Cancellation of Income Tax – Chargeable Person – Tax Agents and Tax Advisors

From 10^th February 2023 the Revenue Commissioners are posting out letters to taxpayers who are currently registered for Income Tax but who have not submitted Income Tax Returns for years of assessment up to and including 2021.  The individuals affected are those who are currently registered for IT but have not filed Form 11 Tax returns for years up to and including 2021.  The Revenue Commissioners are now notifying them of their filing obligations as “chargeable persons” under the self-assessment rules.  For further information on chargeable persons, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-41a/41a-01-01.pdf

The letters state:

“Based on a review of your Income Tax records, you have not filed any self-assessed Income Tax returns for years up to and including 2021.”

Taxpayers should start receiving such letters from 13^th February onwards.

Please be aware that your Tax Agent won’t receive a copy of this notice.

What are you required to do?

In the event that the taxpayer is no longer deemed to be a “chargeable person” and, therefore, is no longer required to file an Income Tax Returns, he/she/they should cancel the Income Tax registration.

The term “chargeable person” applies to an individual who:

1. Is self employed or
2. Is a Director of an Irish company or
3. Has other sources of income in addition to a PAYE salary.

An individual who is in receipt of PAYE income as well as non-PAYE income will not, however, be regarded as a “chargeable person” provided:

1. the total gross income from non-PAYE sources is less than €30,000 and
2. the net assessable income is less than €5,000 and
3. the tax is collected by reducing his/her/their tax credits through the PAYE system.

A chargeable person is obliged to file an annual IT Return through the self-assessment system.

How can you cancel your IT registration?

This can be done online via ROS or by completing a Form TRCN1 which is available on the Revenue website.

What happens if you are considered to be a “Chargeable Person”?

If the taxpayer is considered a “chargeable person” but has not filed Income Tax Returns up to 2021, the letter is deemed to be a Final Reminder to file all outstanding income tax returns.

If the taxpayer does not file the outstanding IT Returns or cancel the registration within 21 days of the letter, Revenue will cease the IT registration without further notice.

Once the Income Tax registration is ceased, if the taxpayer wishes to re-register for IT he/she/they will be required to submit an online application via ROS.

Final Points

The Notice states:

“You should note that, where further information comes to Revenue’s attention that you were a chargeable person for any relevant tax year, Revenue reserves the right to reinstate your Income Tax registration.

The non-filing of a required tax return by chargeable persons can result in further contact from Revenue, including a follow-up compliance intervention. Non-filing of a return where required is also an offence for which a person can be prosecuted.”

For further information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-38/38-01-03c.pdf

If you have received a Cancellation of your Income Tax Registration Notice and you require assistance filing outstanding Income Tax Returns, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Special Assignee Relief Programme (SARP)

Introduction

The Special Assignee Relief Programme (“SARP”) was introduced on 1^st January 2012 to provide Income Tax Relief for eligible employees assigned to work in Ireland from abroad.  It was due to expire for new entrants on 31^st December 2022, however, Finance Act 2022 extended the relief for a further three years, up until 31^st December 2025.

Previous SARP Regulations:

Prior to 1^st January 2023, an individual was required to earn a minimum basic salary of €75,000 per annum (excluding all bonuses, benefits or share based remuneration) in order to be eligible for SARP (Special Assignee Relief Programme).

SARP Changes:

From 1^st January 2023 onwards the employee must have a minimum base salary of €100,000 per annum.  This amount excludes all bonuses, commissions or other similar payments, benefits or share-based remuneration.

A number of conditions need to be satisfied for this relief to apply, as follows:

1. The individual must be an employee of either (i) a company incorporated and tax resident in a country with which Ireland has a Double Taxation Agreement/Exchange of Information Agreement or (ii) an associated company of a relevant employer. The individual must arrive in Ireland in any of the tax years, from 2012 to 2025, at the request of his/her/their employer, to perform employment duties in Ireland for that employer or with an associated company of that employer.

2. The individual must have been employed by a relevant employer for six months immediately prior to arriving in Ireland.

3. The individual must perform employment duties in the State for at least twelve consecutive months from the date of arrival in Ireland.

