Research & Development (R&D) Tax Credit
The R&D tax credit currently provides a 30 % tax credit for all qualifying R&D expenditure. Finance Bill 2025 provides for an increase in the rate of the R&D tax credit to 35 % and an increase to the first-year payment threshold from €75,000 to €87,500. The first-year payment threshold is the amount up to which a claim can be paid in full in the first year, rather than paid in instalments over three years.
In recognition of the need to simplify the R&D regime, a new deeming provision is being introduced in relation to the amount of time an employee spends dedicated to qualifying R&D activities. Where companies can evidence that at least 95 % of an R&D employee’s time is spent on qualifying R&D activities, then those emoluments are deemed to have been incurred wholly and exclusively in the carrying on of R&D activities.
Section 481 Film Tax Credit - Visual Effects (VFX)
The Section 481 Film Tax Credit provides relief in the form of a corporation tax credit related to the cost of production of certain films. The credit is granted at a rate of 32 % on eligible expenditure of up to €125 million per production.
The Bill provides for an enhancement to the Section 481 Film Tax Credit to provide for a new 40 % rate for productions with a minimum of €1 million of eligible expenditure on relevant VFX work. This rate will be available on eligible expenditure up to a maximum of €10 million. It will provide valuable support for VFX companies facing increased international competition. This enhancement is subject to the approval of the European Commission.
Section 481A Digital Games Tax Credit – Credit Extension and Post Release Content
The Digital Games Tax Credit, commenced in 2022, takes the form of a corporation tax credit related to the cost of development of certain digital games. The credit available per digital game is 32 % of up to €25 million.
The Bill provides for an extension to the Tax Credit for a period of six years to 31 December 2031. This extension will provide certainty regarding the availability of the credit and encourage the continued growth of the digital games sector in Ireland.
In addition, the Bill provides for an enhancement to the credit to allow for claims in respect of Post-Release Content work, subject to certain conditions.
Both amendments to the credit are subject to the approval of the European Commission.
Participation Exemption
A participation exemption for foreign dividends was introduced last year and the rules are being updated to enhance and extend the scope of the participation exemption to ensure that it remains competitive. Key updates include extending the geographic scope beyond the current scope of EEA and treaty partner jurisdictions, reducing the existing 5 year look back period to 3 years, and other technical amendments and clarifications to improve the operation of the rules.
New Exemption from the Stamp Duty on the Acquisition of Shares and Repeal of Existing Exemption
This section proposes to repeal section 86A of the Stamp Duties Consolidation Act 1999 (“SDCA 1999”). Section 86A currently provides for an exemption from Stamp Duty on a conveyance or transfer of stocks or marketable admitted to trading on the Euronext Growth market operated by the Irish Stock Exchange plc trading as Euronext Dublin. The repeal is to take effect on 1 January 2026.
The section also proposes the insertion of a new section 86B in the SDCA 1999. The new section provides for an exemption from Stamp Duty on a conveyance or transfer of stocks or marketable securities of Irish registered companies where the securities are admitted to trading on a “relevant market” and the closing market capitalisation of the company that issued the securities was below €1 billion on 1 December in the previous year.
The exemption will take effect from 1 January 2026.
Accelerated Capital Allowances Schemes for Energy Efficient Equipment and for Gas Vehicles and Refuelling Equipment
To support businesses making capital investments which will help to deliver a reduction in emissions, the accelerated capital allowances schemes for both energy efficient equipment and for gas vehicles and refuelling equipment are being extended, for a further five years until 31 December 2030.
Extension of the Bank Levy
Finance Bill 2025 provides for a further 12-month extension of the Bank Levy so that it will continue to apply in 2026.
The levy will be charged at a rate of 0.1025 % on an amount equal to the total value of relevant deposits held by the liable financial institutions on 31 December 2024. The term “relevant deposit” means a deposit which is held by a liable financial institution and is an eligible deposit, i.e. one that is not excluded from protection.
Dividend Withholding Tax Exemption for Investment Limited Partnerships
A Dividend Withholding Tax Exemption for Investment Limited Partnerships and equivalent EU/EEA partnerships is being introduced in Finance Bill 2025 to support opportunities for growth in the funds industry, specifically in the private assets space. This amendment is intended to increase the attractiveness of the Investment Limited Partnership as a fund structure and to help cement our position as a desirable location for regulated investment funds.
To avail of the exemption, an Investment Limited Partnership or equivalent EU/EEA partnership must be beneficially entitled to not less than 51 % of the ordinary share capital of the Irish company making the distribution.
The exemption is to apply in respect of distributions made on or after 1 January 2026.
