Ireland Depreciation

Wear and Tear at 12.5%: Mechanics and Timing

Ireland's standard capital allowance for plant and machinery is 12.5% per year on a straight-line basis over eight years, as provided under Section 284 of the Taxes Consolidation Act 1997. Unlike the UK's pooling and reducing-balance approach, Irish wear and tear runs against each asset individually from the date it is first used in the trade. A graphic design firm buying €48,000 of workstations in September 2024 claims €6,000 per year — the same amount in year one as in year eight. The asset is fully written off after exactly eight years with no residual value. Irish capital allowances require the asset to be used wholly and exclusively for the purposes of the trade; mixed-use assets must be apportioned. Motor vehicles are particularly restricted: allowances are capped at the lower of actual cost and the statutory ceiling of €24,000 per car, a figure unchanged since 2007. A company purchasing a €55,000 executive car can only claim 12.5% × €24,000 = €3,000 per year, with the excess permanently non-deductible.

Accelerated Allowances for Energy-Efficient Equipment

Ireland's Accelerated Capital Allowance (ACA) scheme provides 100% write-off in the year of purchase for energy-efficient plant and machinery on the SEAI's Triple E Register. Qualifying categories include efficient motors, variable speed drives, lighting controls, refrigeration equipment, and EV charging infrastructure. A manufacturing company replacing old compressors with Triple-E-rated units costing €120,000 can deduct the full €120,000 in year one rather than €15,000 per year over eight years, generating a cash-flow benefit equivalent to approximately €26,250 in additional Year 1 tax relief at the 12.5% trading rate. The scheme was extended through successive Finance Acts to remain available beyond 2025, reflecting Ireland's commitment to industrial decarbonisation targets under the National Development Plan.

Section 291A and the Knowledge Development Box

Ireland's intellectual property regime under Section 291A TCA 1997 allows amortisation of specified intangible assets — patents, trademarks, know-how, software, customer lists — in line with accounting amortisation, subject to a capping rule limiting the combined deduction (amortisation plus interest on related borrowings) to 80% of qualifying income from exploiting the IP in any year. Unused deductions carry forward indefinitely. Combined with Ireland's 6.25% Knowledge Development Box rate on qualifying IP income — one of the lowest effective IP tax rates in the EU — this regime has attracted significant IP holding structures. A company licensing patented pharmaceutical processes generating €100 million in qualifying income can shelter up to €80 million annually through amortisation and interest deductions, subject to the OECD BEPS nexus requirements incorporated since 2016 under the Finance Act 2015.