4. The employee must not have been tax resident in Ireland for the five tax years preceding the year of arrival.

5. The individual must be Irish tax resident, although he/she/they may also be tax resident in another country.

6. The individual must be tax resident in Ireland for all years for which he/she/they claim the relief.

7. When applying, SARP applicants must have a PPS number issued to them.

8. Within ninety days of the individual’s arrival in Ireland, the employer must submit the SARP application (SARP 1A) to Revenue’s SARP Unit, certifying that all the above conditions have been met for the relief to apply. In addition, the employer company must have complied with the normal PAYE employee commencement regulations.

9. If the individual is not Irish tax resident in the year of arrival, Relief may start from the following year.

Example 1

Mark arrived in Ireland from USA on 17^th October 2019 on a 5-year contract.

He was not Irish tax resident in 2019.

As Mark was tax resident in Ireland in 2020, he was entitled to claim relief under SARP.

His first year of claim was, therefore, 2020.

He can continue to claim SARP up to and including 2025 if he continues to satisfy the relevant conditions for the Relief.

SARP Relief

The relief operates by:

• exempting, from Income Tax,
• 30% of a qualifying employee’s annual employment income above a qualifying income threshold (€75,000 prior to 1^st January 2023 and €100,000 from 1^st January 2023 onwards),
• Subject to an earnings cap (since January 2019, an earnings cap of €1m has been in effect),
• for a period of 5 years.

Relief is not extended to Universal Social Charge (USC) so the individual must pay USC on the full amount of his/her/their salary.

The specified amount is not exempt from PRSI, unless the employee is relieved from paying Irish PRSI under either an EU Regulation or under a bilateral agreement with another jurisdiction.

The relief operates by providing a deduction for income tax purposes from remuneration based on the following formula:

(A-B) X 30%

A = Qualifying Remuneration i.e. total remuneration.  This includes:

• Income, profits or gains from his/her/their employment in the State with a relevant employer or associated Company.
• Allowances, benefits-in-kind, bonuses, share awards, commissions, etc.
• The following is deductible from the total remuneration figure when calculating the Relief: employee contributions to an Irish approved pension plan or a foreign pension plan eligible for Irish tax relief as well as remuneration eligible for Double Taxation Relief in Ireland.

B = €100,000 (prior to 1st January 2023 it was €75,000)

Example 2

Thomas arrived in Ireland on 1st January 2023 and meets all the above conditions to qualify for SARP relief.

His salary is €120,000, his bonus is €15,000 and he receives a benefits in kind (e.g. medical insurance) valued at €3,000.

A = €138,000 i.e. €120,000 + €15,000 + €3,000

B = €100,000 i.e. qualifying Income Threshold

SARP Deduction = (€138,000 – €100,000) = €38,000 @ 30% = €11,400

Thomas’s marginal Income Tax rate in Ireland is 40%, therefore his Income Tax saving is €4,560 i.e. €11,400 x 40%

It’s important to keep in mind that 8% USC and 4% PRSI, if applicable, will apply to this employment income.

Important Points to keep in mind:

1. Revenue recently clarified that employees must have at least one Irish workday each month in the first twelve months. Therefore, all employees eligible for SARP should take account of this when making travel arrangements in their first year in Ireland so as to ensure their SARP Relief isn’t withdrawn.

2. In the case of new applicants arriving in Ireland from 1^st January 2023 onwards, please be aware that the portion of employment income which is eligible for Relief is 30% of their annual employment income above €100,000. For qualifying employees who arrived in Ireland before 1^st January 2023, however, their relief calculated as 30% of their annual employment income above €75,000.

3. Employees who qualify for SARP Relief are also eligible to receive certain travel expenses and certain costs associated with the education of their children in Ireland tax free.

4. Employees who have started their Irish role before actually arriving in Ireland, will not be entitled to claim SARP relief, unless (i) the employee was prevented from travelling to Ireland to take up his/her/their position here due to unforeseen circumstances beyond his/her/their control and (ii) the Irish employment duties carried out by the individual abroad do not exceed five “workdays” in the six months period prior to his/her/their arrival in Ireland.

