Capital Gains Tax (CGT)

In the run up to the Capital Gains Tax (CGT) payment date of 15 December 2024 – which is relevant in respect of gains realised during the 11 month period to 30 November 2024 – it has been inspiring and reassuring to see the level of transactions entered into in that 11 month period and, indeed, the gains realised by so many.

As we prepare for the Christmas break, we also remind readers to contact their tax agents in a timely manner in January with details of any disposals made during the month ended 31 December 2024 so that your tax agents can outline the CGT implications of those disposals ahead of the CGT payment date of 31 January 2025.

The recent election, and advising clients in respect of the CGT deadlines, has caused me to ponder on what we might expect from our next government from a taxation and business perspective. The first thing to note is that the Irish election has defied the global trend and is one of the few elections where the incumbents, it would seem, will be returned to power. The next few weeks of negotiations will be crucial and we will be watching closely for the draft Programme for Government.

However, from a business perspective I think there will generally be comfort in the stability that will be expected from the returning parties. We would expect to see significant initiatives to increase the supply of housing to address the crisis that the country is currently facing. This could take the form of some tax measures to increase the viability of building new stock or repurposing existing stock.

The new Government will likely refocus on the multinational sector to try to ensure that the success of this sector is continued in the face of global political change particularly in the US. Improving infrastructure and maintaining our stable business environment will be key in this regard. The previous Government initiated two long-term wealth funds one aimed at infrastructure projects. Post the election we would
expect the Government to be comfortable committing these funds to long-term strategic projects rather than short-term spending to get early wins.

In parallel to this we expect the Government will refocus on SMEs to help indigenous business to thrive which would help rebalance some of the exposure to the multinational sector. There was a feeling that Budget 2025 (presented in October 2024) did not do much to help this part of the economy and the new Government will be keen to rectify this perception.

I think renewables will continue to be a focus of this government, in particular I think a big effort will be put into offshore wind. Addressing the challenges of an aging population will also feature strongly for the
incoming Government. Challenges in the residential care sector for the elderly will have to be mitigated to encourage investment in this area.

It will be interesting to see what the Governments view on the income tax regime will be for individuals. Both of the largest parties that are likely to form the next Government have committed to ensure workers retain more of their earnings through lower tax. Both parties have outlined their proposal to increase the entry point to the higher rate of tax which is currently €42,000, and rising to €44,000 in January 2025, with Fianna Fáil proposing an increase to €50,000 and Fine Gael proposing an increase to €54,000. Both parties have also indicated that they plan to reduce the exposure to the lower rate of USC – Fianna Fáil through reduction of the 3% rate to 1.5% and Fine Gael through an increase in the entry point. Both parties have also outlined proposals for increasing tax credits. In this regard, we can see similarities in
objectives and it will be interesting to see what approach is agreed as we see the formation of the next Government.

Fianna Fáil have also have indicated that they will examine reducing CGT to encourage innovation and productivity and attract foreign investment into Ireland and that they will consider increasing the CAT Tax Free Thresholds in each budget and review the CAT Thresholds applicable in instances where the deceased does not have any children. Fine Gael have indicated that they will consider making favourable changes in relation to CGT and CAT matters.

From a review of the tax manifestos of each major political party, it is clear that they are all agreed on retaining the 12.5% rate of corporation tax but they have very different views in terms of how the “super wealthy” and “high income earners” should be taxed.

The Social Democrats, Labour and Sinn Féin manifestos have a lot in common in terms of how high income earners and those with wealth should be taxed including the possible introduction of a wealth tax and restricting tax credits for those earning in excess of €100,000. The possibility of these parties forming a government following a future general election cannot be dismissed and is worrying for high earners and the wealthy.

For the moment, however, I think the result of the election will be positive for business and society in general. Finally, I am sure you are all looking forward to a welcome break over Christmas and I hope each and every one of you enjoys the holiday season and have a successful and happy 2025.