How the Irish Finance Bill will benefit the financial services industry
International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

How the Irish Finance Bill will benefit the financial services industry


The Irish Finance Bill has signalled the introduction of targeted tax provisions aimed at improving the competitiveness of Ireland’s financial services industry, as well as enhancements to the R&D tax credit scheme.

Finance Minister Michael Noonan said in his December budget speech that the Finance Bill would include measures to improve the financial services sector’s competitiveness, and he has kept to that promise.

“The budget contained a number of targeted supports for employment for both the foreign direct investment and the small and medium sized enterprise sectors and the Bill provides additional details of the support for financial services flagged in December,” said Noonan.

However, the announcements are viewed by some as falling slightly short.

“Perhaps not everything which the industry was looking for, but a positive signal that Ireland wants to retain and improve its impressive global standing in this area,” said Fergal O’Rourke, of PwC.

“The Irish Government reinforced its commitment to the industry in last week’s Finance Bill when it introduced a package of 21 measures to help improve the attractiveness and competitiveness of the international financial services industry,” said a spokesperson for the Irish Fund Industry Association.

“Most of the measures were aimed at simplifying how complex financial transactions are treated for tax purposes to make it easier to do business in Ireland.”

Among the measures introduced were new provisions to enable the Revenue Commissioners to formulate rules requiring periodic reporting of certain information, including the tax reference number, by Irish funds.

The grandfathering of certain domestic and international bonds has also been scrapped, for the purposes of the EU Savings Directive, said Yvonne Thompson of PwC.

For funds re-domiciling to Ireland, a provision has been enacted that allows such funds to declare that unitholders are non-residents, thereby ensuring no tax liability arises. Any Irish residents must be identified in any declaration, and subsequent tax accounted for.

Further, for mergers involving an Irish fund and a fund located in an EU, EEA or OECD member country with which Ireland has a double tax treaty, no tax liability will arise in respect of Irish resident investors.

Exemptions from stamp duty charges were also outlined. Exemption will apply when assets are transferred on merger of an Irish fund into a foreign fund, or where Irish assets are transferred on merger of two foreign funds located in treaty jurisdictions.


The R&D tax credit scheme has been updated, with the first €100,000 ($133,000) of qualifying expenditure now benefiting from the 25% R&D tax credit. Sub-contracted R&D expenditure is also now brought under the scope of the R&D tax credit, in cases where it accounts for less than 10% of total R&D expenditure.

Noonan said the targeted enhancements to the R&D tax credit scheme were “to encourage the productive, high value-added sectors of our economy in order to work our way out of the current downturn”.

The R&D changes have been welcomed.

“The Finance Bill has introduced changes to the R&D tax legislation which are very welcome,” said Gerry Vahey, partner at Mazars. “The introduction of a volume based R&D tax credit calculation for the first €100,000 of qualifying expenditure is to be warmly welcomed.”

“Essentially, this introduction has eradicated the administratively difficult incremental basis of calculation for claims up to €100,000,” he added.

O’Rourke said the updated R&D scheme removes one of the weaknesses of the old system, and will be of particular benefit to SMEs.

“One of the weaknesses of the R&D regime has been the requirement to compare the R&D expenditure in the current year with the spend in 2003, with a view to claiming a credit for the incremental spend,” he said.

more across site & bottom lb ros

More from across our site

Proposals by HM Revenue and Customs to raise standards in the advisory market are ‘well overdue’, one partner declared
An intimate understanding of a client’s sector is essential to winning new business, a survey of over 28,000 corporate counsel reveals
‘Auditors are failing to perform their core function’ according to a think tank; in other news, White & Case adds a tax partner in Luxembourg
An overhaul of EU import taxes could spell the end of an exemption for cheap parcels
Sharma, managing director for A&M in the United Arab Emirates, tells ITR about intense time pressures, mimicking Jurgen Klopp and what makes tax cool
AI will speed up some of the most laborious TP processes without making human input redundant, argues Hank Moonen, CEO of TaxModel
Firms with a broad geographic reach are more likely to win work, especially from global companies with high turnovers, according to survey data of nearly 29,000 corporate counsel
Australian businessman Gordon Merchant used EY’s advice to offset an A$85 million capital gain, according to the Federal Court
Griggs has been drafted in ahead of schedule as the incumbent Tim Ryan departs for Citigroup; while the Netherlands plans to scrap a 15% share buyback tax
Authorities must ensure that Russian firms do not use transfer pricing schemes to increase profits made from oil sold in different markets, advocacy organisations have argued
Gift this article