Income Tax

• Standard and higher rates of income tax remain at 20% and 41%.
• Exemption threshold for universal social charge increased from €4,004 to €10,036.
• Income Tax bands and Tax credits remain at 2011 levels.
• Employer PRSI relief on employee pension contributions to be removed from 2012.
• DIRT up 3% to 30% on ordinary deposit accounts.
• Annual imputed distribution from Approved Retirements Funds increased to 6% in respect of funds with asset values in excess of €2 million.
• Mortgage Interest Relief increased to 30% for first-time buyers between 2004 and 2008.
• Mortgage Interest Relief to be abolished for houses purchased from 2013 onwards.
• Surcharge of 5% on income sheltered by property-incentive schemes to be introduced for investors with income over €100,000.
• The use of accelerated capital allowances beyond the tax life of a particular scheme will not be available after 1 January 2015.

Duties/Levies

• Single rate of 2% Stamp Duty to apply on all non-residential property transfers.
• Carbon Tax up 1.4c/litre on petrol and 1.6c/litre on auto-diesel from 6 December 2011.
• Carbon Tax up €17.32/1,000 litres on Fuel Oil and €14.46/1,000 litres on Natural Gas from May 2012.
• Betting duty of 1% is extended to remote betting.
• Betting Intermediaries’ Duty introduced (Gross Profits Tax of 15%) to cover betting exchanges.

Business Tax

• Corporation Tax Rate remains at 12.5%.
• Corporation tax 3 year exemption for start-up companies is extended to companies commencing to trade in 2012 – 2014.
• 25% R&D tax credit for the first €100,000 of expenditure on R&D. The credit for incremental R&D expenditure in excess of €100,000 over the base year 2003 to remain.
• Current outsourcing limits for R&D tax credit to be increased.
• R&D tax credit can be utilised to reward key employees.
• Special Assignee Relief Programme to be introduced to encourage foreign direct investment.
• Foreign Earnings Deduction to be introduced for temporary assignments to BRICS region/countries.
• Employer Rebate from the Redundancy Payments Scheme reduced from 60% to 15%.

Value Added Tax

• Standard rate of VAT will be increased from 21% to 23% from 1 January 2012.

Capital Taxes

• Capital Acquisitions Tax and Capital Gains Tax increased by 5% to 30% for transactions after midnight 6 December 2011.
• Group A tax-free threshold for gifts/ inheritances reduced to €250,000, effective for gifts/ inheritances taken after midnight 6 December 2011.
• Relief from capital gains tax to be introduced for properties bought between 7 December 2011 and the end of 2013, where the property is held for more than seven years.
• Upper limits on retirement relief from capital gains tax to be reduced for business and farming assets disposed of by an individual aged over 66 years (subject to transitional arrangements).

Other Measures

• Old Age State Pension and Jobseeker’s Benefit to remain unaffected.
• Household charge of €100 to be introduced in 2012.
• Drugs Payment Scheme threshold increased from €120 to €132 per month in 2012.
• Entitlements to higher rates of Child Benefit for the third and subsequent child to be phased out.
• Payment entitlement for Jobseeker’s Benefit to be based on a 5 day week where a person is working for part of a week.
• 3% reduction in rate of student maintenance grant from 2012.
• Higher Education student contribution is increased from €2,000 to €2,250.
• Motor tax rates increased from 1 January 2012.
• Requirement that the domicile levy can only apply to Irish citizens to be removed.
• Current tax exemption for first 36 days of illness pay to be removed.

If you would like further information, please contact our Tax Department on
056-7721157.

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