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When setting up a foreign company in Ireland, the first step is to decide on the most appropriate structure – a branch or a subsidiary company.

• A branch is not a separate legal entity in its own right.
• Instead, it’s an arm of the external company operating in Ireland.
• In other words, a branch office is an extension of the parent company abroad.
• A branch performs the same business operations and operates under the legal umbrella of the parent/holding/external company.
• The parent/external/holding company has complete control over any of the branch’s decisions.
• All liabilities incurred by the branch are ultimately those of the head office located overseas.

• A subsidiary, on the other hand, is an independent legal entity.
• It can be either partially or wholly owned by the foreign company.
• It has the same compliance requirements as a that of a Limited Company in Ireland.
• A subsidiary is generally considered to be more tax-efficient than a branch because it’s liable to Irish Corporation Tax on its worldwide income.
• The subsidiary will be required to file an A1 and Constitution with the Companies Registration Office.

SUBSIDIARY

Registering a subsidiary is just like setting up a new company in Ireland.

It is an independent legal entity which is different to the parent or holding company.

Incorporation of a subsidiary requires the completion of Irish Companies Registration Office (CRO) statutory documentation and the drafting of a constitution. The only difference is that the parent company must be either the sole or majority shareholder of the new company i.e. holding at least 51% of the shares.

The subsidiary is generally registered a private company limited by shares.

When setting up a company with another company as the shareholder, someone must be appointed who is authorised to sign on behalf of the company.  This would usually be a Director or another authorised person.

The liability of the parent company is limited to the share capital invested in the Irish subsidiary

With a Parent company as the shareholder, all the existing shareholders of that parent company have the same percentage stake in the new Irish subsidiary.

As with all new Irish companies, the subsidiary will require at least one director who is an EEA resident and a company secretary.  It will also be required to have a registered office address and a trading office within the State.  The company must purchase an insurance bond if none of the directors are EEA resident, unless, the subsidiary can demonstrate that it has a “real and continuous economic link” to Ireland.

An Irish subsidiary company can avail of the 12½% Corporation Tax rate on all sales, both within Ireland as well as internationally.

BRANCH

A branch is not a separate legal entity.

It is generally considered to be an extension of its parent company abroad.

The parent company is fully liable for the Branch and its activities.

An Irish branch will only be allowed to carry out the same activities as the parent company.

In accordance with the Companies Act 2014, a branch must be registered within thirty days of its establishment in Ireland.

As a branch is deemed to be an extension of the external company, its financial statements would be consolidated with those of the parent company and legally it cannot enter into contracts or own property in its own right.

An Irish branch company only qualifies for the 12½% Corporation Tax on sales within Ireland.

A Branch is required to file an annual Return with a set of financial statements of the external company, with the CRO.

Disclaimer This article is for guidance purposes only. Please be aware that it does not constitute professional advice. No liability is accepted by Accounts Advice Centre for any action taken or not taken based on the information contained in this article. Specific, independent professional advice, should always be obtained in line with the full, complete and unambiguous facts of each individual situation before any action is taken or not taken.  Any and all information is subject to change.

Revenue has published a reminder of the payment dates for Local Property Tax (LPT) in 2021.

The payment date depends on the payment method selected:

• 1st January 2021 is the payment date if you are paying by (a) deduction at source from salary, (b) pension, (c) certain Government payments or (d) making regular payments to a payment service provider
• 11th January 2021 is the date for paying in full by cash, cheque, credit card or debit card.
• 15th January 2021 is the date for monthly direct debit payments beginning in January and continuing on the 15th of each month.
• 22nd March 2021 is the deduction date for Annual or Single Debit Instruction.

For further information, please follow the link: https://www.revenue.ie/en/property/local-property-tax/what-to-do-in-2021/filing-and-payment-deadlines.aspx

The new CORE Portal will be launched on 16^th December 2020.

The new Portal will make filing with Companies Registration Office easier and more efficient.

Main Features of the new CORE Portal include:

1. The ability to upload signed PDF signature pages. This removes the requirement to post signature pages to the CRO and should greatly reduce issues such as lost or delayed post as well as missed filing deadlines. A signature page must be generated and signed then a PDF version of the signed signature page can then be uploaded to the system. Please be aware, the option of E-signatures to sign the signature page will not be available.

2. An automatic Fifty Six days to file Annual Returns. This replaces how presenters file annual returns.  Currently the Form B1 can be filed and a signature page generated twenty eight days after the ARD with a further twenty eight days to file the accounts.  From 16^th December 2020 companies will have an automatic 56 days from its ARD (annual return date) to complete the entire filing process which will include (a) preparing the annual return in CORE, (b) uploading the financial statements, (c) generating the signature page once the financial statements have been successfully uploaded, (d) uploading the signed signature page in a PDF format and (e) make the necessary filing payment.

3. From 16^th December 2020 it will be possible for CORE users to preview, remove and upload a new version of the financial statements before the B1 signature page is generated. Currently a new signature page is created every time a set of financial statements is removed and a new version is uploaded.

Today, in a statement issued by Vice President Margrethe Vestager, the European Commission confirmed that it will appeal the judgment of the General Court of the European Union in the Apple State aid case to the Court of Justice of the European Union.

On 15th July 2020, the General Court of the European Union found that no State aid had been given by Ireland to Apple and that the Irish branches of Apple had paid the correct amount of tax due under legislation.

Vice President Margrethe Vestager stated that

“the General Court judgment raises important legal issues that are of relevance to the Commission in its application of State aid rules to tax planning cases. The Commission also respectfully considers that in its judgment the General Court has made a number of errors of law. For this reason, the Commission is bringing this matter before the European Court of Justice.”

