Ireland’s 2025 budget offers support to start-ups and multinational businesses

Ireland’s Minister for Finance, Jack Chambers T.D., delivered his first budget speech and the last of the current government on 1 October. He said that the 2025 Budget was designed to “plan, transform and deliver for the future, with progressivity, fairness and catalysing real opportunity for the future at its core”. The total package for the budget is €10.5 billion, of which €6.9 billion relates to the government’s expenditure package and €2.2 billion in respect of a cost-of-living package, with the balance consisting of a net tax package of €1.4 billion.

A raft of tax measures and policies has been announced to support Irish start-ups and multinational businesses, including the increased limit on gains qualifying for angel investor relief and the changes to Ireland’s research and development (R&D) tax credit regime.

In light of the windfall revenue from the recent Apple state aid case, in which the Court of Justice of the EU ruled that the technology giant must pay Ireland over €13 billion in back taxes, the Chambers confirmed that the windfall receipt is not to be used for day-to-day expenditure or to narrow the tax base. Instead, the government will use it for public infrastructure programmes over the next decade, having recognised the importance of infrastructure in enhancing Ireland’s competitiveness for businesses and attracting foreign investment.

The majority of the measures in the budget will take effect from 1 January 2025 following the passing of the Finance Bill, with some becoming effective at midnight on 1 October. They are expected to bring some positive changes to alleviate any perceived fallout following the Apple decision and underline Ireland’s status as a foreign investment hub for multinational companies.

Business supports under Budget 2025

Irish start-ups and small and medium-sized enterprises (SMEs) will be able to benefit from the extension and enhancement of tax measures that were previously introduced to assist them attract funding and grow. Those incentives include the Employment Investment Incentive (EII), the Start-Up Relief for Entrepreneurs (SURE) and the Start-Up Capital Incentive.

The Irish government has extended these three schemes for two more years, to the end of 2026. Meanwhile, the amount an investor can claim relief on under the EII scheme will be doubled from €500,000 up to €1 million, and the relief available under the SURE is to be increased from €700,000 to €980,000.

To further enhance its business angel investment ecosystem, the angel investor capital gains tax relief, targeted at encouraging business angel investment in start-ups, will commence shortly with a plan to increase the lifetime limit on gains to which capital gains tax applies from €3 million to €10 million.

Innovative businesses, both domestic and multinational, will be interested in the latest changes to Ireland’s R&D tax credit regime. The 2025 budget will bring a 50% increase in the first-year payment threshold in the R&D tax credit, from €50,000 to €75,000, providing further cash flow support to companies undertaking smaller R&D projects or new claimants in the regime.

The budget also includes measures to incentivise businesses scaling up through the equity market. For example, Irish SMEs will benefit from a new relief for expenses incurred on first listing on Irish or European stock exchanges, subject to a €1 million cap, as well as a stamp duty exemption when they access equity via financial trading platforms to support their funding needs. However, the stamp duty exemption will be subject to state aid approval.

Another significant development confirmed by the budget announcement is the introduction of a participation exemption for foreign dividends from Irish corporate tax, effective from 1 January 2025. This measure has been the subject of ongoing consultation over the last few months. The reform aims to provide a simplified mechanism for double tax relief for multinational businesses, and bring Ireland’s corporate tax regime closer into line with those of competitor jurisdictions.

The Irish government intends to legislate for the participation exemption in this year’s Finance Bill, and for it to take effect from 1 January 2025.

The budget has also outlined the government’s policy priorities. Next year, the government will give further consideration to introducing a separate exemption in respect of foreign branch profits and consider the recommendations arising from the independent review on the taxation of share-based remuneration. The report arising from that review was completed over the summer and published by the Department of Finance on the same day as the budget announcement.

Other key reviews highlighted by the minister include the ongoing consultation on the treatment of interest under Ireland’s tax code, and the review of the R&D tax credit regime, which is set to be conducted during 2025.

Framework for infrastructure and investment

Ireland’s Budget 2025 has also made it clear that the revenue from the Apple state aid case should be spent on public infrastructure programme over the next decade, and there should be a clear strategic direction in how it can be used to deliver for the future of the country, improving the lives of people and communities and supporting Irish SMEs and multinational corporations operating in the country.

The Departments of Finance and Public Expenditure, National Development Plan (NDP) Delivery and Reform, have started building out a framework for allocating the windfall receipts, with input from other relevant department agencies. The minister emphasised that the framework should be based on a number of high-level principles and parameters, such as deliverability, value for money, additionality and prioritisation for economic impact. The development of such a framework is, said the minister, to help ensure the maximum rate of return, both from an economic and societal perspective, and complement the NDP.

The department’s target is to bring the framework to government for approval in the first quarter of next year.

For 2025, the government has made available €3 billion to spend on key infrastructure, such as water, housing and electricity grids, following the recent disposal of part of the state’s shareholding in Allied Irish Bank.