PAYE

Finance Bill – Income Tax, Corporation Tax, VAT, Employer and Payroll Taxes

The Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 was published today.  The provisions contained in the Bill include amendments to existing supports which were announced in the Economic Recovery Plan in addition to the introduction of the Business Resumption Support Scheme.  These tax relief measures income Income Tax, Business/Corporation Tax, Employer and Payroll Taxes and VAT.

Reduced rate of VAT (9%) for the hospitality sector

Section 6 of the Bill amends section 46 VATCA 2010 to provide for the extension of the reduced 9% VAT rate until 31st August 2022 in relation to the following services:

• Restaurant and catering services
• Guest and holiday accommodation
• Entertainment services to include admissions to cinemas, theatres, museums, fairgrounds, amusement park and sporting facilities
• Hairdressing
• The sale of certain printed matter including brochures, maps and programmes.

In summary, the reduced 9% VAT rate for the tourism sector has been extended from 31st December 2021 to 31st August 2022.

Employment Wage Subsidy Scheme (EWSS)

The Employment Wage Subsidy Scheme (EWSS) is a scheme that subsidises the cost of getting employees back to work.

The extension of the scheme should provide reassurance to businesses affected by the pandemic and enable them to plan for the months ahead.

Section 2 of the Bill amends the Employment Wage Subsidy Scheme (Section 28B of the Emergency Measures in the Public Interest (Covid-19) (No.2) Act 2020) to provide for the following changes:

1. the extension of the Employment Wage Subsidy Scheme (EWSS) until 31st December 2021.
2. the retention of the enhanced subsidy rates up to 30th September 2021.
3. the retention of the qualifying criteria of a 30% reduction in turnover or customer orders threshold.
4. An increase in the reference period to assess eligibility for the scheme from six to twelve months with effect from 1st July 2021.

This employer/payroll tax scheme requires that employers have valid tax clearance to enter the EWSS and that they maintain this tax clearance for the duration of the scheme.

Covid Restrictions Support Scheme (CRSS) 

The COVID-19 Restrictions Support Scheme (CRSS) was introduced by the Finance Act 2020.

It provided support for businesses which had to temporarily cease as a result of public health guidelines.

At such time as the affected businesses are allowed to re-open, those claimants will have to exit this scheme.

As some of those businesses will remain financially affected, the new measures introduced in the Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 published today will extend the scheme. In addition, there will be an enhanced re-start payment for businesses exiting the scheme equal to up to three weeks at double rate of payment, subject to a €10,000 cap.

Sections 3 and 4 of the Bill amend the Covid Restrictions Support Scheme (CRSS) and provide for the extension of the specified period until 30th September 2021.

Section 4 of the Bill provides for the enhanced restart week payment scheme.  The level of payment a business may claim on reopening, following the restrictions, will depend on the actual date that business reopens.

• For restart weeks between 29^th April to 1^st June 2021, the restart payment will equate to two weeks at double the normal CRSS rate subject to a cap of €5,000, being the maximum weekly amount.
• For restart weeks between 2^nd June to 31^st December 2021, the restart payment will equate to three weeks at double the normal CRSS rate subject to a cap of €10,000, being the maximum weekly amount.
• In all other cases, the standard rate of one week at the normal CRSS rate will apply, subject to a cap of €5,000, being the maximum weekly amount.

Please be aware:

• According to Revenue’s guidelines, an eight week deadline applies to the submission of enhanced restart week payment claims.
• A business can qualify for (a) the double restart week payment or (b) the triple restart week payment once.
• The Minister for Finance has the power to extend this scheme to 31st December 2021 by order.

Business Resumption Support Scheme (BRSS)

Section 5 of the Bill includes a new section, section 485A TCA 1997, which makes provision for a new Business Resumption Support Scheme (BRSS)

The main features of the scheme are as follows:

