The European Court of Justice held that the supply of services by a non-EU Head Office to a branch situated in the E.U. is now liable to VAT where that branch is part of a VAT group.
VAT grouping allows EU member states to treat two or more companies as a single entity for VAT purposes which means transactions between members of a VAT group are normally ignored for VAT purposes.
However, the ruling on this dispute between Skandia America Corporation and the Swedish Tax Authorities means that services previously deemed to be VAT exempt will now be subject to VAT rates of between 15% and 27%.
This decision is of particular relevance to the financial services industry since the products and services they sell (e.g. mortgages and insurance) are largely exempt from VAT. The ruling means they will now be unable to recover input VAT refunds within the EU resulting in additional costs for banks and/or insurers who have outsourced IT and other services.
The consequences of this ruling will be substantially higher tax bills for financial services companies especially in the U.K. which is considered the “Global Financial Services Centre.”
Special Assignee Relief Programme
The Special Assignee Relief Programme or S.A.R.P. applies to secondments in Ireland in 2012, 2013 and 2014 and lasts for five calendar years for each employee.
How does an employee qualify for this relief?
To qualify, the employee:
What Incentive is available?
The incentive available is a reduction of taxable income in Ireland by 30% of the “specified amount.”
The “specified amount” is calculated as an amount of 30% of the difference between €75,000 (being the lower limit) and the lower of either:
What are the actual savings to the U.S. Secondee?
Are there any other incentives?
Qualifying employees can also receive the following payments tax free:
What about restrictions?
The S.A.R.P. Relief does not apply to:
Split Year Residence Relief
This relief applies to an individual who has not been Irish resident in the tax year prior to the date of arrival and who arrives in Ireland with the intention that he/she will be resident her in the following year. In such circumstances the individual will be treated as Irish resident only from the date of arrival.
Why is this important?
This is important because it means the individual won’t be liable to Irish income tax in respect of any foreign income arising to him/her prior to the date of arrival.
Does it apply to all income?
No. It only applies to employment income except for Directors’ salaries.
It does not affect any potential tax liability in respect of income from other sources.