Capital Allowances

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Traditional Capital allowances/ Depreciation

As in the United Kingdom depreciation in the accounts is added back in the trading income computation. Depreciation against taxable profits is permitted only by way of capital allowances. The following capital allowances are available

  • Plant and machinery 12.5% per annum
  • industrial buildings used for manufacturing qualifying activities 4 % per annum
  • vehicles (subject to cost restrictions) 12.5% per annum
  • intellectual property assets depreciation 7% per annum 2% final year
  • Allowances on motor vehicles are restricted to a cost of €24,000 which sum may vary based on the carbon emissions of the vehicle.

Separate from general depreciation on equipment, finance leases and operating leases of assets with a shorter life than eight years may receive more beneficial allowances. Lessors may use accounting depreciation rather than capital allowance type appreciation over eight years. It must reflect the economic lifetime of the asset in accordance with standard criteria for depreciation.

Modern Allowances

There are incentive schemes in relation to certain types of capital expenditure. A 100% capital allowance in the year of acquisition is permitted in respect of expenditure on certain qualifying equipment of an energy-saving nature acquired for use in a trade. It must be acquired before 2021. It applies to a wide range of equipment and systems which meet defined energy efficiency criteria including

  • information and communications technology
  • heating and electricity provision
  • electric and alternative fuel vehicles
  • heating ventilation and air conditioning control systems
  • motors and  drives
  • refrigeration and cooling systems
  • catering and hospitality equipment
  • building energy  management systems

There are capital allowances for the cost of constructing and equipping qualifying fitness or childcare facilities provided by employers for use by employees. The allowances are granted over seven years. Expenditure on qualifying equipment may receive 100% relief in the first year.