5. Employees must have a PPS number when making their application.

6. Individuals should register their employment with Revenue before applying for SARP.

7. The SARP Relief cannot be claimed by new hires with no previous group employment history.

EMPLOYEES

SARP Relief can be claimed by the employee in one of two ways:

1. Through the year-end Tax Return

An employee who receives SARP Relief is considered to be a “chargeable person” for Income Tax purposes.  He/she/they is/are required to submit an Income Tax Return to the Irish Revenue Commissioners in respect of each year for which relief is claimed.   The Form 11 Tax Return may be filed by way of a paper form or through the Revenue’s On-Line Service (ROS).

Employees who have registered and qualify for SARP must file a Form 11 Tax Return by 31st October following the end of the tax year.

2. Through payroll

By completing Part C of Form SARP 1A and submitting it to Revenue, SARP Relief can be granted at source through the employee’s payroll.

The employer is required to make this application only once.

Relief can be granted at source through payroll for the duration of the assignment, up to a maximum of five years, providing the employee continues to satisfy all the relevant conditions.

If you would like further information on the new SARP (Special Assignee Relief Programme) regime, please contact us to make an appointment.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

VAT Exemption – VAT Capital Goods Scheme

Today the Irish Revenue Commissioners published eBrief No. 197/22 in relation to emergency accommodation and ancillary services.  For full information, please click: https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part03-taxable-transactions-goods-ica-services/Services/services-emergency-accommodation-and-ancillary-services.pdf

If you are providing Emergency Accommodation it is essential for you to consider the VAT implications.

The most important points are as follows:

• The use of State owned property for emergency accommodation is outside the scope of VAT.

• The supply of emergency accommodation in all/part of a house, apartment, bedsit or other similar establishment is exempt from VAT.

• Accommodation in a hotel or guesthouse which is contracted to a State agency is considered to be an exempt supply of emergency accommodation provided the following two conditions are met: (i) it is provided exclusively as emergency accommodation and (ii) it must not available to the general public as guest or hotel accommodation.

• The supply of accommodation in direct provision centres is also exempt from VAT as a supply of emergency accommodation.

• Ancillary supplies relating to the supply of emergency accommodation will be treated as exempt from VAT. These include laundry, security, reception and administration services.

• The Revenue Commissioners do not consider catering services to be ancillary to the supply of emergency accommodation. Therefore, catering services are liable to VAT at the appropriate VAT rate once the turnover from catering services exceeds, or is likely to exceed, €37,500 in any twelve month period.

• Where there is a supply of emergency accommodation and catering services, the consideration payable must be apportioned between (a) the exempt emergency accommodation service and (b) the taxable catering service. This will ensure that the correct amount of VAT is calculated on the taxable supplies.  It is also important for accurately computing VAT deductibility on costs.

• The business overheads should be apportioned between (i) taxable and (ii) exempt business activities. The VAT on costs associated with the exempt supply of emergency accommodation and ancillary services cannot be recovered. The VAT incurred on the costs of providing taxable catering services, however, are deductible in full.

• If the person providing the accommodation has waived their exemption from VAT in relation to residential property acquired before 2^nd April 2007 (i.e. apartments, houses, etc.) which are now used for the purposes of emergency accommodation then VAT at 23% (i.e. the current standard rate) will apply to such supplies.

• For residential properties including houses, apartments, etc, that have already been used for VAT exempt residential lettings, no Capital Goods Scheme adjustment will arise if the property is then used as emergency accommodation. The reason being that the property was already used for VAT exempt purposes.

• If, however, a property previously providing taxable supplies of hotel and guest accommodation is used for emergency accommodation, a Capital Good Scheme adjustment will be triggered. This could have serious VAT implications for the property owner (i.e. the holder of the capital good).

• For detailed information on the operation of the Capital Good Scheme, please click link: https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part11-immovable-goods/capital-goods-scheme/capital-goods-scheme.pdf

If you require further information on VAT issues, please contact us to make an appointment.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Residential Zoned Land Tax (RZLT) and LPT

The publication of Draft Residential Zoned Land Tax (RZLT) Maps by local authorities was announced today by the Minister for Finance, Paschal Donohoe T.D. and the Minister for Housing, Local Government and Heritage, Darragh O’Brien T.D.  Landowners have until 1st January 2023 to make a submission to the relevant local authority as to whether or not their land, on the map, satisfies the criteria to be liable to the tax.  This is part of the implementation of the Residential Zoned Land Tax (RZLT).