• BRSS is available for affected self-employed individuals and companies who carry on a trade, the profits from which are chargeable to Income Tax or Corporation Tax under Case I of Schedule D.
• It is also available to persons who carry on a trade in partnership (Income Tax), and any trading activity carried on by charities and sporting bodies.
• To qualify, businesses must be able to prove that their turnover is reduced by 75% in the reference period (i.e. 1st September 2020 to 31st August 2021) as compared with 2019 but it will be a later period if the business commenced trading on or after 26th December 2019.
• Qualifying taxpayers will be able to claim an amount equal to three times the amount as derived by 10% of their average weekly turnover during the reference period (i.e. 1st September 2020 to 31st August 2021) up to a maximum of €20,000 and 5% thereafter subject to a cap of €15,000.
• Please be aware that these payments will be treated as an advance credit for trading expenses.
• If the business was set up before 26^th December 2019 the claim will be calculated based on its actual average weekly turnover in the period starting on 1^st January 2019. For example, if the business was established after 1^st January 2019, then the claim will be based on the period from the actual commencement date up to 31^st December 2019.
• If the business was established between 26^th December 2019 and 10^th March 2020 the claim will be based on the actual average weekly turnover arising between the date of commencement and 15^th March 2020.
• If, however, the business activity commenced between 10^th March 2020 and 26^th August 2020 then the claim will be based on the actual average turnover generated between the date of commencement and 31^st August 2020.
• The individual, company or persons carrying on a partnership must have an up to date Tax Clearance Certificate in order to make a valid claim under this scheme.
• They must also be VAT compliant.
• They must not be entitled to make a claim under the CRSS Scheme in relation to any week that includes 1st September 2021 and the business must be actively trading, with the intention of continuing to do so.
• Those making a claim must register on ROS and file a declaration that they satisfy the necessary conditions to avail of BRSS.
• Please be aware that the names of BRSS claimants can be published on the Revenue’s website.

Stamp Duty measures for the cumulative purchase of ten or more residential properties

Section 13 of the Bill gives statutory effect to the Financial Resolution that was passed on 19th May 2021 and inserts section 31E in the SDCA 1999, thereby imposing a 10% stamp duty rate on the acquisition of certain residential properties (houses and duplexes but excluding  apartments) where an aggregate of ten or more units is acquired during a twelve month period by a single corporate entity or individual.

Section 14 of the Bill introduces a provision which provides for an exemption from the new 10% rate of stamp duty in situations where the residential units are leased to local authorities for certain social housing purposes.

Tax Debt Warehousing

Section 7 of the the Finance (COVID-19 and Miscellaneous Provisions) Bill 2021 inserts a new section 28D into the Emergency Measures in the Public Interest (Covid-19) Act 2020 which provides for the warehousing of EWSS overpayments received by employers.

Sections 8, 9 ,10, 11 and 12 of the Bill give effect to the extension of the Debt Warehousing Scheme for refunds of Temporary Wage Subsidy Scheme (TWSS) payments, Employer PAYE liabilities, Income Tax, VAT and PRSI:

This scheme will have three periods:

• Period 1 (the “Covid-19 restricted trading phase”) will run from 1st July 2020 to 31st December 2021.
• Period 2 (the “zero interest phase”) – will run from 1st January 2022 until 31st December 2022.  No interest will be levied on warehoused EWSS tax from Period 1.
• Period 3 (the “reduced interest phase) –will run from 1st January 2023 until the relevant tax is repaid to Revenue. interest will be levied at a rate of 3% per annum on the Period 1 warehoused relevant tax, from 1st January 2023.

In circumstances where an employer does not meet the conditions for debt warehousing then (i) the zero interest and (ii) reduced interest rates will no longer apply.  Instead the 8% rate will be imposed.

In summary, the extension of the Debt Warehousing Scheme relates to refunds of Temporary Wage Subsidy Scheme (TWSS) payments, PAYE, Income Tax, VAT and PRSI.

For full and complete information, please follow the link: https://data.oireachtas.ie/ie/oireachtas/bill/2021/89/eng/initiated/b8921d.pdf

lease 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.

Cryptocurrency. Crypto-assets. Personal Taxes. Capital Gains Tax. VAT. Corporation Tax. Payroll Taxes.

In Revenue’s most recent guidance material outlining how cryptocurrencies transactions should be treated for Irish tax purposes (under Income Tax, Capital Gains Tax, Corporation Tax, VAT and Payroll), they formed the view that no special tax rules are required.  For further information please click the link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-01-03.pdf

Cryptocurrencies are also known as virtual currencies and include the following:

• Bitcoin
• Ethereum
• Ripple
• Dash
• Litecoin

Ireland has its own cryptocurrency called “Irishcoin”.