Ireland had previously appealed the Commission’s Decision on the basis that the correct amount of Irish tax had in fact been paid by Apple and that Ireland had not provided State aid to Apple.  The judgment from the General Court of the European Union vindicates Ireland’s position.

The Minister for Finance, Paschal Donohoe T.D. said,

“I note the decision of the European Commission to lodge an appeal to the CJEU. Ireland has not yet been served with formal notice of the appeal. When it is received, the Government will need to take some time to consider, in detail, the legal grounds set out in the appeal and to consult with the Government’s legal advisors, in responding to this appeal.”

The funds in escrow of €13 billion will only be released when there has been a final determination in the European Courts on the validity of the Commission’s decision.

This appeal process could take up to two years.

For more information, please click: https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_20_1746

Revenue have confirmed in today’s ebrief No. 124/20 that there is no requirement for a person to include a capital loss in a tax return for the chargeable period in which the loss arises in such circumstances where there is no chargeable gain, arising in the same chargeable period, against which it may be offset.

Revenue’s Tax and Duty manual Part 19-02-05 has been updated.

Paragraph 5.1 clarifies Revenue’s position that, where an allowable loss arises in a chargeable period and there is no chargeable gain arising in the same chargeable period against which it may be offset, then there is no obligation for a person to include the loss in a tax return for the chargeable period in which the loss arises.

For further information, please click the link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-02-05.pdf

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

• Bitcoin
• Ethereum
• Ripple
• Dash
• Litecoin

Ireland has its own cryptocurrency called “Irishcoin”.

In Revenue’s most recent guidance material outlining how cryptocurrencies transactions should be treated for Irish tax purposes, 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

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.

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) in which it published Government’s recommendation as to how employers can allow employees to work from home.

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

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 wtih 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.

On 29th July 2019 the Central Register of Beneficial Ownership was launched in Ireland.  This new legal requirement forms part of Ireland’s implementation of the 4th EU Anti-Money Laundering Directive.

The new Central Register of Beneficial Ownership requires that all companies file details of their Ultimate Beneficial Owners with the Companies Registrations Office.

Under the Regulations, the commencement date for the obligation to file on the Central Register was 22^nd June 2019 and companies must deliver their beneficial ownership information to the CRO by 22^nd November 2019.

Going forward, newly incorporated companies will have five months from the date of incorporation to register their information.

It is considered a breach of statutory duty not to file within the deadline date.

This is a new filing requirement, in addition to the other usual requirements, for example, filing a B1 annual return.

A beneficial owner is defined an individual/natural person who owns or controls directly or indirectly:

1. more than 25% of the equity
2. more than 25% of the voting rights or
3. has capacity to control the company by other means.

In situations where no beneficial owners can be identified, the names of the directors, senior managers or any other individual who exerts a dominant influence within the company must be entered in the register of beneficial owners.  In other words, where the beneficial owners are unknown, the company must take “all reasonable steps” to ensure the beneficial ownership information is gathered and recorded on the register.

The following information is required to be filed with the RBO in respect of each beneficial owner:

1. The name,
2. Date of Birth,
3. Nationality,
4. Residential Address,
5. PPS Number, if applicable – The Registrar will not disclose any PPS Numbers and will only use them for verification purposes.
6. A Statement of the nature and extent of the ownership interest held or extent of the control exercised,
7. The date of entry on the register as a beneficial owner,
8. The date of ceasing to be a beneficial owner.

For non-Irish residents who do not hold a PPS number, a Transaction Number must be requested from the Companies Registration Office.  This is done by completing and submitting a Form BEN2 and having it notarised in the relevant jurisdiction.

Failure to comply with the Regulations is an offence and shall be liable on summary conviction to a Class A fine, or conviction on indictment to a fine up to €500,000.

Going forward, any changes to a Company’s Internal Beneficial Ownership Register must be updated in the Central Register within fourteen days of the change having occurred.

Once a company has been dissolved the registrar will delete all information held in relation to that entity, after the expiration of ten years.

Who has access to this information?

As required by EU anti-money laundering laws, members of the public will have restricted access to the CRBO including:

• The name, month/year of birth, country of residence and nationality of each beneficial owner.
• The nature and extent of the interest held or the nature and extent of the control exercised by the beneficial owner.

The 2019 regulations provide for the following to have unrestricted access to the Central Register:

• An Garda Síochána
• The Revenue Commissioners
• Members of the Financial Intelligence Unit Ireland
• The Criminal Assets Bureau

On 17th July 2019, the U.S. Senate approved the 2019 Protocol to amend the Switzerland USA Double Taxation Agreement.

Formally, the protocol will enter into force on the date the instruments of ratification are exchanged.

The core element of the protocol of amendment is the exchange of information.

The protocol provides for the following changes:

• Currently there is no differentiation between tax evasion and tax fraud in Switzerland. This was in line with the international standard on information exchange. Switzerland applied this to in excess of one hundred jurisdictions however, the United States was not one of them. The protocol will erase this difference within the context of administrative assistance in relation to the U.S. It will also apply to other categories of information requests.
• For pillar 3a solutions (i.e. dividends paid to individual retirement arrangements), it will provide for an exemption from the source country (i.e. the Us) withholding 15% tax on cross border dividends from 1st January 2020 provided the protocol of amendment comes into force in 2019.
• Mandatory binding arbitration of unresolved competent authority cases will be implemented where the competent authorities cannot reach agreement in the mutual agreement procedure. This will eliminate exposure to double taxation.
• Under the new provision, the United States will be able to make group requests under the FATCA Agreement. The IRS will submit the group requests to the Swiss Federal Authority. The affected Swiss financial institutions will have ten days to deliver the required information on receipt of the request from the Swiss Federal Authority.

This milestone in the Switzerland and USA tax relationship is likely to make Switzerland far more appealing to U.S. multinationals.