How to get tax breaks for tenant fit-outs and why you should be wary of lease incentives

In this month’s Insider Ireland’s Business Matters, senior consultant Phil O’Connor highlights the tax breaks that are available for the majority of fit-out expenditure, which many occupiers of property are unaware of.

Phil explains that Wear and Tear Allowances and Accelerated Capital Allowances are available for plant and machinery expenditure, and spend on energy efficient technologies. Fit-out projects tend to attract high levels of allowances as the majority of the installations are designed specifically to meet the occupant’s business needs.

He says: “Retail and leisure fit-outs contain additional items that qualify over and above other types of property, due to the nature of their trade in attracting customers to their business. Such items can include certain ambient and decorative fittings which have been found to qualify in specific circumstances under case law precedents.”

Additionally, Phil provides advice to tenants with landlords offering incentives, such as a rent-free period or capital contribution towards fit-outs, which could considerably impact their tax bill.

“Tenants should ensure that due consideration is given to the tax implications of each option. The Revenue Commissioners define a reverse premium to be a payment or other benefit received by a tenant as an inducement to enter into a lease. For tax purposes, this payment is generally regarded as a taxable revenue receipt, i.e. taxable income.”

To find out more, you can read the article in full on the Insider Ireland website here, or to discuss further, please contact our team.

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