One of the common questions arising is whether the profits or losses arising from cryptocurrency transactions are liable to Income Tax/Corporation Tax or if instead, they are subject to Capital Gains Tax.

In other words, it is important to keep in mind that there are different tax treatments for those trading in cryptocurrency and those investing in it.

If the cryptocurrency transactions are deemed to a trading activity then the profits are subject to Income Tax/Corporation Tax.  Capital Gains Tax, however, applies to gains arising from the disposal of cryptocurrency which is held as an investment.

Trading activity or investment?

This answer is determined by reference to what are known as the “Badges of Trade” as well as to related case law.

The ‘Badges of Trade’ are a set of indicators to decide if an activity is a trading or an investment activity and include the following:

1. The Subject Matter
2. Length of Ownership
3. Frequency of similar transaction
4. Supplementary work to enhance it or make it become more marketable
5. Circumstances for realisation

It is not essential that all the above “badges” be present for a trade to exist. When you examine all the badges present in the context of the activity carried out then it’s possible to ascertain if you are carrying out a trade in cryptocurrencies or investing in them.

Another way to look at this is to consider whether you are a passive or an active investor.

If you make a one-off purchase of a few coins that you retain in the hope the value increases then it would be fair to say you are a passive investor and any gain arising in the case of an individual, would be liable to Capital Gains Tax at 33% after offsetting any prior year and current year capital losses less the individual’s personal CGT exemption of €1,270.

If, however, there are multiple transactions taking place on a frequent basis, with a high level of organisation and a commercial motive (i.e. the aim of buying and selling the coins is to create/optimise profit) then it would be reasonable to consider yourself an active trader and any profits arising would be liable to Income Tax / Corporation Tax.  For example, profits derived from crypto mining activities carried on by an individual or a company, would be treated as trading profits and liable to Income Tax/Corporation Tax.

It is essential, therefore, that this should be correctly established by each taxpayer, given their own specific set of circumstances, from the very beginning, to avoid any costly errors further down the line.

As with all tax issues, it is vital to establish the residence and domicile of the investor.  Depending on the location of the cryptocurrency exchange, gains arising for non-resident individuals may be outside the scope of Irish tax.  Individuals who are Irish resident but non domiciled may be able to available of the remittance basis of tax.

What about VAT?

The Revenue Commissioners consider cryptocurrencies to be ‘negotiable instruments’ and therefore exempt from VAT.  This treatment applies to companies and individuals buying and selling cryptocurrencies.  Mining activities are also considered to be outside the scope of Irish VAT.

Financial services consisting of the exchange of cryptocurrencies for traditional currency are exempt from VAT where the company performing the exchange acts as the principal.

Value Added Tax, however, is due from suppliers of goods or services sold in exchange for cryptocurrencies. The taxable amount for VAT purposes should be calculated in Euro at the time of the supply.

What about Payroll Taxes?

Where an employee’s wages and salaries are paid in a cryptocurrency, the value of these emoluments for the purposes of calculating payroll liabilities is the Euro amount attaching to that cryptocurrency at the time those payments are made to the employee.

The amounts contained in returns made to Revenue must be shown in Euro.

Finally, as crypto currencies are traded on a number of exchanges, a reasonable effort should always be made to use an appropriate valuation for the transaction in question.

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.

Capital Gains Tax (CGT), Local Property Tax (LPT), e-workers, Tax Reliefs for Employees, Employers Tax Obligations.

In response to the Covid-19 outbreak in Ireland, the Government has asked people to take all necessary measures to reduce the spread of the virus and, where possible, individuals are being asked to work from home.  Today Revenue updated their e-Working and Tax guidance manual (i.e. Revenue eBrief No. 045/20) around e-workers in which it published Government’s recommendation as to how employers can allow employees to work from home.  This compliance document outlines the measures for tax relief.  It also contains employee queries in relation to how e-working from home may affect their eligibility for Principal Private Residence Relief (PPRR) under Capital Gains Tax (CGT) as well their Local Property Tax (LPT).

The content of Tax and Duty Manual Part 05-02-13 has been updated to include:

• An explanation of what constitutes an e-worker along with examples.
• The conditions that apply to employer payments of home expenses of e-workers.
• Clarification that current Government recommendations for employees to work from home as a result of COVID-19 meet the conditions for relief.
• Guidance for employees claiming relief for allowable e-working expenses, who are not in receipt of e-working payments from their employers.

