Ireland has published the Finance Act 2022 (Act No. 44 of 2022), which was signed into law on 15 December 2022 and provides for the implementation of the 2023 Budget measures as well as various other measures. Some of the main measures include the following:

Income Tax

• An increase of EUR 3,200 in the income tax standard rate band cut-off point for all earners:
  • single, widowed or surviving civil partner from EUR 36,800 to EUR 40,000;
  • single, widowed or surviving civil partners, qualifying for the single person child carer credit from EUR 40,800 to EUR 44,000; and
  • married couples or civil partners (one income) from EUR 45,800 to EUR 49,000;
• An increase in the personal tax credit from EUR 1,700 to EUR 1,775.
• An increase in the employee tax credit from EUR 1,700 to EUR 1,775.
• An increase in the earned income credit from EUR 1,700 to EUR 1,775.
• An increase in the home carer tax credit from EUR 1,600 to EUR 1,700.

Universal Social Charge (USC)

• The adjustment of the USC bands as follows, including an increase in the 2% band ceiling, with the exemption for incomes of up to EUR 13,000 maintained:
  • EUR 0 – EUR 12,012 @ 0.5%
  • EUR 12,013 – EUR 22,920 @ 2%
  • EUR 22,921 – EUR 70,044 @ 4.5%
  • EUR 70,045+ @ 8%
  • Self-employed income over EUR 100,000: 3% surcharge

Support for Enterprise/SMEs/Agri-sector

• A scheme of accelerated capital allowances is introduced for farmers for the construction of slurry storage facilities, providing that the capital cost of the facilities may be written off over two years rather than seven years, which will be brought into effect by Ministerial commencement order
• The Foreign Earnings Deduction (FED) is extended to 31 December 2025, providing relief from income tax on up to EUR 35,000 of income for employees tax-resident in Ireland who travel out of the State to temporarily carry out duties of employment in certain qualifying countries;
• The Key Employee Engagement Programme (KEEP) is extended to 31 December 2025 (1 January 2026), including modifications to provide for the buy-back of KEEP shares by the company from a relevant employee and to increase the lifetime company limit for KEEP shares from EUR 3 million to EUR 6 million;
• The Special Assignee Relief Programme (SARP) is extended to 31 December 2025, with the minimum income limit for new entrants increased from EUR 75,000 to EUR 100,000;
• The Section 481 Film Relief is extended from its current end date of 31 December 2024 to 31 December 2028, providing relief in the form of a corporation tax credit equal to 32% of qualifying expenditure related to the production of certain audiovisual productions capped at EUR 70 million;
• The Research and Development Tax Credit is changed in regard to the payment of the credit, including that companies are given the option to call for payment of their eligible R&D tax credit or to request for it to be offset against other tax liabilities, and the existing caps on the payable element of the credit are removed; and
• The Knowledge Development Box (KDB) is extended to accounting periods commencing before 1 January 2027, along with an increase in the effective tax rate of the KDB from 6.25% to 10.0% that will be brought into effect by Ministerial commencement order once agreement is reached at the OECD/G20 Inclusive Framework on implementation of the Pillar 2 Subject to Tax Rule (STTR).

VAT Measures

• A zero VAT rate is introduced for the following supplies with effect from 1 January 2023:
  • newspapers and news periodicals, including digital editions, but excluding those which are wholly or predominantly devoted to advertising, or consist wholly or predominantly of audible music or video content;
  • automated external defibrillators, including parts or accessories suitable for use solely or principally with an automated external defibrillator;
  • supplies of sanitary towels, sanitary tampons, menstrual cups, menstrual pants, and menstrual sponges;
  • all non-oral hormone replacement therapy medicine; and
  • all non-oral nicotine replacement therapy medicine;
• The Flat-rate compensation percentage for unregistered farmers is reduced from 5.5% to 5.0% from 1 January 2023 (compensation is for VAT incurred on farming inputs); and
• The 9% VAT rate for gas and electricity is extended from 31 October 2022 to 28 February 2023.

Charges on Capital Sums Received for the Sale of Patent Rights

• The treatment of capital sums received for the sale of patent rights is amended to provide relief for intra-group transfers of patent rights in a similar manner to the relief that is available to intra-group transfers of patents, which is provided by deeming that the sale of patent rights intra-group occurs at such an amount that neither a gain nor a loss arises to the selling company and the purchaser is treated as acquiring the patent rights for that same amount; and
• A technical amendment is made to confirm that the outright sale of a patent or a patent pending is not a sale of patent rights, which confirms that the sale of a patent is chargeable to capital gains tax (CGT), whereas the sale of patent rights for a capital sum is subject to tax as income.

Technical Amendments to the ATAD Interest Limitation Rule

• Technical amendments are made to the ATAD interest limitation rule to ensure that the interest limitation and associated preliminary tax rules operate as intended, including revised (clarified) definitions of "consolidating entity", "interest equivalent", "large scale asset", "group EBITDA", and "group exceeding borrowing costs"; and
• Clarifications are provided in regard to the exemption for interest on legacy debt when there is a repayment in respect of facilities that have a mixture of legacy debt and non-legacy debt, including that the "first-in-first-out" basis applies, meaning that where a partial repayment is made on a mixture of legacy and non-legacy debt, the repayment shall be treated as a repayment on legacy debt in priority to the non-legacy debt.

Transfer Pricing Guidelines

• The definition of "transfer pricing guidelines" is updated to mean the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations published by the OECD on 20 January 2022 supplemented by such additional guidance, published by the OECD on or after the date of passing of the Finance Act 2022, as may be designated by the Minister for Finance (replaces reference to 2017 guidelines).

Defensive Measures Towards Non-Cooperative Jurisdictions for Tax Purposes

• The definition of "listed territory" is updated for the purpose of the defensive measure providing that the potential exclusions from the CFC rules will not apply for CFCs resident in jurisdictions included in the EU list of non-cooperative jurisdictions, which includes references to the applicable EU lists for different accounting periods:
  • in relation to an accounting period beginning on or after 1 January 2021 but before 1 January 2022, the EU list published on 7 October 2020 applies ( OJ No. C331, 7.10.2020);
  • in relation to an accounting period beginning on or after 1 January 2022 but before 1 January 2023, the EU list published on 12 October 2021 applies ( OJ No. C413I, 12.10.2021); and
  • in relation to an accounting period beginning on or after 1 January 2023, the EU list published on 12 October 2022 applies ( OJ No. C391, 12.10.2022).

Extending Tax Transparency Rules to Digital Platforms

• Measures are provided to complete the transposition of Council Directive (EU) 2021/514 of 22 March 2021 (DAC7) as regards the mandatory automatic exchange of information in the field of taxation in relation to platform operators (DAC7 measures first introduced as part of the Finance Act 2021); and
• A new section is added for the transposition of the OECD Model Rules for reporting by digital platform operators, which are similar to DAC7 but are applicable to operators outside of the EU and is intended to ensure that digital platforms both within and outside the EU will have standardized reporting obligations.