Budget 2025: Good News for Irish Start-Ups

Ireland's Minister of Finance, Jack Chambers, delivered a budget that will "plan, transform and deliver for the future, with progressivity, fairness and catalysing real opportunity for the future at its core".

With a mission to support economic growth, attract foreign investment and drive innovation, the total package amounts to €10.5 billion, of which €2.2 billion relates to the cost-of-living package and €1.4 billion relates to the net tax package. The rest is allocated to the government's expenditure package.

The emphasis of Budget 2025 commercially seems to be building up small, Irish-born businesses and supporting multinational financing. 

Reinforcing Tax Credits

In a welcome move, the government announced another increase in the first-year payment threshold for R&D tax credit claimants. These companies can now access up to €75,000 in a cash credit (a 50% increase on the €50,000 figure in Budget 2024). The augmented credit provides a vital cash-flow injection to young companies claiming back some of their expenses for research and development. This ensures that R&D remains attractive and rewards innovation when it starts.

Building on the buzz around homegrown Irish film talent, the government has introduced an enhanced film tax credit rate for lower-budget productions. With an 8% increase to Section 481 film tax incentive, Irish film producers can expect 40% back on eligible expenditure for feature films with a maximum qualifying expenditure of €20 million. With five Irish films at Cannes in 2024, this move will support the filmmakers behind some of Ireland's exciting film productions.

Budget 2025 also revealed a new audio-visual tax credit for Unscripted Productions at a rate of 20% on qualifying expenditure of up to €15 million, subject to European Commission approval.

Additionally, the government confirmed that an in-depth review of the R&D tax credit scheme would be conducted to continue delivering best-in-class support to innovative companies in the coming years. With international tax relief schemes getting more competitive, Ireland must continue to review and improve its tax credits.

Supporting Small Business

Last year’s budget announced a Capital Gains Tax Entrepreneur Relief of 16% for angel investors in innovative start-up SMEs, which came into effect in December 2023. However, in an effort to further incentivise angel investment, the limit on gains is being increased from €3 million to €10 million.

Additional supports for SMEs previously introduced were confirmed to be extended. The Employment Investment Incentive (EII), Startup Relief for Entrepreneurs (SURE) and the Start-up Capital Incentive (SCI) reliefs are being extended to 31 December 2026.

The EII's maximum amount an investor can claim relief on is being increased from €500,000 to €1 million. Likewise, the amount an investor can claim SURE on is being increased to €140,000.

Startup companies have been able to claim a reduction in corporation tax for the first five years of trading with Section 486C, depending on the amount of the employer's Pay-Related Social Insurance (PRSI). Budget 2025 increased the scope of this calculation, including Class S PRSI paid by a company director.

Innovation in Ireland

With a General Election looming in early 2025, the current government is looking to cement its strong performance in the Irish economy in recent years. Though Budget 2025 announced a few radical changes for businesses, startups and SMEs assured that their progress is still a priority for the government.

The Minister emphasised the importance of foreign investment, especially in infrastructure. Additionally, the Minister stressed the significance of remaining competitive for businesses. Budget 2025 aims to "support innovative businesses as they evolve to meet the challenges, and seize the opportunities, of an increasingly digitalised world."

How Myriad Can help

Understanding the intricacies of R&D tax credits is essential to fostering growth and innovation. If you require assistance claiming R&D tax credits, our informative articles can keep you updated.

Myriad also boasts a team of dedicated specialists in R&D tax matters. We recognise the complexities involved in making a tax credit claim, and our team possesses the expertise to assist you at every stage.

Should you wish to commence your R&D tax claim, please contact us at 0207 118 6045. Our R&D tax calculator can also assess potential savings for your innovative project. We look forward to speaking with you soon.