The tech sector has cautiously welcomed the expansion of intellectual property tax credits and employee share schemes in the 2023 budget.
The government is extending the state’s so-called “Knowledge Development Box” tax credit for another four years. This mainly applies to technology companies and patent applicants. Qualifying companies can receive a profit deduction of up to 50 percent.
However, the effective tax rate is set to increase from 6.25 percent to 10 percent as the OECD rules for uniform tax rates are introduced internationally.
Treasury Secretary Paschal Donohoe also announced that the government will amend the research and development tax credit, which currently generates a 25 percent tax credit and a 12.5 percent tax deduction. However, he did not specify the rate of change, which can result in a refund of €37.50 for every €100 spent on research and development.
Separately, the government has extended the Special Assignee Relief Program (SARP) scheme – which gives income tax relief to high-paid executives who come to Ireland to work – until the end of 2025. The government has raised the minimum income limit for new entrants to €100,000.
At small and medium-sized companies, some employee stock option programs will be renewed. The key employee engagement program (Keep) will be extended until the end of 2025. The lifetime corporate limit on Keep shares will be raised from €3m to €6m.
The Office of the Data Protection Commissioner is to receive an additional 3 million euros, including the cost of two new Data Protection Commissioners. The government aims to have 280 staff at the regulator by the end of 2023.
Fines imposed by the regulator on big tech companies, like the €405m penalty on Instagram earlier this month, are being subsumed into Ireland’s public finances.
The moves have been widely welcomed by some tech industry lobby groups.
“The further changes to the Keep stock options and R&D tax credit schemes are positive for start-ups,” Scale Ireland said in a statement.
“We look forward to further details on these two measures.”
Public Expenditure Secretary Michael McGrath also announced an increase in funding for local corporate offices.
https://www.independent.ie/business/budget/tech-sector-sees-tax-credit-and-employee-share-scheme-extensions-42022941.html The technology sector plans to extend tax credit and employee share plans