What is RZLT?

As you may remember, Residential Zoned Land Tax (RZLT) was introduced by Finance Act 2021 as part of the Government’s ‘Housing for All – a New Housing Plan for Ireland’.

Land within the scope of RZLT will be liable to an annual 3% tax based on its market value from 1^st January 2024 onwards.

RZLT will apply to land that on, or after, 1^st January 2022, is:

1. zoned for residential use and
2. serviced

In other words, where the land is zoned as suitable for residential development and serviced after 1^st January 2022, tax will be first due in the third year after it comes within scope.

The primary objective of RZLT is activate land for residential development and not to increase the Government’s tax revenue.

It will operate on a self-assessment basis, which places the filing and payments obligations on the landowners.  You must retain detailed records to enable the Revenue Commissioners to verify the correct amount of RZLT due and payable.

What should you do?

If you own land liable to RZLT, you must register for the tax.

You will be able to register for RZLT from late 2023.

You will be required to file an annual return to Revenue and pay any liability on or before 23rd May of each year, beginning in 2024.

Please be aware that interest, penalties and surcharges will apply in relation to cases of non-compliance, for example:

• in relation to undervaluation of land
• the late filing of returns.

Exclusions.

There are a number of exclusions from RZLT.

Certain properties are excluded from RZLT such as existing residential properties.

Homeowners will not have to pay the Residential Zoned Land Tax if they own a dwelling which appears on the local authorities’ RZLT Maps, and this property is subject to Local Property Tax (LPT).  In other words, residential properties liable for Local Property Tax (LPT) are not subject to RZLT.

If, however, your garden/yard/land is greater than 0.4047 hectares (one acre) then you must register for RZLT.

No RZLT, however, is payable by owners of these properties.

Summary:

• Registration is available from late 2023.
• Each local authority will publish a Final RZLT Map by 1st December 2023 indicating what lands are subject to the RZLT.
• The RZLT will first fall due on 1st February 2024.
• The pay and file date will be 23^rd May 2024.
• If a homeowner owns such a dwelling and the land/gardens/yards attached to it are greater than 0.4047 hectares (1 acre), they will be required to register for the RZLT with the Revenue Commissioners but will not be liable to pay the tax.

For full information, please click:

https://www.gov.ie/en/publication/fbad0-residential-zoned-land-tax/?_cldee=pGqqP87nFB2cRDW2HeolsCPXUpzM4oJGbkS0FTFnkfAOidPYtjzIqfeGfW2_3PSo&recipientid=contact-7f5d2b33fbf9e71180fb3863bb358f88-0837673b37e04a398fdd86a896db4181&esid=1f53b22f-5a5c-ed11-9562-6045bd90529b

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-22a/22a-01-01.pdf

https://www.revenue.ie/en/property/residential-zoned-land/due-date-excluded-properties.aspx

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Budget 2023 – Corporate Tax, Personal Taxes Global Mobility, Employment Taxes, SARP, FED, KEEP

Today, Minister for Finance, Paschal Donohoe T.D., and Minister for Public Expenditure and Reform, Michael McGrath T.D. presented Budget 2023.  We have summarised the key measures included in this “cost of living” Budget including Ireland’s headline Corporate Tax rate remaining unchanged at 12½%.  A number of welcome personal tax and global mobility employment tax measures to benefit Irish employees and international assignees include an extension to the Special Assignee Relief Programme (SARP),  to the Key Employee Engagement Programme (KEEP) and the Foreign Earnings Deduction (FED).   The key Corporate Tax measures include amendments to the R&D tax credit, the extension of the KDB as well as the extension of the film tax credit, subject to a commencement order.

