Budget 2025: Key Takeaways for Ireland's Competitiveness as a Global Business Hub

What are the takeaways from Budget 2025 for Ireland’s competitiveness as a location for international business, and can you comment on the principal business impacts, including any proposals regarding tax administration and simplification in the Budget?

Angela Fleming, Partner & Head of Financial Services Tax: "The first piece of very welcome news was confirmation on Budget Day that a new participation exemption regime for dividends is being introduced from 1 January. We look forward to seeing the drafting of the legislation on 10 October (which should be published by the time this article goes to print). One of the biggest criticisms of the strawman proposal that was put forward a month ago was that the exemption is limited to dividends from subsidiaries in EU and treaty countries. While it seems that this is to remain the case, in his Budget speech Minister Chambers stated “work will continue in the coming year on participation exemptions, including further consideration of geographic scope and of a foreign branch exemption”. Thus, it also sounds like the geographic scope of the exemption may be widened in future years as Pillar Two continues to evolve. Furthermore, a foreign branch exemption, while not to be expected in this year’s Finance Bill, is still under review and potentially something we can be optimistic about seeing introduced into Irish tax law in future years. 

Minister Chambers acknowledged in his Budget speech “it is critical that we continue to actively work on maintaining Ireland’s attractiveness to businesses”, a sentiment that we strongly share. We have, on numerous occasions in this publication, advocated for an overhaul of Ireland’s interest deductibility rules. We believe this should be a key priority in order to simplify Irish tax law, ease the administrative burden on taxpayers, and make Ireland an attractive place to do business for international companies. On 27 September, the Department of Finance launched a public consultation on the Taxation of Interest, which includes both the taxation and deductibility of interest, as well as interest withholding tax. While this is a welcome development, the consultation period runs to 30 January 2025 meaning we are unlikely to see any changes until next year’s Finance Bill."