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THE FINFACTS TAXATION CENTRE
Irish Taxes 2008 and 2007 - see below
Budget 2008 - - Summary by main headings and all related documents
Irish Tax Data/Statistics 2006
KPMG Global Corporate Tax Report 2007: Global competition for foreign investment continuing to drive down corporate tax rates
Tax as % of GDP in OECD Countries
Irish Revenue Online

Davy Stockbrokers report says severe downturn in construction sector would have dramatic impact on public finances; Tax revenue from the property market has tripled since 2002
OECD's Taxing Wages 2007 report shows little change in taxes on individual wage earners
KPMG Global Company Tax Report 2006: Average corporate tax rates in the EU fell to 25.04% in 2005
IFSC - Dublin's Offshore Financial Services Centre
Patent Tax Exemption - Bonanza for Ireland & US Firms - funds over 5% of annual Irish Government spending
IRISH TAXATION 2008 and 2007
   

MAIN PERSONAL TAX CREDITS
 
 

2007

2008
Personal Tax Credit    
Single Person 1,760 1,830
Married Couple/Single Parent

3,520

3,660
Widow(er) with dependent child after 1st year of bereavement (1)

3,750

4,000
Additional Widow(er)

550

600
Employee (PAYE) (2)

1,760

1,830
Incapacitated Child 3,000 3,660
     
(1) Additional credits due for Widow(er) with dependent children for first 5 years after bereavement    
(2) Not available to proprietory Directors and the self employed    
   
Age Credit    
Single/Widowed Person

275

325
Married

550

650
     
Blind Persons Credit    
Married (both spouses blind)

3,520

3,660
Single or married (one spouse blind)

1,760

1,830
     
Home Loans – Standard Rate    
*First-Time Buyer    
Single Max

1,600

2,000
Married Max

3,200

4,000
Widow(er) Max

3,200

4,000
* Now available for 7 years, previously 5 years    
     
Non-First Time Buyer    
Single Max

600

600
Married Max

1,200

1,200
Widow(er) Max

1,200

1,200
     
Rent Relief    
Under 55 - Single 360 400
Under 55 - Married/Widow(er) 720 800
Over 55 - Single 720 800
Over 55 - Married/Widow(er) 1,440 1,600
     
One income Family Credit    
Spouse caring for children, the aged or handicapped 770 900
     

Tax Credit on Trade Union Subscriptions

60 70
Dependent Relative 80 80
     

   
INCOME TAX RATES Return to top
   

Single & Widowed Persons: No Dependent Children

2007

2008
20% on first 34,000 35,400
41% on balance    
     
Single & Widowed Persons: Dependent Children    
20% on first 38,000 39,400
41% on balance    
     
Married Couples: One Income    
20% on first 43,000 44,400
41% on balance    
     
Married Couples: Two Incomes*    
20% on first 68,00 70,800
41% on balance    
     
* Excess over € 44,400 non transferable between spouses    
     
Tax Allowance    
Cost of employing carer for incapacitated individual allowed at marginal rate of tax 50,000 50,000

Rent-a-Room Relief (private residence)

7,620 10,000
Film Investment 25,400 25,400
BES  Scheme (Business Expansion Scheme) (max relief) 150,000 150,000
 
 
BENEFIT-IN-KIND Return to top
 
Cars
Cash equivalent – 30% of original market value. BIK is calculated on 30% of the open market value of the car with a deduction for amounts borne by the employee in respect of the car costs.

The percentage which is now applied to the open market value of the company car will be determined based only on business mileage as follows:

Business Mileage  % of OMV
   
15,000 or less 30.0%
   
15,001-20,000 24.0%
   
20,001-25,000 18.0%
   
25,001-30,000 12.0%
   
Over 30,000 6%

Private Use of Employer Van

The charge to BIK for the private use of an employer’s van is calculated at 5% of the ‘original market value’ of the van with effect from 1 January 2004.

   
Preferential Loans  
   
Specified rate for home loans  5.3% 
Specified rate for other loans 13% 

From 1 January 2004 employers are obliged to operate PAYE on non cash benefits provided to employees. These benefits are also liable to PRSI and Health Levy.

The main areas of benefit involved are as follows:

• Company cars.

• Company loans.

• Tax paid vouchers.

• Expense payments on behalf of employees/directors.

Small Benefits in Kind

An employer can provide an employee with a small benefit to a value not exceeding €250 without applying PAYE and PRSI to that benefit.

   
PRSI Return to top
 
 

Contribution
Rate

Earnings
Ceiling 2008 €

Earnings
Ceiling 2007 €

Social Insurance      
Employer Class A1      
Employer Contribution (including training fund levy)    

10.75% (1)

No Ceiling

No Ceiling


Employee

Earning over € 356 per week or equivalent)  

Class A1
     
PRSI

(First €127 of weekly earnings exempt)

4%

50,700

48,800

Health Contribution

    2% (2)(4)

No Ceiling

No Ceiling

Total for Employee

6%

   

As from 1 January 2008, the employee weekly threshold for liability to PRSI will increase from €339 to €352.

 
Self Employed Contributions      
PRSI

   3%(3)

No Ceiling

No Ceiling
Health Contribution

    2% (2)(4)

No Ceiling

No Ceiling
Total

5%

   
 
(1) 8.5% where weekly earnings are less than €356
(2) Does not apply where aggregate earnings are less than €500 per week
(3) Rate increases to 2.5% for earners where income exceeds €1,925 per week.

