Companies going through initial public offerings (IPO) from next year will receive tax relief of up to €1 million on related expenses, Minister for Finance Jack Chambers said on Tuesday, as the Government seeks to reboot flotations.
The relief will be offered on IPOs on a recognised stock exchange in Ireland or the wider European Economic Area (EEA), the Department of Finance said in Budget 2025 documents.
The Minister added that his department will also introduce a stamp duty exemption – subject to state aid considerations – in the coming year on the trading of shares in Irish small and medium enterprises (SMEs) “via financial trading platforms designed to support their funding needs”.
This is understood to relate mainly to plans by Euronext Dublin, which runs the Irish stock exchange, to establish a “springboard” market in Dublin for small companies to list. Euronext already runs such so-called Euronext Access markets in Paris, Brussels and Lisbon.
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Share trading on Euronext’s existing junior market, Euronext Growth, is exempt from the 1 per cent stamp duty rate that applies to trading of shares of Irish companies on the main market. In the UK a rate of 0.5 per cent applies to electronic trades, with rates in other European countries generally lower.
Mr Chambers was not in a position to deliver on his predecessor Michael McGrath’s plan to introduce tax changes in the budget to encourage households to invest their savings, rather than have money lying idle in bank accounts. Most of the €150 billion of Irish household deposits in banks are earning little or no interest.
The final report on a Department of Finance review of the Irish funds sector, which is expected to highlight issues with the current tax system that act as disincentive to small-time investors, was originally expected to feed into Budget 2025. The Minister said on Tuesday he plans to bring the report, which he recently received, to Government “shortly” and then “outline the next steps”.
The Irish Equity Market Forum, comprising officials from the Dublin stock exchange and corporate law, accountancy and stockbroking firms, has called on the Government to launch a tax-friendly retail investment plan along the lines of the popular schemes in some other European countries, including the individual savings accounts (ISAs) scheme introduced in the UK 25 years ago.
It urged in a pre-budget submission that an Irish scheme be launched, which would allow individuals to invest as much as €40,000 for a period of five years directly or indirectly in companies listed in the EEA.
Only three companies have floated on Dublin in the past five years. Meanwhile, a number of companies have exited the market through take-private deals and, more recently, decisions by former Iseq heavyweights, CRH, Flutter Entertainment and Smurfit Westrock, to ditch their Irish listings and move their main quotations to New York.
Separately, Mr Chambers said he will consider “in due course” the findings of a Government-commissioned report on share-based remuneration in Ireland, published on Tuesday.
The report, by Indecon, estimated there were stock-based remuneration (SBR) schemes in Ireland worth a total of €2.1 billion in 2022, more than half related to US multinationals.
Some €320 million of tax was foregone on such schemes in 2022, €235.9 million of which related to foregone employer PRSI. The report recommended that a cap be put on employer PRSI exemptions.
It also called for the simplification of SBR schemes, to make them more attractive to SMEs, and a lowering of the existing 13.5 per cent benefit-in-kind rate that applies in Ireland on interest-free loans businesses can provide to allow staff buy company shares. The UK rate is 2.25 per cent.
“SBR schemes are an important part of enterprise policy,” the report said. “Indecon believes that from a competitiveness perspective, there is a case for enhancing the attractiveness of aspects of the existing schemes while also taking measures to contain the growth in the high level of exchequer costs.”
