2012 Irish budget

Before the budget

Main points

• Increase in motor tax from 1 January.
• Reduction in the VAT rate on district heating from 21 percent to 13.5 percent, to benefit businesses.
• Farmers to be able to claim a VAT refund on wind turbines purchased from 1 January 2012.
• Broaden the base for pay related social insurance through removal of the remaining 50 percent employer PRSI relief on employee pensions.
• Broaden PRSI base to cover rental, investment, and other forms of income from 2013.
• Increase the rate of notional distribution on the highest value Approved Retirement Funds and similar products to 6 percent.
• Increase the rate of tax on the transfer of an ARF retirement fund on death to a child over 21 from 20 to 30 percent.
• Abolish the "citizenship" condition for payment of the Domicile Levy so as to ensure that "tax exiles" cannot avoid it by renouncing their citizenship.
• Increase the current rate of Capital Acquisitions Tax from 25 to 30 percent after Budget Day.
• Increase Capital Gains Tax from 25 to 30 percent after Budget Day.
• carbon tax not to be applied to solid fuels.
• Household charge of €100 can be paid in installments.
• Increase in carbon tax to be applied to petrol and auto diesel from midnight following Budget Day.
• Reduce the Group A Tax-free threshold for Capital Acquisitions Tax from €332,084 to €250,000.
• Increase deposit interest retention tax from 27 to 30 percent.
• VAT increased by 2 percent. Government commits to not raise the standard rate of VAT beyond 23 percent during its lifetime.
• 300,000 people to move from liability to pay Universal Social Charge.
• Universal Social Charge: From 1 January, exemption level to be raised from €4,004 to €10,036. Revenue to collect USC on a cumulative basis in 2013.
• Additional new tax measures of €1 billion.
• No increase in income tax.
• General government deficit to be 10.1 percent of GDP in 2012 and 8.2 percent in 2013 - both below targets in troika bailout.
• A property relief surcharge of 5 percent to be imposed on investors with an annual gross income over €100,000.
• Increased mortgage interest relief for first time buyers buy from Budget Night up to a year, but nothing if wait until 2013
• Non-first time buyers in 2012 to benefit from mortgage relief at 15 percent instead of 10 percent proposed by the last Government.
• Mortgage interest rate relief increased to 30 per cent.
• No changes on residential stamp duty.
• Capital Gains Tax incentive also announced; modifying retirement relief from Capital Gains Tax so it better incentivises the timely transfers of farms and businesses before the current owners reach the age of 66.
• Fifty percent stock relief for all registered farm partnerships and 100 percent stock relief for certain young trained farmers forming such partnerships.
• Stamp Duty on commercial property including farmland to be cut by 6 to 2 percent from midnight following Budget Day.
• Nine per cent rate of VAT for tourism extended to open farms.
• The first €100,000 of R&D expenditure of all companies will be allowed on a volume basis for the purpose of the R&D Tax Credit.
• Corporate tax exemption for new start-up companies to be extended for the following three years and to be available for companies that commence trading in 2012, 2013 and 2014.

  After the budget