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Budget 2013 Update
AUTHOR(S): Aidan Fahy, Catherine Galvin, Gerry Thornton, Greg Lockhart, Joe Duffy, John Kelly, Mark O’Sullivan, Shane Hogan, Suzanne Lynch, Turlough Galvin, Liam Quirke
PRACTICE AREA GROUP: Tax
The Irish Government yesterday announced its budget for 2013. The budget did not contain many provisions of significance to our international clients. We have summarised below the main points of relevance for international companies and financial institutions doing business in and through Ireland.
1. 12.5% corporation tax rate
The Irish Government confirmed that it “remains 100% committed to maintaining the 12.5% corporation tax rate.” The Minister for Finance remarked that “even though this commitment has been stated numerous times, it is worth repeating so that there can be no doubt.”
2. Real Estate Investment Trusts (REITs)
The Government has announced the future introduction of REITs in Ireland. The REITs will be listed investment companies, used to diversify investment in real estate. The REITs will be exempt from corporation tax on their qualifying profits, and will have an obligation to distribute the majority of their income each year. The Minister said that he hoped this would permit the financing of property transactions in a more risk-diversified manner. Further details regarding the Irish REIT structure should become available over the coming months.
It was confirmed yesterday that Ireland is now one of the first countries to conclude an inter-governmental agreement with the United States in relation to the Foreign Account Tax Compliance Act. The early conclusion of this agreement will serve to give the Irish financial services sector an advantage over other countries. It is hoped that the details of the agreement will be available before the end of 2012.
4. International aviation services
New measures are to be introduced to incentivise the growth of Ireland’s aircraft leasing industry, through accelerated tax depreciation for the construction of hanger and other ancillary aviation facilities. The Government is also actively considering the introduction of new funding sources for airlines, aircraft financing and aircraft leasing companies, with the intention of maintaining Ireland’s position as the pre-eminent aircraft leasing jurisdiction.
5. Capital gains tax
The rate of capital gains tax was increased from 30% to 33% with effect from 6 December 2012.
If there are any particular aspects of the budget which you would like clarified, please get in touch with your usual Matheson or a member of the Tax Department.