stage: 4 December
• Seanad Report Stage: 11 December
• Move to the president for signature: mid-December