Finance (No. 2) Bill 2023 - Business Tax

Implementation of 15% rate of corporation tax

Extensive (136 pages) legislation is included to implement the OECD Pillar 2 agreement into Irish law.

This is required as part of an EU commitment which requires Member States to introduce a global minimum effective tax rate of 15% for corporate groups with annual global turnover of at least €750 million (in at least two of the preceding four years).

The rules will apply for accounting periods commencing on or after 31 December 2023.

The Bill introduces a Qualified Domestic Top Up Tax (‘QDTT’) to achieve a minimum effective tax rate of 15% for impacted businesses, when added to the corporation tax charged under existing domestic rules (i.e. the trading rate of 12.5%).

Transitional safe harbour and relieving measures are included to ease the administrative burden on in-scope Multinational Enterprises (‘MNE’) groups in respect of their GloBE compliance obligations during the initial years of implementation.

Impacted groups will also need to consider relevant accounting disclosures in relation to OECD Pillar Two later this year.

R&D Tax Credit

The Bill legislates for the increase in the rate of the R&D Tax Credit from 25% to 30% of qualifying expenditure in respect of accounting periods commencing on or after 1 January 2024. The Bill also reflects the increase in the amount of the first year payment to €50,000.

In addition, it introduces a new concept of a “pre-notification requirement” which will apply to first time claimants and to companies who have not claimed an R&D Tax Credit in the previous 3 years. The notification must be made 90 days prior to making a claim.

Finally, provision is made to allow a company succeeding to a trade to claim unused credits of the predecessor company from which the trade transferred, subject to certain conditions.

Outbound payments defensive measures

These new measures apply to outbound payments of interest, royalties and distributions (including dividends) to jurisdictions on the EU list of non-cooperative jurisdictions, no-tax and zero-tax jurisdictions. The new provisions restrict the operation of certain domestic withholding tax exemptions and impose a reporting obligation for impacted payments.

Qualifying Finance Companies

Under Section 38 of the Bill a “qualifying financing company” can, where certain criteria are met, claim a tax deduction for interest paid in respect of third party finance which is on lent to a qualifying subsidiary (i.e. direct 75% or more shareholding) for a qualifying business purpose.


A number of technical amendments are included in relation to the taxation of leases as follows:

  • Clarification on how taxable profits calculations are impacted by lease income/payments
  • Balancing allowance/charge provisions in respect of leased assets
  • Lease ring-fence provisions

Return to Finance (No.2) Bill 2023 Commentary

Team Members

Jackie Masterson

Head of Tax, Tax Partner

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