Finance Act 2019 – An Overview of Positive Developments

Finance Act 2019 was signed into Irish law on 22 December 2019. We have highlighted below some of the key enhancements put forward in this legislation.

The Special Assignee Relief Programme (“SARP”) provides a valuable relief from Irish Income Tax on a portion of income earned by employees of foreign companies who are assigned to work in Ireland. The availability of SARP was due to expire on 31 December 2020 but has now been extended until 31 December 2022.

The Foreign Earnings Deduction (“FED”) provides relief from Irish Income Tax for Irish individuals who temporarily carry out duties of their employment in certain countries for extended periods of time. The availability of FED was also due to expire on 31 December 2020 but has now been extended until 31 December 2022.

For more information in relation to the availability of SARP and FED, please see Global Mobility Expertise.

The Research & Development (“R&D”) tax credit provides Irish companies with a 25% credit against their corporation tax liability for any qualifying R&D expenditure incurred in an accounting period. Finance Act 2019 increases the R&D tax credit from 25% to 30% for micro and small businesses. The current limit on outsourcing to third level universities will also be increased from 5% to 15% of total expenditure (subject to certain conditions being satisfied).

The Key Employee Engagement Programme (“KEEP”) is an employee share option scheme which was introduced in 2018 to help small and medium enterprises attract and retain key employees. A number of changes have been made to KEEP, including the extension of the scheme to companies operating in corporate group structures and to part-time and flexible working employees. This should make the KEEP scheme more attractive to employers and employees.

The 0% Benefit in Kind (“BIK”) for electric cars which was introduced in 2018, for vehicles valued at €50,000 or less, has been extended to 2022. This incentive is bound to be an attractive form of remuneration for key staff.

The Employment and Investment Incentive (“EII”) provides for a deduction from an individual’s total income of 40% of the cost of investing in certain companies incorporated in Ireland or another EEA state. Current tax legislation provides that a portion of this relief is only available after a period of 3 years following the initial investment.  However, Finance Act 2019 allows for (i) the full relief in the initial year of investment; and (ii) to extend the maximum annual investment limit from €150,000 to €250,000.

If you would like to discuss how any of these changes affect you or your business, please contact any member of our tax team.

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