The main changes introduced by the 2016 Budget

Here you find a brief summary of the changes introduced by the 2016 government budget to the income, corporation and VAT codes


The changes to the IRS Code introduced by the 2016 budget were quite limited due to time constraints which had resulted from the delay in forming a government.

There was a slight easing of the tax burden in that the first four scales of the tax table were increased by .5 of one percent.

The marriage coefficient was reintroduced as it had worked until 2014 in that a couple's joint income was halved to apply the tax rates with the result being doubled providing the couple opted for joint taxation. In 2015 dependents were included in the calculation.

To compensate for this the deductions against tax for each dependent were increased.

  1. For dependent children the tax deduction becomes € 600 for each child
  2. For dependent parents who live with the tax payer providing they do not have income superior to the minimum pension the amount deductible becomes € 525 for each dependent.

In cases when the dependent child or parent who are handicapped the deduction increases to € 1,048.05 providing they do not have income superior to the minimum pension.

In general the effect of this change will benefit tax payers on a lower income who have children.

Although the changes to the income code were in fact very limited the government has obtained a legislative authorisations to introduce during 2016 the following changes to the Income Tax Code;

  • Introducing an electronic registration for Non Habitual Residents;
  • Clarify what constitutes a deduction in respect of social security payments;


The main changes to the 2016 corporation tax code were the following;

  • The carry forward of losses has been reduced from 12 years to 5 years except for Small and Medium Sized enterprises where the carry forward remains at 12 years;
  • The corporation tax rate has been harmonized between not for profit entities and normal trading companies at 21 %;
  • The period that the books and records of an entity must be kept is reduced form 12 to 10 years;
  • Introduction of a Country by Country Reporting to be prepared by the holding company with information regarding their subsidiaries such as jurisdiction, gross profit,results before tax,tax due and retained earnings;


The only significant change to the Value Added Tax regime was the following;

On the 1 July 2016 the VAT rate on restaurant meals will go down from 23% to 13%.

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