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Jun 12

Budget 2010

Budget 2010 Highlights

*Main Tax Credits *Mortgage Interest Relief
*Income Tax Bands *Benefit in Kind
*Social Insurance *Corporation Tax Rates & Payments
*Research & Development Tax Credit *Intellectual Property Capital Allowances
*Other Capital Allowances *Pension Contribution Limits
*Capital Gains Tax *Gift/Inheritance Tax
*Value Added Tax *Stamp Duty
*Dates to Remember
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Main Tax Credits

 

2010 2009
Personal Tax credit
Single/Widowed Person 1,830 1,830
Married Couple/Single Parent 3,660 3,660
Widowed person without dependent children 2,430 2,430
Widowed person in year of bereavement 3,660 3,660
One-Parent Family 1,830 1,830
Widowed parent bereaved in 2009 4,000 4,000
Employee (PAYE) (1) 1,830 1,830
Incapacitated Child 3,660 3,660
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(1) Not available to proprietary Directors and the self employed

Age Credit

Single/Widowed Person 325 325
Married 650 650

Blind Persons Credit

Married (both spouses blind) 3,660 3,660
Single or married (one spouse blind) 1,830 1,830

Rent Relief Credit (20% of rent subject to maximum)

Under 55 – Single (max) 400 400
Under 55 – Married/Widow(er) (max) 800 800
Over 55 – Single (max) 800 800
Over 55 – Married/Widow(er) (max) 1,600 1,600
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One Income Home Carer Tax Credit

Spouse caring for children, the aged or handicapped (maximum) 900 900

 

Tax Credit on Trade Union Subscriptions 70 70

 

Dependent Relative Credit 80 80
Mortgage Interest Relief (Main Residence Only) Max
Relief
Max
Relief
2010 2009
First-Time Buyer Credit – Years 1 and 2 – 25% 2,500 2,500
Single Max 5,000 5,000
Married Max 5,000 5,000
Widow(er) Max
First-Time Buyer Credit – Years 3-5 – 22.5%
Single Max 2,250 2,250
Married Max 4,500 4,500
Widow(er) Max 4,500 4,500
First-Time Buyer Credit – Years 6 and 7 – 20%
Single Max 2,000 2,000
Married Max 4,000 4,000
Widow(er) Max 4,000 4,000
Non-First Time Buyer Credit – 15%
Single Max 450 450
Married Max 900 900
Widow(er) Max 900 900
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Qualifying loans taken out before 1 July 2011 will continue to get relief for 7 years.

Transitional measures will be provided for qualifying loans taken out between 1 July 2011 and
the end of 2013.

Those, whose entitlement to relief would, in the absence of this change, expire in 2010 or after;

will continue to qualify for relief at the applicable rate up until end 2017.

Abolition of the relief entirely by the end 2017.

Income Tax Bands 2010 2009
Single & Widowed Persons: No Dependent Children
20% on first 36,400 36,400
41% on balance
Single & Widowed Persons: Dependent Children
20% on first 40,400 40,400
41% on balance
Married Couples: One Income
20% on first 45,400 45,400
41% on balance
Married Couples: Two Incomes*
20% on first 72,800 72,800
41% on balance
* Excess over €45,400 non transferable between spouses
Income Levy – Employees & Directors (01 Jan to 30 April 2009)
1% on first 100,100
2% on next 150,020
3% on balance
Income Levy – Employees & Directors (post 30 April 2009)
1% on first 75,036 75,036
2% on next 99,944 99,944
6% on balance
Income Levy – Self Employed Individuals (2009 annual rates)
1.67% on first 75,036
3% on next 25,064
3.33% on next 74,880
4.67% on next 75,140
5% on balance
Income Levy – Self Employed Individuals (2010 onwards)
2% on first 75,036
4% on next 99,944
6% on balance
Tax Allowance
Cost of employing carer for incapacitated individual allowed at marginal
rate of tax
50,000 50,000
Film Investment (max relief) 25,400 25,400
Rent-a-Room Relief (private residence) 10,000 10,000
BES Scheme (max relief) 150,000 150,000
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Benefit-In-Kind

General

In general, the taxable BIK is the higher of the following, less any amount made good to the

employer by the employee.

