Global Employer Services News

Ireland - Key employment tax measures in Budget 2024

Ireland’s Finance Minister Michael McGrath and Minister for Public Expenditure Paschal Donohoe on 10 October announced the 2024 budget, which includes a number of significant employment tax measures.
Benefit in kind on company car
 The temporary relief of EUR 10,000 applied to the original market value (OMV) of a company car for vehicles in Category A-D is being extended to 31 December 2024.

Effective 1 January 2023, the amount taxable as a benefit in kind (BIK) has been determined based on the car’s OMV, the annual business kilometres driven, and CO2 emissions-based bands.

The move to a CO2-based BIK system was designed to encourage the use of electric vehicles (EVs) and lower-emissions cars. However, a significant number of employees with vehicles in the typical emissions range experienced large increases in their income tax liabilities since the start of 2023. In response, the government introduced temporary legislation to reduce the taxable BIK on company cars for the 2023 tax year only. This was achieved by allowing a EUR 10,000 reduction to the vehicle’s OMV. This reduction applied to all company cars other than from those that fell into the highest CO2 emissions category (more than 179g/km). This temporary relief has now been extended to 2024.
The EUR 10,000 reduction in OMV will apply in addition to the EUR 35,000 tax relief currently available for EVs, so that the total relief for 2024 is EUR 45,000. The schedule for the tapering off of this relief has been extended; the revised schedule is as follows:

Key Employee Engagement Programme (KEEP)
KEEP is a tax-efficient share option scheme available to small and medium-sized enterprises whereby a participant is given an option to acquire shares at a future date, at a fixed price. However, the participant will not have to pay tax when they exercise the option, even if the shares have increased in value.

The program involves a significant number of qualifying conditions. The Government announced that EU state aid approval has been obtained for certain proposed amendments that had been announced in Finance Act 2022. The amendments include the extension of the scheme to the end of 2025 and a doubling of the limit for the total market value of issued but unexercised qualifying share options from EUR 3 million to EUR 6 million. The minister also announced that these amendments would be implemented shortly.
Social Insurance (PRSI) increase
 An increase of 0.1% across all PRSI contribution rates will take effect from 1 October 2024. This will apply to employee and employer contribution rates.

Mark Hynes
BDO in Ireland