GLOBAL MOBILITY & EMPLOYMENT

In Budget 2023, Minister Donohoe announced an extension to a number of existing personal tax reliefs including:

• Special Assignee Relief Programme (SARP) is to be extended to the end of 2025.  The minimum income threshold for an employee to qualify for SARP is being increased from €75,000 to €100,000 for new entrants.  Existing claimants will not be affected by this change.  In other words, this higher qualifying threshold will not apply to current claimants availing of the relief.  For associated articles, please click SARP – 2023 Update – Accounts Advice Centre

• Key Employee Engagement Programme (KEEP) is to be extended to the end of 2025.  The lifetime company limit for KEEP shares will be raised from €3 million to €6 million.  KEEP is also being modified to provide for the buy-back of KEEP shares by the company from the relevant employee.

• Foreign Earnings Deduction (FED) which is a personal tax relief for employees who are tax resident in Ireland and who travel out of the State to temporarily carry out employment duties in certain qualifying countries was extended for a further three years to the end of 2025. FED provides relief from income tax on up to €35,000 of income.

• Another significant development was the doubling of the Small Business Exemption from €500 to €1,000 effective from 2022. Employers will also be permitted to grant an employee two vouchers/non-cash awards in a single year, provided the cumulative value of the two vouchers does not exceed €1,000.

PERSONAL TAX

Key measures included in Budget 2023:

• A significant increase in the Standard Rate Cut-Off Point to €40,000 for single individuals and €49,000 for married couples with one earner. This means that a single person can now earn an additional €3,200 before paying tax at the 40% Income Tax rate.

• An increase of €75 in the Personal Tax Credit, Employee Tax Credit and the Earned Income Tax Credit (all currently set at €1,700). For the tax year 2023 onwards the new tax credits be each be €1,775

• An increase of €100 in the Home Carer tax credit. From 2023 it will be increased to €1,700.

• A reintroduction of the rent tax credit of up to €500 for renters in the private sector for 2023 to 2025. It will be possible to claim this tax credit on a retrospective basis in relation to rent paid in 2022.  One credit per person can be claimed per year.

• The Sea-going Naval Personnel Tax Credit has been extended to the end of 2023.

• An increase in the ceiling of the 2% USC rate from €21,295 to €22,920.

• The exemption from the top rate of USC for medical card holders, and those aged over seventy years earning under €60,000 will continue beyond 2022. In other words, the reduced rate of 2% USC will be extended until the end of 2023.

• There is no increase to Employer’s PRSI rates.

ENTERPRISE – Corporate Tax

The main corporate tax measures include amendments to the Research & Development tax credit and extensions to the Knowledge Development Box and film tax credit regimes:

• The Temporary Business Energy Support Scheme (TBESS) was introduced to support trading businesses. The scheme will be open to businesses carrying on a Case I trade that are tax compliant and have experienced a significant increase in their natural gas and electricity costs. Businesses carrying on trading activities will be eligible for a refund of 40% on the increase in electricity and gas prices, subject to a monthly cap of €10,000 per trade.  Detailed information on the scheme has not yet been published, however, it is believed the scheme will operate by comparing the average unit price for the relevant period in 2022 with the average unit price for the corresponding period in 2021. If the increase in average unit price is more than 50% then the business will be eligible for the scheme. Businesses will be required to register for the scheme and to make claims within the required time limits.  This scheme is subject to State Aid approval from the EU.

• Amendments will be made to the R&D tax credit regime with respect to how repayments are made under the scheme which will ensure the regime is regarded as a “qualifying refundable credit” for the purposes of the Pillar Two Model Rules. Currently the R&D tax credit is firstly offset against current and prior year corporate tax liabilities followed by repayment over three instalments. The current system is being changed to a new fixed three-year payment system. A company will have an option to call for payment of their eligible R&D Tax Credit or to request for it to be offset against other tax liabilities. In other words, the changes will enable taxpayer companies to call for the payment of their R&D tax credits in cash or for these to be offset against its tax liabilities in this three-year fixed period. The existing caps on the payable element of the credit are being removed. The first €25,000 of a claim will now be payable in the first year.  Transitional measures will be introduced for one year for those that already engaged in R&D activities and claiming the credit

• An extension to the Knowledge Development Box regime for a further four years to 31^st December 2026. Currently the KDB provides for a 6.25% effective rate of corporation tax on profits generated from exploiting certain assets, including patents and software developed through R&D activities carried out in Ireland. In preparation for the changes under the OECD Pillar Two agreement, the effective rate under the KDB regime is to be increased from 6.25% to 10%.  The policy document released by the Department of Finance states that the commencement of this rate will be determined by reference to international progress on the implementation of the Pillar Two Agreement but it is expected in 2023.

