Capital Allowances let businesses offset certain capital expenditure against their profits. It’s a valuable and popular form of tax relief, with newly published statistics from Revenue showing that the value of Capital Allowances claimed in Ireland during 2023 was €192 billion.
The figures come from the Revenue’s annual Corporation Tax 2024 Payments and 2023 Returns analysis, which paint a picture of how companies in Ireland, particularly multinationals, are using the relief scheme.
In this article, we highlight details from some of the key areas in Revenue’s analysis.
What is the Corporation Tax 2024 Payments and 2023 Returns analysis?
What can the Capital Allowances statistics tell us about the Irish economy?
Capital Allowances claims are a record of business investment in Ireland (indeed, Capital Allowances are designed to incentivise both domestic and foreign investment).
Therefore, by looking at the statistics, we’re able to get an insight into the health of business activity. The greater the investment, the more likely it is that confidence is high, which bodes well for the overall growth and prosperity of the Irish economy.
What do Revenue’s statistics tell us about the take-up ofCapital Allowances in Ireland?
Revenue’s statistics focus on the biggest categories for claiming Capital Allowances in Ireland: intangible assets, plant and machinery, and industrial buildings.
In total, €192 billion in Capital Allowances were claimed in 2023 from 96,246 Corporation Tax returns. €43bn was claimed as plant and machinery and €147bn as intangible assets.
The amount claimed for plant and machinery actually fell by 9% year-on-year, while the value of intangible asset claims broadly remained the same. “Other” Capital Allowances claims fell by 15%, with the only rise coming from industrial buildings claims, which rose by 16%.
Capital Allowances asset type claimed
2019 (€m)
2020 (€m)
2021 (€m)
2022 (€m)
2023 (€m)
Plant and machinery
38,580
49,867
40,961
47,465
43,408
Intangible assets*
46,208
94,237
131,324
147,054
147,567
Industrial buildings
594
644
718
806
935
Other
235
204
232
281
239
Total
85,617
144,952
173,235
195,606
192,149
*Note: For intangible assets, the level of deduction can’t exceed 80% of trading income of the relevant trade for the accounting period. Any excess amounts can be carried forward and added to allowances available for offset against the trading income of the relevant trade for the next accounting period, and this can carry on for each succeeding accounting period.In 2023, the total value for intangible assets before the restrictions was €147 billion, while €102 billion in unused allowances from 2023 is available to be carried forward into 2024.
If we focus on the two largest types of assets, “plant and machinery” and “intangible assets”, it’s clear that growth in the amount of Capital Allowances claimed stagnated in 2023. While growth in intangible assets allowances grew consistently between 2019 and 2022 (and slightly in 2023), growth in plant and machinery allowances has very much been up and down across the years.
Why has the amount of Capital Allowances claimed fallen in 2023?
Ireland’s economy has been praised by the OECD and many others for its “robust” strength, partly because it is such an attractive place for multinationals to do business. But 2023 saw a decline in growth with figures from the Central Statistics Office showing that GDP fell by 5.5%, which was due to a contraction in multinational-dominated sectors. This volatility potentially helps to explain the overall fall in the amount of Capital Allowances claimed for 2023.
Are most capital allowances claimed by foreign owned multinationals?
Foreign owned multinationals are huge beneficiaries of the Capital Allowances scheme (which is one of many reasons as to why Ireland is seen as an attractive location for businesses to locate their operations). As the table below shows, as much as 91% of intangible assets and 81% of plant machinery were claimed by foreign owned multinationals.
Capital Allowances asset type claimed (2023)
Foreign owned multinational
Irish owned multinational
Non multinational
Intangible assets
91%
8%
1%
Plant and machinery
81%
5%
14%
Which sectors claim the most Capital Allowances?
Revenue’s analysis helpfully breaks down Capital Allowances claims by sector, showing that the “administrative and support services” sector (of which a significant proportion was aircraft leasing), was the largest claimant of allowances for plant and machinery in 2023 at €21 billion, and the “manufacturing” and “information & communication sectors were the largest claimants of allowances for intangible assets, each claiming €43 billion.
Capital Allowances asset type claimed
Plant and machinery (£m)
Intangible assets (£m)
Industrial buildings (£m)
Other (£m)
Administrative & support services
21,008
9,400
2
51
Information & communication
8,107
43,561
3
12
Manufacturing
4,903
43,053
556
17
Financial & insurance
2,590
5,497
2
14
Wholesale & retail trade
2,131
17,844
55
31
Construction
652
0
6
16
Transportation & storage
585
1,785
125
13
All other sectors
3,432
26,426
186
85
Total
43,408
147,566
935
239
Can you help my business claim Capital Allowances?
Yes! If anything, the latest figures from Revenue reemphasise the importance of speaking to the experts during volatile economic times.
Many businesses underestimate how much they’re able to claim, missing out on valuable tax relief. Our highly-qualified Capital Allowances team have a diverse range of specialisms, with years of experience working in construction, surveying, accounting and tax advisory. This means they’re able to dig into the details, identify all qualifying expenditures, and maximise your claim.
