Finance (No. 2) Bill 2023 measures affecting Irish financial services companies

The Irish Government published Finance (No. 2) Bill 2023 on 19 October 2023. Many of the provisions contained in the Bill are to implement tax measures announced by Minister Michael McGrath in his Budget 2024 speech.

The Bill contains further detail on how these tax measures will be implemented along with further administrative and technical measures which did not make it into the Minister’s Budget Day speech. The tax measures contained in the Bill took effect on 1 January 2024.

Below are some of the key measures contained in the Bill which are relevant to companies operating in the Irish financial services sector.

Corporation tax

BEPS – Pillar 2

While the 12.5% corporation tax rate will remain the norm for most Irish companies, the 15% effective corporation tax rate for Multinational Enterprises (MNEs) will be introduced in 2024. This is part of the OECD Pillar 2 agreement. It will apply to MNEs with worldwide revenues in excess of €750m. Legislation on the operation of this new effective tax rate is included in the Bill and provides some welcome clarity for affected taxpayers.

Qualifying financing company

The Bill introduces a new Section 76E which allows for a deduction against Case III or Case IV income for interest incurred by a Qualifying Financing Company that has borrowed from a third-party lender for the purpose of onward lending to a trading subsidiary established an EU/EEA jurisdiction, subject to meeting certain conditions.

Hybrid/Reverse hybrid mismatch rules

An amendment is being made to the definition of an “entity” for the purposes of the Hybrid/Reverse hybrid mismatch rules. The amendment requires a legal arrangement to be within the “charge to tax” as opposed to being “subject to tax”.


An amendment is being made to Section 76D to clarify that taxable lease income and deductible lease expense should not be calculated in accordance with the financial statements and should be calculated by computing the total lease payments due under the lease and dividing it evenly over the lease term.

An amendment is being made to Section 299 to allow accounting rules to be used to calculate profit or loss from a lease where the substance of the transaction is a financing transaction.

A number of amendments are being made to Section 403 which limits the ability to group relive losses resulting from capital allowances.

Withholding taxes

Outbound payments

The Bill introduces new provisions in relation to the availability of certain withholding tax exemptions on outbound payments of interest, royalties and distributions (including dividends) towards jurisdictions on the EU list of non-cooperative jurisdictions, no tax and zero tax jurisdictions. Exemptions remain for quoted Eurobonds and wholesale debt instruments subject to meeting certain conditions.

Stamp duties

Bank levy

From 2024, a revised bank levy will apply to those financial institutions that received financial assistance from the Government during the banking crisis (AIB, EBS, Bank of Ireland and PTSB only). The measure is expected to raise approximately €200m. The levy will be reviewed again in Budget 2025. The levy will now be calculated based on 0.112% of the amount of eligible deposits held by the affected banks during the 2022 base year. This is a departure from the previous levy which could impact all banks and was based on the amount of DIRT collected from the bank. This is a welcome development for new entrants (and potential new entrants) to the Irish banking marketplace.

Exemption from Stamp Duty on certain transfers of Irish shares.

The Revenue administrative practice whereby they did not seek to impose Irish stamp duty on the acquisition of Irish shares where the transaction had taken place on a recognised US or Canadian depositary system has now been put on a statutory footing.


An amendment is being made to the penalty regime for FATCA, CRS and DAC 2 to ensure Revenue can impose penalties where the financial institution is not a legal entity (e.g. a partnership or a trust).

If you would like to discuss any of the proposed changes in further detail, please feel free to reach out to a member of our tax team.