• The extension of the Film Corporation Tax Credit until December 2028. Film relief is granted at a rate of 32% of qualifying expenditure which is capped at €70 million.

PROPERTY

Help-to-Buy Scheme

The scheme will continue at current rates for another two years and will expire on 31^st December 2024

Vacant Homes Tax (“VHT”)

A VHT will apply to residential properties which are occupied for less than 30 days in a 12 month period.

Exemptions will apply where the property is vacant for “genuine reasons.”

The applicable tax rate is three times the existing local property tax (“LPT”) rate

Residential Development Stamp Duty Refund Scheme

The stamp duty refund scheme will continue until the end of 2025.

The stamp duty residential land rebate scheme allows for a refund of eleven-fifteenths of the stamp duty paid on land that is subsequently developed for residential purposes. was due to expire on 31 December 2022. It has been extended to the end of 2025.

Pre-letting Expenses on Certain Vacant Residential Properties

The limit for landlords claiming allowable pre-letting expenses is to be increased from €5,000 to €10,000.

The vacancy period is to be reduced from 12 months to 6 months.

Levy on Concrete Blocks, Pouring Concrete and other Concrete Products

A 10% levy was announced in response to the significant funding required in respect of the defective blocks redress scheme. A 10% levy will be applied to concrete blocks, pouring concrete, and certain other concrete products

This levy applies from 3rd April 2023.

VAT

9% VAT rate for hospitality and tourism sector

The 9% VAT rate currently in place to support the tourism and hospitality sectors will continue until 28^th February 2023.

9% VAT rate on electricity and gas supplies

The temporary reduction in the VAT rate applicable to gas and electricity supplies (from 13.5% to 9%) will be extended to 28^th February 2023.

Farmers’ Flat-Rate Addition

The flat-rate addition is being reduced from 5.5% to 5% in accordance with criteria set out in the EU VAT Directive.

This change will apply from 1^st January 2023.

Zero-rated supplies

From 1^st January 2023 VAT on newspapers, including digital editions will be reduced from 9% to 0%.

For further information, please click: https://www.gov.ie/en/publication/4de03-your-guide-to-budget-2023/

and

https://www.revenue.ie/en/corporate/press-office/budget-information/previous-years/2023/budget-summary-2023.pdf

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Digital Services Taxes (DSTs) – Corporation Tax – Business Tax

On 5^th August 2022 the Irish Revenue Commissioners issued a new Tax and Duty Manual Part 04-06-03, which provides guidance on the tax deductibility of Digital Services Taxes (DSTs).  It states that DSTs are a turnover tax  levied on revenues rather than profits. Digital Services Taxes relate to the provision of digital services and advertising.  Revenue have confirmed that certain DSTs which are incurred wholly and exclusively for the purposes of a trade are deductible in respect of computing income of that trade for Irish corporation tax purposes.

For full information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-06-03.pdf

The guidance provides that certain DSTs incurred wholly and exclusively for the purposes of a trade (taxable under Case I and Case II Schedule D) are deductible in calculating the income of that trade for the purposes of computing Irish corporation tax.

The Revenue’s position is that Digital Services Taxes are a turnover tax.

They are levied on revenues associated with the provision of digital services and advertising and not on the profits.

The guidance provides that, in circumstances where the following DSTs have been incurred wholly and exclusively for the purposes of a trade, the Irish Revenue Commissioners will accept that they are deductible expenses in calculating the income of that trade:

• France’s Digital Services Tax;
• Italy’s Digital Services Tax;
• Turkey’s Digital Services Tax;
• United Kingdom’s Digital Services Tax; and
• India’s Equalisation Levy.

The Guidance material doesn’t distinguish between the two forms of equalisation levy under the Indian regime. At this time there is no clear guidance available however, it would be expected that that since both types of levy are so similar that both should be covered. If this situation applies to you, it is advisable to contact the Irish Revenue Commissioners to seek clarification via MyEnquiries.

This Guidance should be interpreted as an initial list.  According to The Revenue Commissioners “The list of DSTs above may be updated as required.”

