Our annual "What's Another Year?" bulletin is a snapshot of the key legal and regulatory developments which we can expect over the course of 2024, across a range of sectors and practice areas.
TRANSPOSITION OF NEW MINIMUM EFFECTIVE TAX RULES INTO IRISH DOMESTIC LAW
The transposition of the EU Pillar 2 Directive setting down a minimum effective tax rate of 15% into Irish law has been completed before the 31 December 2023 deadline. The new legislation is contained in the Finance (No 2) Act 2023 that was signed into law on 18 December and entered into force from 1 January 2024. The legislation will be incorporated into the consolidated Irish corporate tax legislation.
For more information, please see here.
PARTICIPATION EXEMPTION ON FOREIGN DIVIDENDS TO BE INTRODUCED IN 2025
In October 2023, the Minister for Finance announced an exemption from tax on foreign dividends to come into effect on 1 Jan 2025. As part of the announcement the Department of Finance published a roadmap and a public consultation seeking input on the details of the legislation and exploring the possibility of introducing a participation exemption for foreign branch profits.
It is hoped that the new legislation, which is long overdue, will result in a welcome simplification of the current complex regime. For more information on the Arthur Cox submission please see the recent briefing.
ADDITIONAL WITHHOLDING TAX MEASURES ON CERTAIN OUTBOUND PAYMENTS
The Finance (No 2) Act 2023 contains new measures that seek to prevent double non-taxation of income by denying the application of exemptions from withholding tax in certain circumstances. In broad terms, the new measures will apply to payments of interest and royalties and the making of distributions (including dividends) to associated entities in jurisdictions that are not EU Member States and are on the EU list of non-cooperative jurisdictions or zero-tax jurisdictions.
The new measures will apply from 1 April 2024 and pre-existing arrangements will be grandfathered until 1 January 2025. For more details see the Arthur Cox Briefing.
PUBLIC CONSULTATIONS IN ANTICIPATION OF CHANGES TO LAW ON INTEREST DEDUCTIONS AND SHARE-BASED REMUNERATION IN IRELAND
As part of the Budget 2024 speech, the Minister for Finance announced an upcoming review of the rules applicable to interest deductibility in Ireland. The simplification of these rules is a matter that is long overdue and Arthur Cox LLP will be engaging in the public consultation.
The Minister for Finance also announced a public consultation on share-based remuneration in Ireland, in recognition of the increasing importance that business places on share-based remuneration in rewarding and retaining employees and the continued globalisation of the workforce. The consultation will form part of a wider review that will commence in 2024. The consultation was launched on 4 December and will remain open until 22 January 2024. Arthur Cox LLP will be engaging with the Department on this Review and submitting a response to the public consultation.
Clients who have tax matters they wish to see raised as part of these public consultations should get in touch with their usual contact in the Tax Group.
INTRODUCTION OF ANGEL INVESTOR RELIEF
A new relief to encourage investors to acquire significant minority shareholdings in early-stage innovative companies (less than five years old), will be introduced in the first quarter of 2024. Subject to certain conditions, the relief reduces the rate of chargeable gains tax payable by investors.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
