Corporation Tax (CT)

Under the transposition of the EU Minimum Tax Directive, a summary of the Pillar Two rules that will come into effect from 31 December 2023 is as follows:

• In-scope businesses will pay a minimum effective tax rate of 15% on their profits in respect of each country in which they operate.
• This will apply to both multinational and domestic businesses with a global annual turnover of €750 million and above in at least two of the preceding four years.

A number of consequential amendments to existing provisions have also been introduced.

The maximum expenditure which can be used to calculate the credit will be increased to €125 million, from the date of commencement order.

There are a number of amendments to the R&D Corporation Tax credit including:

• An increase in the rate from 25% to 30%.
• An increase from €25,000 to €50,000 in the amount of the credit payable in Year One.

CGT relief will be introduced for third-party individuals who take significant minority shareholdings in innovative start-up companies for at least 3 years. These individuals can avail of an effective reduced rate of CGT of 16%, or 18% for partnerships. The relief can be applied on a gain of up to twice the value of their initial investment and is subject to a lifetime limit of €3 million. Further details will be set out in the Finance Bill.

The following changes will come into effect for disposals made on or after 1 January 2025:

• The upper age limit which applies to the maximum level of retirement relief will be extended from 66 to 70, in respect of both a disposal to a child and a disposal to a person other than a child.
• A new threshold will limit the availability of the relief on disposals to a child by individuals from the age of 55 until the age 70 to assets with a value of €10 million or less.

A further amendment will require that retirement relief must be claimed by an individual on their tax return.

Currently, individuals can claim the Group A CAT threshold in respect of gifts and inheritances received from their foster parents. Similar treatment is to be extended in respect of gifts and inheritances received from within the wider familial relationships individuals have by virtue of their foster parents. Where the treatment applies, individuals will be entitled to claim the Group B CAT threshold.