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Residential Zoned Land Tax (RZLT) – New Irish Tax – Finance Act 2021 – New Property Tax

On 19^th July 2022 the Irish Revenue Commissioners published eBrief No. 148/22 in relation to Residential Zoned Land Tax (RZLT) which was a new Irish tax introduced by Finance Act 2021.  It applies to owners of serviced and undeveloped land that has been zoned for residential use.

For full information please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-22a/22a-01-01.pdf

Residential Zoned Land Tax (RZLT) applies to land that, on or after 1st January 2022, is zoned as being suitable for residential development and is serviced, with certain exclusions.

It does not apply to existing residential properties.

Where land is within scope of the tax on 1st January 2022, the tax will be charged from 1st February 2024 onwards.

RZLT is an annual tax, calculated at 3% of the market value of the land within its scope.

Owners of residential properties with yards and gardens greater than 0.4047 hectares will be required to register for RZLT, but will not need to pay it.

Each local authority will be required to prepare and publish a map identifying land within the scope of the tax.  This must be updated annually.

An owner of land which is zoned as being suitable for residential development and serviced on 1st January 2022 and where this development has not commenced before 1st February 2024 will be liable to file a return and pay the RZLT on or before 23rd May 2024, with certain exclusions.

Where land comes within the scope of the RZLT after 1st January 2022, the tax will be first due in the third year after it comes within scope.

The tax will continue to be payable each year in respect of the land unless a deferral of the tax applies or the land ceases to be liable to the tax.

RZLT will operate on a self-assessment basis.

From 2024 onwards, owners of the land in scope will be required to register for RZLT and then (i) make an annual return to Revenue and (ii) pay any tax liability in May of each year.

Interest, penalties and surcharges will apply in cases of non-compliance, including undervaluation of the land in scope and late filing of returns, etc.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

On 27th April 2022 Revenue updated its guidance material to provide clarity on the tax treatment of transactions involving crypto-assets.  This latest publication also provides worked examples.

The terms “cryptocurrency” and “cryptocurrencies” are not defined.

The Irish Central Bank places cryptocurrencies, digital currencies, and virtual currencies into the same category of digital money. It is important to bear in mind, however, that although defined in this manner, these “currencies” are unregulated and decentralised which means that no central bank either guarantees them or controls their supply.

Throughout Revenue’s updated document the term “crypto-asset” is used, which includes cryptocurrencies, crypto-assets, virtual currencies, digital money or any variations of these terms.  Revenue state that the information contained in their most updated guidance is for tax purposes only.

Under Section TCA97 Ch4 s71–5, an individual who is resident in Ireland but not Irish domiciled is liable to Irish income tax in full on his/her/their income arising in Ireland, and on “non-Irish income” only to the extent that it is remitted to Ireland.

This is known as the remittance basis of taxation.

It’s important to keep in mind that the remittance basis of taxation does not apply to income from an office or employment where that income relates to the performance of the duties of that office or employment which are carried out in Ireland.

Section 29 TCA 1997 is the charging section for Capital Gains Tax.

s29(2) TCA 1997 states that a person who is Irish resident or ordinarily resident and is Irish domiciled is chargeable to Irish CGT on gains on all disposals (on his/her/their worldwide assets) arising in the year of assessment regardless of whether the gains are remitted to Ireland or not.

s29(4) TCA 1997 states that an individual who is Irish resident, or ordinarily resident,  but not Irish domiciled is chargeable on gains arising on disposals of Irish assets in the year of assessment as well as on remittances to Ireland in the year of assessment in respect of gains on the disposals of foreign assets.  In other words, an Irish resident/ordinarily resident but non domiciled individual is liable to Irish CGT on remittances in respect of gains arising on the disposal of assets situated outside the state.

From professional experience, the location of the crypto asset is often difficult to prove.

According to Revenue’s most recent publication:

“… where a crypto-asset exists ‘on the cloud’, it will not actually be situated anywhere and therefore, cannot be
viewed as ‘situated outside the State’.”

If the crypto-asset isn’t located anywhere and isn’t, therefore, considered to be a “disposal of an asset outside the state” then the remittance basis of taxation does not apply and the gain arising will be liable to Irish Capital Gains Tax based on the residency rules of the individual.