(4) 3% subject to minimum payment of €254
   
CORPORATION TAX Return to top
   
Standard Rate on Trading Income* 12.5% from 1 January 2003
Investment/Rental Income 25%
Manufacturing Rate 10% (only for established qualifying companies)
*Special rates apply to dealings in land  

The payment date for preliminary tax, which must be at least 90% of the final liability, has been brought forward, to one month before the end of the accounting period. Preliminary tax is based on the current year’s liability. However, small companies can base the preliminary tax payment on the previous year’s liability. 

A small company is a company with a Corporation Tax liability of less than €200,000 in the preceding year. The first instalment is due one month before the end of the accounting period as follows:

Accounting Periods Ending on or after % of current liability  % of previous year's liability (Small Company)*
1 January 2007 and after 90 100

The final balance of tax (10%) is payable nine months after the end of the accounting period.

*With effect from 6 December 2006 a small company is a company with a corporation tax liability of less than €150,000 in the preceding year.

New or start up companies with a corporation tax liability of less than €200,000 in their first accounting period will not be required to pay preliminary corporation tax. The liability is paid when the return is filed.

   
CAPITAL GAINS TAX Return to top
Per Individual  
   
Annual exemption €1,270
   
Rate 20%
   
Retirement Relief exemption limit €750,000
The due date for payments of Capital Gains Tax for disposals of 1 January and 30 September is 31 October in the same tax year. Where the disposal is between 1 October and 31 December the due date for payment is 31 January in the following tax year.
   
CAPITAL ALLOWANCES Return to top
 
  Motor Vehicles(1) Plant & Machinery(1) Industrial Buildings Hotels(2)

 

  Year 1 – 8 Year 1 - 8  

Writing Down Allowance 12.5 % per annum 12.5 % per annum 4% per annum 4% p.a

Note 1
These allowances apply to expenditure incurred on or after 4 December 2002, except where a written contract is in place before that date and the expenditure is incurred by 31 January 2003.

Note 2
The special regime of capital allowances of 15% per annum over 7 years was terminated as and from 4 December 2002. Transitional provisions provide for the continued availability of the special regime where an application for planning permission in respect of building work has been made to the local authority on or before 31 December 2004 and the expenditure is incurred by 31 July 2006.

 
Motor Vehicles
Maximum allowable capital cost for new and second hand private cars, purchased on or after 1 January, 2007, is €24,000.
   
RESEARCH & DEVELOPMENT Return to top
 

A credit of up to 20% of a company’s expenditure on qualifying research and development activity can be offset against a company’s corporation tax liability.

The method of calculating the relief is an incremental one using a base year to determine the level of incremental expenditure.

The base year is fixed at 2003.

The Budget extends the scheme for a further 4 years to 2013.

Partial relief is also available to companies for the cost of sub-contracting research and development work to unconnected parties.

   
PENSIONS
Return to top
 
Contribution level deductible for tax purposes as follows:  
Age %
Up to 30 15
30 to 39 20
40 to 49 25
50 and Over 30
60 and Over 40

30% also applies to individuals with limited earnings span e.g. athletes, entertainers.

There is a cap of €254,000 per annum on the amount of earnings on which tax relief may be obtained for contributions by individuals to Retirement Annuity Contracts and Personal

Retirement Savings Account. This cap also applies for employee contributions to occupational pensions schemes. The contribution level limits will be adjusted annually from the tax year 2007 in line with an earnings index.

There is a cap on the allowable pension fund limit of €5m or, if higher, the value of the fund on the 7 December 2005. Both sums will be adjusted annually from the tax year 2007 in line with an earnings index.

   
VAT >Return to top
 
 
VAT Registration Thresholds:

Supply of taxable goods in Ireland.(1)

(90% of turnover must be from the sale goods for this threshold to apply)

 €75,000 ( €70,000 up to 1 May 2008)

Provision of taxable services in Ireland (1)

 €37,500 ( €35,500 up to 1 May 2008)


Note 1.
These thresholds do not apply to traders established outside Ireland who must register irrespective of turnover.

Note 2.
A registration threshold of €41,000 also applies to certain persons acquiring goods in Ireland from other EU member states (other than new means of transport or goods subject to a duty of excise).

Note 3.
A registration threshold of € 35,000 applies in relation to "Distance Selling" – i.e. persons supplying certain goods to non-taxable persons in Ireland from other EU member states.

Note 4.
A registration threshold of €nil also applies to certain persons acquiring certain services in Ireland from abroad.

     
VAT rates:    

21%

This standard rate applies to all supplies not chargeable at other rates.

Examples - Cars, Petrol / Diesel, Telephone services, soft drinks and alcohol, computers and software, consultancy services.

13½%

With effect from 1st January 2003 

Heating fuel, electricity, restaurant services, newspapers, hotel and B&B lettings, property and Child Car Seats (with effect from 1 May 2007, please see below)

0%

  Examples - Exports, certain food and drink, oral human medicine, books, children's clothing and footwear.
5.2%   Examples - Livestock, live greyhounds , hire of horses and the "Flat Rate Addition" .
VAT Exempt Services   Examples - Financial, insurance, educational, training, medical, optical, and dental and passenger transport services.
   
GIFT/INHERITANCE TAX Return to top
 
  2008€ 2007
     
Threshold amount Nil Nil
Excess

20% for gifts and inheritances

20% for gifts and inheritances

Thresholds    
Parents to child or minor child of a deceased child/Child to parent*  €496,824**  €478,155**
Blood relative  €49,682**  €47,815**
Others  €24,841**  €23,908**
     
* Applies only to inheritances taken on the date of death.
** Threshold amount for 2008 will be increased in line with inflation. The relevant details will not be available from January 2008.
No gift/inheritance tax is payable between spouses.

Annual gift exemption €3,000 per individual. The base date for aggregation is 5 December 1991.

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