1. The value the benefit provided to the employee;

or

2. The cost to the employer of providing the benefit.

However, certain BIKs are subject to specific calculation rules.

Company Cars

The charge to BIK on company cars are based on the cars’ level of CO2 emissions. Every car is
graded according to its CO2 emissions with the BIK being progressively higher for cars with
greater CO2 emissions.

Reductions are available for significant business mileage incurred in any given year.

Private Use of Employer Van

The charge to BIK for the private use of an employer’s van is 5% of the original market value
of the van.

Preferential Loans

A BIK arises where an employer provides a low or interest free loan to its employees. A BIK
arises on the difference between the specified interest rate and the interest rate actually Charged

Specified rate for home loans          5.0%

Specified rate for other loans          12.5%

Small Benefits in Kind

An employer can provide an employee with a small benefit to a value not exceeding €250 per
annum without applying PAYE and PRSI to that benefit.

Cycle to Work Scheme

Subject to certain conditions, an employer can provide cycling and related safety equipment to
an employee, up to a maximum value of €1,000 per employee, without applying PAYE and
PRSI to that benefit.

Social Insurance Contribution
Rate
Earnings
Ceiling
2010 2010
Employer Class A1
Employer Contribution (including training fund levy) 10.75% (1) No Ceiling
Employee Class A1
PRSI 4% (2)(3) €75,036
Health Contribution 4% (4) (5) No Ceiling
Total for Employee 7%
(1) 8.5% where weekly earnings are not more than €356
(2) For those earning over €352 per week or equivalent
(3) First €127 of weekly earnings exempt
(4) No health levy for earners where income is not
more than €500 per week.
(5) Rate increases to 5% for earners where income
exceeds €1,925 per week.
(6) 3% subject to minimum payment of €254
Corporation Tax Rates
Standard Rate on Trading Income          12.5%
Investment/Rental Income                       25%
Manufacturing Rate *                             10%
* Only for established qualifying companies. Expires 31 December 2010
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Preliminary Corporation Tax

Small Companies

A small company is a company with a corporation tax liability of less than €200,000 in the
preceding year.

Preliminary tax of at least 90% of the liability for the period or 100% of previous year’s
liability is due one month (but no later than the 21st day of that month) before the end of the

accounting period.
New or start up companies with a Corporation Tax liability of less than €200,000 in their
first accounting period will not be required to pay Preliminary Corporation tax. The liability
is paid when the return is filed.

Other Companies

In respect of accounting periods commencing after 14th October 2008 preliminary tax is due
in two instalments.

The first installment will be payable in the sixth month of the accounting period (by the 21st
day of that month) and the amount payable will be 50% of corporation tax liability in the

preceding accounting period of 45% of corporation tax liability for the current accounting
period.

The second instalment will be payable in the eleventh month (by the 21st day of that month)
of the accounting period and the amount payable will bring the total preliminary tax paid to

90% of the corporation tax liability for the current accounting period.

The final balance is payable at the Return filing date i.e. 21st day of the ninth month following
the end of the accounting period.

Start-Up Companies
New start-up companies, which commence trading in 2009 or 2010, will be exempt from tax,
including capital gains, in each of the first three years to the extent that their tax liability in the
year does not exceed €40,000.

Research and Development Tax Credit

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General

A credit of up to 25% (20% for periods commencing before 1 January 2009) of a company’s
expenditure on qualifying research and development activity can be offset against a company’s
corporation tax liability.

The method of calculating the relief is on an incremental basis using a base year to determine
the level of incremental expenditure.

The base year is fixed at 2003 until 2013.

Partial relief is also available to companies for the cost of sub-contracting research and
development work to unconnected parties.

Cash Rebates of R&D Tax Credits

For accounting periods commencing on or after 01 January 2009 it is possible to claim a rebate
of excess of any R&D tax credits over the corporation tax liability of a company for the same
accounting period.

The rebate is payable in three instalments and is restricted to the greater of the following two
amounts:

• the aggregate corporation tax paid by the company for the previous 10 accounting
periods;

or

• the aggregate Irish payroll tax liabilities of the company for the accounting period in
question.