Revenue has defined e-working to be where an employee works:

• at home on a full or part-time basis
• part of the time at home and the remainder in the normal place of work
• while on the move, with visits to the normal place of work

The guidance material goes on to state that e-working involves:

• logging onto a work computer remotely
• sending and receiving email, data or files remotely
• developing ideas, products and services remotely

The revised Revenue guidance clarifies that the following conditions must also be met:

• There is a formal agreement in place between the employer and the employee under which the employee is required to work from home
• An employee is required to perform substantive duties of the employment at home; and
• The employee is required to work for substantial periods at home

The guidance confirms that e-working arrangements do not apply to individuals who in the normal course of their employment bring work home outside standard working hours.

It would appear from the updated material, that where there is an occasional and ancillary element to work completed from home, the e-working provisions will not apply.

The revised guidance does not specify what a “formal agreement” between the employer and employee might contain therefore it would be advisable for businesses/employers going forward to consider putting in place a formal structure for employees looking to avail of the e-worker relief in the future.

The guidance material states in broad terms that employees forced to work from home due to the Covid crisis can claim a tax credit.

“Where the Government recommends that employers allow employees to work from home to support national public health objectives, as in the case of Covid-19, the employer may pay the employee up to €3.20 per day to cover the additional costs of working from home.  If the employer does not make this payment, the employee may be entitled to make a claim under section 114 TCA 1997 in respect of vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of the employment”.

The revised guidance advises that employers must retain records of all tax-free allowance payments to employees.

In situations where an employee is working from their home but undertakes business travel on a particular day and subsequently claims travel and subsistence expenses, please be aware that if the e-workers daily allowance is also claimed by that employee for the same day, then it will be disallowed and instead, treated as normal pay in the hands of the employee/e-worker i.e. it will be subject to payroll taxes.

Where an employee qualifies as an e-worker, an employer can provide the following equipment for use at home where a benefit-in-kind (BIK) charge will not arise provided any private use is incidental:

• Computer, laptop, hand-held computer
• printer
• scanner
• software to facilitate working from home

There is no additional USC liability imposed on the provision of this work-related equipment to an employee.

Please be aware, however, that laptops, computers, office equipment and office furniture purchased by an employee are not allowable deductions under s. 114 of the Taxes Consolidation Act (TCA) 1997.

e-Working expenses can be claimed by completing an Income Tax return.  An individual can complete this form on the Revenue website as follows:

• sign into myAccount
• click on ‘Review your tax’ link in PAYE Services
• select the Income Tax return for the relevant tax year
• click ‘Your Job’
• in the ‘Claim for Tax Credits, allowances and Reliefs’ page select ‘Remote Working (e-Working) Expenses’ and insert the full amount of the expense in the “Amount” section.

As a claim may be selected for future examination, all documentation relating to a claim should be retained for a period of six years from the end of the tax year to which the claim relates.

Finally, for employees who meet the relevant conditions and are deemed qualify as e-workers:

• Using part of his/her home for the purposes of e-working will not affect his/her entitlement to principal private residence (PPR) relief when selling his/her home in the future.
• There is no reduction in the Local Property Tax (LPT) where part of the property is used for the purposes of e-working.

For further information, please follow the link: https://www.revenue.ie/en/tax-professionals/ebrief/2020/no-0452020.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.

PAYE. Employee Employer Tax. Global Mobility. Payroll. Income Tax. Personal Tax. Revenue Compliance Intervention.

As you’re aware, Revenue’s PAYE Modernisation came into effect from 1st January 2019 to .  By operating in real time, every time an employer pays their employee through payroll, they must report the employee’s pay/salary/wage as well as the correct statutory deductions at the right time.  Through ‘My Account’, an employee can check if their employer has paid over the correct tax deductions to Revenue, thereby ensuring tax compliance and reducing the need for compliance interventions. This new system is aimed at reducing the occurrence of both the overpayment and underpayment of payroll taxes.  Following recent developments of the PAYE system,  employees and Proprietary Directors can now access details of their total pay and statutory deductions for 2019. They can also view their tax position for the year based on Revenue’s preliminary calculation.

