Tax News Update    Email this document    Print this document  

October 13, 2023

Ireland announces Budget 2024

  • The Minister for Finance presented Budget 2024 (the Budget) on 10 October 2023.
  • This Alert summarizes the key elements for international investors.
  • Finance (No. 2) Bill 2023, which will include legislation giving effect to the measures presented in the Budget, is scheduled for release on 19 October 2023.


On 10 October 2023, the Minister for Finance, Michael McGrath (the Minister), presented the Budget which provided for a total budget package of €14 billion which is broken down as follows:



Current & Capital Expenditure Increase


Non-Core Funding including Ukraine and COVID-19


Temporary Cost of Living/Business Supports/Energy Credits


Tax Measures (including Temporary measures)


The Budget has been positioned as "setting out how we can help with the needs of today, but it also has to be about planning for the next 10, 20, 30 years."1

A key strand of the Government's fiscal strategy is to increase capital expenditure as set out in the National Development Plan.2 There will be a record €5.1 billion of capital investment in housing in 2024.3

The tax yield for the current fiscal year is expected to be €88.3 billion. Included in this amount are corporate tax receipts of €23.6 billion, representing a 4% increase relative to 2022. This rate of growth is significantly lower than the growth rate in recent years and is primarily attributable to a reduction in pharmaceutical exports following the end of the COVID-19 emergency. The tax yield in 2024 is projected to grow to €92.6 billion of which corporation tax is projected at €24.5 billion.

An inflation rate of 2.9% is expected in 2024 compared to the current rate of 5.3% for 2023.

Modified gross national income (GNI*), a deglobalized measure of national income, is projected to increase by 2% for both 2023 and 2024. A similar trend is expected with the level of modified domestic demand (MDD), which is projected to grow by 2.25%.

The key objective for the Budget is to support improvements in living standards while also "laying the foundations for sustainable growth — economically, fiscally, environmentally and socially - into the future."4

With the above in mind, the Budget provides for the introduction of two new sovereign funds:

  • Future Ireland Fund — This fund is created to manage living standards and public services for current and future generations. The Minister announced that 0.8% of Gross Domestic Product (GDP) will be invested into this fund annually between 2024 — 2035. This fund has the potential to reach over €100 billion by the middle of the next decade.
  • Infrastructure, Climate and Nature Fund — This fund is to help ensure sustained levels of investment in infrastructure in the event of economic downturns and to fund climate and nature related projects. This fund will grow incrementally by €2 billion plus interest accrued for seven consecutive years. By 2030, there will be €14 billion set aside for the purpose of this fund.

Detailed discussion

The text below highlights the key budgetary measures that are of relevance to international investors.

In setting tax policy, the Government's key objectives include supporting workers, promoting enterprise, supporting commitments on housing and to help households and businesses with the cost of living.

Pillar Two

Further to the feedback statements released in March5,6 and July7,8 of this year, the Irish Government has outlined its intention to publish implementing legislation in Finance (No. 2) Bill 2023 on 19 October.

Research and Development (R&D) tax credit

The R&D tax credit is a key incentive for companies performing innovation activities in Ireland. It is currently structured as a 25% refundable credit on qualifying expenditure net of grant assistance. The R&D tax credit is available in addition to the tax deduction for qualifying expenditure and is a qualifying refundable tax credit for Pillar Two purposes.

The Government has announced an increase in the R&D tax credit from 25% to 30%. In announcing this move, the Minister commented: "This will maintain the net value of the existing credit for those businesses subject to the new 15% minimum effective tax rate, while also delivering a real increase in the credit to those smaller companies who will not be in scope of Pillar Two."

Personal income tax changes

The Minister acknowledged that, without any amendments, the current personal income tax system could increase the burden of tax for rising incomes. To address this point, the Budget has provided for a number of changes resulting in reduced personal income taxes for most individuals.

Social Security

To address the long-term sustainability of the State pension system, the Government has decided to take a measured approach to increasing Pay Related Social Insurance (PRSI) contribution rates on a phased, incremental basis over a number of years.

An increase of 0.1% will take effect for both employer and employee contributions from 1 October 2024.

Territoriality/Participation Exemption

In his budget speech, the Minister referenced the recent public consultation that was opened to address the introduction of a dividend participation exemption.9 This consultation period will close on 13 December 2023. Please refer to our Tax Alert for further detail in this regard.10

Interest deductibility

The Minister has committed to engaging with stakeholders regarding a possible simplification of the current interest deductibility provisions set out in Irish tax legislation. The Minister also acknowledged that other aspects of tax legislation may be simplified, as well, following implementation of Pillar Two.

Capital Gains Tax (CGT) Angel Investor Relief

A new targeted CGT relief for individual angel investors in innovative start-up small and medium enterprises was announced. This relief will consist of a 16% rate of CGT (or 18% if invested through a partnership) on the disposal of qualifying investments (capped at twice the level of the investment).

The investment must be in the form of fully paid up newly issued shares of at least €10,000 and it must constitute between 5% - 49% of the ordinary share capital of the investee company. The scheme will include a certification process by Enterprise Ireland and will be subject to the EU General Block Exemption Regulation (GBER). A lifetime gains limit of €3 million will apply.

Share-based remuneration

It was announced that the Department of Finance will be launching a public consultation on share-based remuneration in recognition that this is a key element of remuneration that employers use to reward and retain employees. It is expected share options will be reviewed as part of the consultation to look at moving the taxation to the Pay As You Earn (PAYE) system.


For additional information with respect to this Alert, please contact the following:

Ernst & Young (Ireland), Dublin

Ernst & Young (Ireland), Financial Services, Dublin

Ernst & Young (Ireland), Cork

Ernst & Young (Ireland), Limerick

Ernst & Young (Ireland), Waterford

Ernst & Young (Ireland), Galway

Ernst & Young LLP (United States), Irish Tax Desk, New York

Ernst & Young LLP (United States), Irish Tax Desk, San Jose

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor



1 Statement by Minister McGrath on Budget 2024

2 National Development Plan 2021 - 2030

3 Press Release - Department of Housing, Local Government and Heritage unprecedented budget package of near €7bn announced

4 Budget 2024 — Economic and Fiscal Outlook

5 Pillar Two Implementation Feedback Statement — Department of Finance

6 See EY Global Tax Alert, Ireland launches consultation on EU Minimum Tax Directive and proposed legislative approach, dated 5 April 2023.

7 Pillar Two Implementation Second Feedback Statement — Government of Ireland

8 See EY Global Tax Alert, Ireland launches second Feedback Statement on EU Minimum Tax Directive and proposed legislative approach, dated 28 July 2023.

9 Roadmap for the Introduction of a Participation Exemption to Irish Corporation Tax including technical consultation — Government of Ireland

10 See EY Global Tax Alert, Irish Government publishes roadmap for introducing dividend participation exemption to Ireland's corporation tax system, dated 15 September 2023.