The three instalments in which any rebate is to be made will be paid over a period of 33 months
from the end the accounting period in question. The relevant dates and amounts are as follows:

• 33% of the refund will be payable by 9 months from the end of the accounting period;

• the next 33% will be payable by 21 months from the end of the accounting period;

• the remaining 33% will be payable by 33 months from the end of the accounting
period.

Note that the second and third instalment must be offset firstly against any corporation tax
arising in respect of the company’s subsequent and next subsequent accounting period

respectively, with any remaining balance being refundable.

Intellectual Property Capital Allowances

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Capital allowances are available in respect of capital expenditure incurred in relation the
acquisition/internal generation of intellectual property assets on or after 7 May 2009.

The tax deduction allowed is equal to the amount of accounting depreciation or amortisation
charged in the annual financial statements of a company. Alternatively, a company may to elect
to claim the tax deduction over 15 years (7% per annum and 2% in year 15). The 15-year
period applies to all capital expenditure incurred on that asset and the election, if availed of, is
irrevocable.

The definition of IP assets is broad and includes the acquisition of, or the licence to use:

• patents and registered designs,

• trademarks and brand names,

• know-how,

• domain names, copyrights, service marks and publishing titles,

• authorisation to sell medicines, a product of any design, formula, process or invention
(and any rights derived from research into same), and

• goodwill, to the extent that it directly relates to the assets outlined above.
The tax deduction is only available for utilisation against trading income generated from the
exploitation of the IP assets and is subject to certain other restrictions.

Other Capital Allowances

Motor Vehicles (1) Plant& Machinery(1) Industrial
Buildings
Year 1 – 8 Year 1 – 8
Writing Down
Allowance
12½ %
per annum
12½ %
per annum
4%
per annum

(1) These allowances apply to expenditure incurred on or after 4 December 2002.

Maximum allowable capital cost for new and second hand private cars purchased on or
after 1 January 2007 is €24,000.

In respect of motor vehicle purchases on or after 01 July 2008, the allowability of allowances
and expenses are linked to the CO² emission levels of the vehicles. The vehicle emission
categories are as follows.

Vehicle category CO2 Emissions (CO2g/km)
A 0g/km up to and including 120g/km
B More than 120g/km up to and including 140g/km
C More than 140g/km up to and including 155g/km
D More than 155g/km up to and including 170g/km
E More than 170g/km up to and including 190g/km
F More than 190g/km up to and including 225g/km
G More than 225g/km
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The qualifying cost for capital allowance purposes for each category is as follows. In each case,
the specific amount equals the lower of the purchase price of the car or €24,000.

(a) in the case of a vehicle in category A, B or C, an amount equal to the specified amount,

(b) in the case of a vehicle in category D or E, where the retail price of the vehicle at the
time it was made was:

(i) less than or equal to the specified amount, 50% of that price, and

(ii) greater than the specified amount, 50% of the specified amount, and

(c) in the case of a vehicle in category F or G, nil

Pensions – Maximum Tax Efficient Contributions

Contribution level deductible for tax purposes are as follows:

Age % %
2010 2009
Up to 30 15 15
30 to 39 20 20
40 to 49 25 25
50 to 54 30 30
55 to 59 35 35
60 and over 40 40
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30% also applies to individuals with limited earnings span e.g. athletes, entertainers.

There is cap of €150,000 for 2010 (€150,000 for 2009) on the amount of earnings on which
tax relief may be obtained for contributions by individuals to Retirement Annuity Contracts

and Personal Retirement Savings Account. This cap also applies for employee
contributions to occupational pensions schemes.

There is a cap on the allowable pension fund limit of €5,418,085 or, if higher, the value of
the fund on the 7 December 2005.

Capital Gains Tax

Annual exemption per individual €1,270
Rate of tax 25%
Retirement Relief exemption limit €750,000
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The payment date in respect of disposals in the period January to November is 15 December and the tax arising on disposals in the month of December is due by the following 31 January.

Gift/Inheritance Tax

Group Thresholds

Parents to child/spouse €434,000
Blood relative €43,400
Others €21,700
Rate of tax in excess of the threshold 25%
Business/agricultural relief – % reduction in taxable value 90%
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Gifts and inheritances received since 5 December 1991 within the same group threshold are
aggregated to determine tax payable on current gift.

