A summary of the 2018 Irish Budget

The 2018 Irish Budget was put forward by the Irish government for the 2018 fiscal year on the 10th of October 2017. It affects every taxpayer living in Ireland, and while some of these changes will be implemented immediately, some are set to take effect over the next year.

Impact of Brexit

Brexit will no doubt have a significant impact on UK’s economic system, and while it is unclear how this will affect businesses, in this year’s budget, the government has raised awareness of the challenges following Brexit and has laid out its plan to safeguard the sectors that are most vulnerable to its impact. A new loan scheme with funds of up to €300 million has been introduced to provide funding for SMEs (including food businesses) at competitive rates.

This budget has been allocated to help with short-term working capital needs for a company that are most at risk after the Brexit fallout. In addition to the new loan scheme, the government will hire around 40 new employees whose primary focus will be on Brexit and the challenges and opportunities it will bring.

KEEP – A new scheme for SMEs

A new KEEP (Key Employee Engagement Program) incentive-based scheme has also been introduced to help SMEs attract and retain key staff. This will allow SMEs low on cash to provide options to employees in a manner that is tax efficient which is unlike the current system. Gains arising on the exercise of KEEP options will be exempt from income tax but will be liable to Capital Gains Tax. If an employee sees growth potential in a small firm, share options can be used to increase the value of the job without the added burden of being liable to income tax. Applies to share options will be granted from 1st January 2018 to 31st December 2023.

The budget referred to the Coffey report which was published on 12th September 2017. The report specified that all rules related to TP (Transfer Pricing) had to be updated and applied to non-trading transactions, capital transactions as well as transactions of SMEs.

Earned Income Tax Credit

The earned income tax credit for the self-employed will increase by €200, going from €950 to €1,150. However, there is still a disparity between the self-employed who receive a PAYE tax credit of €1,650. This indicates an overall benefit of €500 per year for PAYE employees.

Keeping track of the new changes brought about by the 2018 Irish budget can be a difficult task, which is why More Group has a number of tax specialists that can help you maintain an optimal tax position while ensuring your business grows amidst all the confusion surrounding the 2018 Irish Budget.

Note: The information should not be construed as legal or other advice as it designed as an information source only © More Group 2018. All rights reserved.