New terminology and documentation have been introduced as follows:

1. The Employment Detail Summary replaces the P60 for 2019 and subsequent years. is the official record of an employee’s pay and statutory deductions for the year.
2. The Preliminary End of Year Statement is a calculation by Revenue of the employee or Proprietary Director’s income tax and USC liabilities for 2019 based on the payroll information submitted by employers throughout 2019.
3. The Statement of Liability replaces the P21 Balancing End of Year Statement.

You can access the record of your payroll details for 2019 as follows:

• Go to MyAccounts
• Click on the PAYE Services Screen
• Click on Employment Detail Summary
• Click on Review Your Tax 2016 – 2019

This summary of payroll information or proof of income can be downloaded or printed for you to retain or it provided to third parties as required.

To calculate whether you have underpaid, overpaid or paid the correct amount of income tax and USC for 2019 you can request a Preliminary End of Year Statement by

• Clicking on PAYE Services
• Clicking on Review Your Tax 2016 – 2019
• Clicking on Statement of Liability for 2019

If you have overpaid your taxes, based on the Revenue’s records, please be aware that the refund will not issue automatically.   You will need to file an Income Tax Return for 2019 to include (i) your total income, (ii) any allowable deductions and (iii) your tax credits so that Revenue has been provided with full and complete information necessary to calculate your tax position.

In order to file an Income Tax Return, you should:

• Go to MyAccount
• Click onto the pre-populated form for 2019
• Examine the information contained in the form to ensure it is correct
• Insert all relevant information that has not been included in this pre-populated form including dividend income, deposit interest, health expenses, etc.

Once you have submitted your Income Tax Return,  it will be processed by Revenue and a Statement of Liability will issue along with any refund due for the 2019 year of assessment.

The refund can be paid in two ways: (i) directly into your bank account or (ii) by cheque posted to your home address.  if you wish to have the refund transferred electronically, you must:

• Go to MyAccounts
• Click onto MyProfile
• Insert the BIC, IBAN and full name on the bank account in the relevant sections

If, however, the Preliminary End of Year Statement shows that you underpaid your taxes for the 2019 year of assessment, you must file an online Income Tax Return to include all relevant income, allowable deductions, tax credits, etc.  This can be done through MyAccount.  Once Revenue has processed the information, a Statement of Liability will issue.  This document will outline how any underpayment is be recovered.  Options include adjusting your tax credits and standard rate cut-off point over one or more years.

The Revenue Commissioners will write to taxpayers who have underpaid tax based on their preliminary calculations, requiring them to complete and file an Income Tax Return for 2019.

In circumstances where the taxpayer does not file a return, the Revenue Commissioners will write to them again, this time outlining how the underpayment is to be collected.

For further information, please click:

https://www.revenue.ie/en/online-services/support/software-developers/paye-modernisation-technical-overview.aspx

https://www.revenue.ie/en/employing-people/paye-modernisation/index.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.

Special Assignee Relief Programme (SARP). Income Tax Relief. Employee Tax Relief. Payroll Tax

There have been two updates to SARP legislation in the most recent Finance Act.  The Special Assignee Relief Programme is an Income Tax Relief aimed at employees who move to Ireland with their employer or with an associated company.  By way of background, SARP was first introduced in 2012. Where certain qualifying criteria are met, the assignee or secondee is entitled to a 30% deduction from employment income over €75,000.  Although this is an Income Tax Relief, the exemption does not extend to Universal Social Charge (USC) and PRSI.  SARP be claimed for five consecutive years in two way: (a) through an individual’s annual self assessment Income Tax Return or (b) through the employer’s payroll.

Revenue’s guidance on Special Assignee Relief Programme (SARP) has been updated to take into account the recent changes introduced by Finance Act 2018:

1. Details of the cap of €1 million introduced from 1st January 2019 for the years 2019 (for new entrants only) and 2020 (for all claimants).

A cap has been reintroduced on the amount of the employment income to which SARP relief can apply.

The upper income threshold of €1 million will apply to any relevant employee who first arrives in Ireland on or after 1st January 2019.

For the tax year 2020, the upper income threshold will apply to all relevant employees.

2. Clarification regarding the requirement to file Form SARP 1A within the 90 day time limit

From 1st January 2019 the time limit for the submission of the form SARP 1A will be extended from within 30 days of the date the employee first arrives in Ireland to carry out his/her employment duties to 90 days.

For further information, please click on the following link:

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/income-and-employment/special-assignee-relief-programme/index.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.