No gift/inheritance tax is payable between spouses.

Annual gift exemption is €3,000 per individual.

Indirect Taxes

Value Added Tax

Supply of taxable goods in Ireland.
(90% of turnover must be from the supply of goods for
this threshold to apply)
75,000
Provision of taxable services in Ireland 37,500

Note 1.

These thresholds do not apply to traders established outside Ireland who must register
irrespective of turnover.

Note 2.

A registration threshold of €41,000 applies to certain persons acquiring goods in Ireland from
other EU member states (other than new means of transport or goods subject to a duty of

excise).

Note 3.

A registration threshold of €nil applies to certain persons acquiring certain services in Ireland
from abroad.

Note 4.

A registration threshold of €35,000 applies in relation to “Distance Selling” – i.e. persons
supplying certain goods to non-taxable persons in Ireland from other EU member states.

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Value Added Tax

VAT Rates:

Standard rate applying to all supplies not chargeable at other rates.
Includes – Cars, Petrol / Diesel, Telecommunications, soft drinks and alcohol
computers and software, consultancy services, opted leases.
21%
Standard reduced rate from 21.5% to 21% as of 1st January 2010
Reduced rate applying to certain goods and services 13.5%
Includes – Heating fuel, electricity, restaurant services, newspapers,
hotel and B&B lettings, property and Child Car Seats
Includes – Livestock, live greyhounds, hire of horses etc 4.8%
Includes – Exports, certain food and drink, oral human medicine, books,
children’s clothing and footwear.
0%
“Flat Rate Addition” 5.2%

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VAT Exempt Services

Includes certain financial services, insurance, educational, training, medical, optical and dental
services, passenger transport services and non-opted leases.

Vehicle Registration Tax

Introduction of Car Scrappage Scheme

VRT relief of up to €1,500 on a new low-emission car, provided a car over 10 years old is
traded in.

VRT Exemption for Electric Vehicles

The exemption from VRT on electric cars will be extended by two years to the 31st December
2012.

VRT Relief on Plug-in Hybrid Electric Cars

The relief of €2,500 off VRT for plug-in hybrid electric cars will be extended by two years to
the 31st December 2012.

Stamp Duty

Consideration (€) Rate
Stocks & Shares
Land/Commercial Buildings/Goodwill
Consideration 0 – 10,000 Exempt
Consideration 10,001 – 20,000 1%
Consideration 20,001 – 30,000 2%
Consideration 30,001 – 40,000 3%
Consideration 40,001 – 70,000 4%
Consideration 70,001 – 80,000 5%
Consideration Over 80,000 6%

The above rates apply to the full value of the property.

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Residential Property
Consideration First Time Buyer Other Owner Ocupiers Investors – New & Second –
Hand
Properties
Up to Euro 125,000 Exempt Exempt Exempt
Next €875,000 Exempt 7% 7%
Balance Exempt 9% 9%

Dates to Remember

Income Tax
Preliminary Income Tax Payment for 2010 31 October 2010
Balance of tax due for 2009 31 October 2010
File Personal Tax Return for 2009 31 October 2010
Capital Gains Tax – Payment Dates
Disposals made between 1 December 2009 & 31 December 2009 31 January 2010
Disposals made between 1 January 2010 & 30 November 2010 15 December 2010
Disposals made between 1 December 2010 & 31 December 2010 31 January 2010
Returns
Individuals
2009 Disposals 31 October 2010
2010 Disposals 31 October 2011

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Corporation Tax

Small Companies

1. Choice of 90% of current year liability or 100% of previous year liability due one
month before year end (but no later than the 21st day of that month);

2. Balance of tax to be paid on date the Corporation Tax Return is due.

Other Companies

1. Choice of 45% of current year liability or 50% of previous year liability due in sixth
month of accounting period (but no later than the 21st day of that month);

2. Payment bringing total preliminary tax up to a minimum of 90% of current year
liability due one month before year end (but no later than the 21st day of that month);

3. Balance of tax to be paid on date the Corporation Tax Return is due.
Company Tax Returns
Within nine months of the end of the accounting period but no later that the 21st day of that
month.

Company Tax Returns

Within nine months of the end of the accounting period but no later that the 21st day of that
month.