As you can see, it is very much the responsibility of the taxpayer to be able to prove the location where the gain arose on the disposal of the crypto-assets.

Revenue have outlined their record keeping provisions in relation to all taxes as follows: https://www.revenue.ie/en/starting-a-business/starting-a-business/keeping-records.aspx

In situations where the records are stored in a wallet or vault on any device including a personal computer, mobile phone, tablet or similar device, please be aware that these records must be made available to Revenue, if requested.

As with all taxes, full and complete records must be retained for six years in accordance with legislation. It is important to keep in mind that these provisions apply to all taxpayers, including PAYE only taxpayers.

For further information, please follow the link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-01-03.pdf

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Today, 14th April 2022. the Irish Revenue published guidance (Revenue eBrief No. 090/22) on the tax treatments of Ukrainians, who continue to be employed by their Ukrainian employer while they perform the duties of their employment, remotely, in Ireland.

The Guidance material outlines a number of concessions which will apply for the 2022 tax year.

PAYE

As you’re aware, income earned from a non-Irish employment, where the performance of those duties is carried out in Ireland, is liable to Irish payroll taxes irrespective of the employee’s or employer’s tax residence status. However, by concession, the Irish Revenue are prepared to treat Irish-based employees of Ukrainian employers as not being liable to Irish Income Tax and USC in respect of Ukrainian employment income that is attributable to the performance of duties in Ireland.

Ukrainian Employers will not be required to register as employers in Ireland and operate Irish payroll taxes in respect of such income.

Please be aware that this concession only relates to employment income which is (a) paid to an Irish-based employee (b) by their Ukrainian employer.

In order for the above concessions to apply, two conditions must be met:

1. The employee would have performed his/her/their employment duties in Ukraine but for the war there and
2. the employee remains subject to Ukrainian income tax on his/her/their employment income for the year.

Corporation Tax

The Irish Revenue will disregard for Corporation Tax purposes any employee, director, service provider or agent who has come to Ireland because of the war in Ukraine and whose presence here has unavoidably been extended as a result of the war in Ukraine.

Again, such concessionary treatment only applies in circumstances where the relevant person would have been present in Ukraine but for the war there.

For any individual or relevant entity availing of the concessional tax treatment, it is essential that he/she/they retain any documents or other evidence, including records with the individual’s arrival date in Ireland, which clearly shows that the individual’s presence in Ireland and the reason the duties of employment are carried out in the state is due to the war in Ukraine.  These records must be retained by the relevant individual or entity as Revenue may request such evidence.

For further information, please follow link: https://www.revenue.ie/en/tax-professionals/ebrief/2022/no-0902022.aspx

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Today the Irish Government announced the following measures to help with the rising costs of energy, in addition to the cost of living measures of €2 billion which were previously announced:

• A temporary reduction in the rate of VAT on the supply of gas and electricity, from 13.5% to 9%, from 1st May until 31st October (at an estimated cost of €46 million to the Exchequer).
• An additional once off €100 lump sum to households eligible for the fuel allowance (for an estimated 370,000 recipients).
• A further reduction of 2.7% per litre in the excise levy on marked gas oil or green diesel.
• The reduced rates of excise duty on petrol (20 cents per litre), diesel (15 cents per litre) and green diesel (2 cents per litre), which were announced last month, will be extended to Budget Day at the end of August (at a cost of €80 million to the Exchequer).

The Minister for Finance also confirmed that the Public Service Obligation (P.S.O.) Levy will be set to zero by October 2022.

For full information, please follow link:  https://www.gov.ie/en/press-release/0a129-government-announces-further-measures-to-help-households-with-rising-cost-of-energy/?_cldee=lcXqBawaGsFsOWw3I_ME4giIjrsplWXd-72lcBtEruyHtX5gNJK0C75jcfN8DtDRoL9I-M69U5_UiLjbKHtHpQ&recipientid=contact-baa265b900fae71180fd3863bb3600d8-34a5f9f973f64e0ead12cc385e40b831&esid=f492a4af-0abc-ec11-983f-6045bd8c5c09

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.