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Field of view - Budget 2022 summary

  • Ireland
  • Tax planning and consultancy - Budget

13-10-2021

On 12 October 2021, the Minister for Finance, Paschal Donohoe T.D., (the “Minister”) delivered his Budget 2022 speech.

The Minister announced Budget 2022 in a clear exercise in both recovery and growth from the effects of the Covid-19 pandemic. Amounting to approximately €4.7 billion, Budget 2022 is a significant decrease in the record-breaking expenditure of Budget 2021, a €17 billion package framed against the backdrop of a projected €21 billion deficit.

Of the €4.7 billion available under Budget 2022, approximately €1 billion is available for new spending, with a tax package of approximately €500 million, almost two times that presented in Budget 2021. Of this €500 million, revenue raising measures make up approximately €230 million. This significant tax package is a clear sign of the efforts being made to recover from the impacts of the pandemic on the exchequer’s purse, as well as to reform certain tax fundamentals affecting both corporations and individuals.

From an individual perspective, increasing both the income tax standard rate band and the tax credits, together with the new zoned land tax are likely to be the most-discussed aspect of Budget 2022, though this is certainly not the only tax provision of importance to individuals. Covid-19 has made working from home a regular aspect of normal working life, and amendments have been introduced to allow tax deductions for the resulting increased home expenses.

From a commercial perspective, the focus of Budget 2022 is very much centred on aligning Irish legislation with international developments, particularly in the areas of climate action and international tax reform. Key measures as outlined below show efforts to improve the Irish offering as a hub for sustainable investment, while complying with OECD mandates.

The majority of the measures announced by the Minister will take effect from 1 January 2022 following the passing of the Finance Bill. The finer details of these changes, and any additional policy and legislative changes, will become more apparent with the release of the Finance Bill 2021 in the coming weeks.

Set out below is a brief overview of the key highlights arising from Budget 2022:

                                                                                                                                                  

How Eversheds Sutherland can help

At Eversheds Sutherland, we provide innovative, client-focused, local and international tax expertise through our comprehensive international network that gives access to market leading tax experts from all around the world. We are one of the few international full service law firms with this bench strength in tax, allowing us to more efficiently handle the most intricate tax matters and offer a seamless multi-jurisdictional tax advisory service to our domestic and international clients. The firm has a global footprint of over 5,000 people, including 700 partners and 3,000 lawyers, spanning 74 offices in 35 countries and is active in every major economy and in every area of taxation.

For more information, please contact a member of the Tax Team

Alan Connell, Managing Partner and Head of Tax - AlanConnell@eversheds-sutherland.ie

Tim Kiely, Partner, Tax and Commercial - TimKiely@eversheds-sutherland.ie

Melissa Daly, Senior Associate, Tax - MelissaDaly@eversheds-sutherland.ie

Robert Dever, Senior Associate, Tax - RobertDever@eversheds-sutherland.ie

Niall Pilkington, Solicitor – Tax and Commercial – NiallPilkington@eversheds-sutherland.ie

Aoife Noone, Solicitor – Tax and Commercial – AoifeNoone@eversheds-sutherland.ie