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Minister for Finance publishes Finance Bill

The Finance Bill implements the tax changes announced on Budget Day.
The Finance Bill implements the tax changes announced on Budget Day.

The Minister for Finance has published the Finance Bill which implements the tax changes announced on Budget Day, as well as introducing some administrative and technical changes to the tax code.

The 142 page document provides for amendments relating to the rate of VAT applying to the hospitality and hairdressing sectors, the Automatic Enrolment Retirement Savings Scheme, the Participation Exemption for Foreign Dividends, and the rates of taxation that apply to investments in Irish domiciled funds and life assurance policies.

It also provides for changes to existing measures to support enterprises and farming, individuals and households, as well as property-related measures.

These include the Rent Tax Credit, VAT on the sale of apartments, Residential Zoned Land Tax, Benefit-in-Kind on motor vehicles, the Research and Development Tax Credit, and the Key Employee Engagement Programme. It also provides for amendments to certain Stamp Duty measures and an extension of the Bank Levy.

Janette Maxwell, Tax Partner at Grant Thornton Ireland said she had hoped for clarity in the Finance Bill on the 9% VAT rate on the sale of newly completed residential apartments, which was announced in the Budget.

"The bill failed to address the ambiguity around the meaning of housing as part of a social policy," Ms Maxwell said.

"Furthermore, it did not extend the scope of the 9% VAT rate to sites and development agreements.

"To clarify - the sale of completed apartments in a block are subject to VAT at 9%, whereas a contract for sale of a site and the construction of a block of apartments is subject to VAT at 13.5%.

"This will have inequitable impact, especially for those housing bodies who have entered into forward-funding agreements at the behest of the Government," she added.

Sinead Leahy, Indirect Tax Director at Grant Thornton Ireland said the Finance Bill introduces a series of targeted reforms to the VAT treatment of agricultural activities, with a particular focus on the flat-rate farmers scheme and VAT registration obligations.

"For flat-rate farmers, the headline change is the reduction of the flat-rate addition from 5.1% to 4.5%, effective 1 January 2026.

"This adjustment aims to better align the compensation mechanism with actual input VAT and reduce overcompensation for unregistered farmers," Ms Leahy explained.

Ms Leahy also highlighted updates to the VAT registration assessment criteria for farmers, which is likely to impact those in the horse-racing and training sector.

"The turnover threshold assessment must now include all activities excluded from the flat-rate addition, and the review period is expanded to cover both the current and prior calendar year.

"This change is designed to align with EU legislation and ensure a more accurate and comprehensive evaluation of VAT liability, and will likely result in more farmers having to register for VAT purposes," she added.