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EY reacts to Budget 2022

Michael Rooney, Tax Partner, People Advisory Services, EY Ireland

Income tax receipts were €22.6bn in 2020, which was only €293m less, or 1.3% lower, than 2019. This is despite 664,000 people being on Government supports at one stage during 2020, which is about 25% of the workforce. The importance and resilience of the income tax system is clear, but our economic rebound and the inflationary pressures that brings, meant that the Minister had to raise the tax and USC bands and increase tax credits, so that all taxpayers could feel like they had a little bit more net income in their pocket. For higher rate taxpayers, the additional net income is nearly €35 per month or €415 per annum.”

Rachel Dillon, Head of Mobility, EY Ireland on flexible working supports

“With the great resignation of 2021, the ability to offer flexible working arrangements will be crucial for many employers so that they can attract and retain talent, therefore the Government’s commitment to their policy to facilitate remote working arrangements is very welcome. While the increase in the tax deduction for vouched utility expenses from 10% to 30% sounds significant, in financial terms, if an employee incurred utility expenses of €1,000 per year, this would be worth approximately €120 in cash to a higher rate taxpayer working from home on a full time basis.

While there is certainly an increasing demand from employees for flexible working arrangements, employers need to remember that facilitating international remote working arrangements outside the country of employment can give rise to complexity, including additional employer compliance requirements.”

Ian Collins, Partner and Head of Innovation Incentives, EY Ireland on the Digital Gaming Tax Credit

“It is refreshing to see Ireland aspire to introduce a very competitive Digital Gaming Tax Credit (DGTC) – both in terms of rate (32%) and level of allowable spend per project (€25 million). This compares very favourably to many of our competitor jurisdictions where a DGTC has been in place for many years. It is hoped this will have the intended consequence of boosting Ireland’s creative economy, and act as a further stepping stone to promoting Ireland as a world class hub for the digital gaming sector.”