Traders (including farmers), professionals and other persons carrying on a business, as well as non-trading or non-profit making organisations and bodies of persons (including charitable organisations and statutory bodies) are required to file Forms 46G annually containing details of payments made by them to third parties for services provided.

For individuals / persons (other than companies) the return should include payments made

1. in the twelve month period to 31st December each year or
2. up to the date on which accounts of the trade or profession are normally prepared

The Form 46G must be filed on or before 31st October of the following year.

For companies, the Form 46G should cover all relevant payments in an accounting period and be submitted no later than 9 months following the end of the relevant accounting period.

A non-compliant taxpayer (i.e. where a taxpayer fails to deliver a true and correct return) may be liable to a penalty of €3,000. In addition to which a tax clearance certificate may not be granted and tax refunds may be withheld.

Details of payments must be returned where the total amount paid to one individual or company in the year exceeds €6,000.

Relevant payments include:

• Payments for services provided in connection with the trade, profession, business etc.
• Payments for services provided in connection with the formation, acquisition, development or disposal of the trade or business
• Periodical or lump sum payments made in respect of any copyright.

Revenue provides a list of services that must be specifically disclosed. This list should be reviewed prior to filing a Form 46G on an annual basis.

The following categories of services were recently added:

• Call Centre/Customer Service
• Childcare
• Fitness, Sport & Leisure Services
• Fleet Management Services
• Health & Safety Services
• HR/Recruitment Services
• Internet & Information Technology related services (including website design or re-design, cloud services etc.)
• Landscaping/Gardening/Horticulture
• Marketing /Business Analysis
• Printing & Publishing
• Research

Certain payments are not required to be disclosed such as:

• Payments for essential services/utilities such as electricity, gas and telephone
• Payments from which income tax has been deducted
• Payments from which withholding tax has been deducted.  This includes payments which are subject to PAYE, fees paid subject to withholding tax, payments subject to Relevant Contracts Tax (RCT), etc.
• Payments to non-residents
• Payments for services where the value of any goods provided as part of the service exceeds two thirds of the total charge

For further details, please follow the link:

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-38/38-03-13.pdf

Has your business incurred VAT costs in another EU member State between 1st January and 31st December 2018?

If the answer is “yes” then you should begin preparing your ‘EVR’ refund claim.

As you’re aware, if you are an Irish VAT registered business who has incurred VAT in another E.U. state, you can’t reclaim this VAT in your Irish VAT 3 Form.  Instead, you must submit an online claim through the Electronic VAT Refund (EVR) service.

This EVR claim is made via the tax authorities’ portal in the trader’s own country.  In other words, an Irish VAT registered business must submit its application to the Irish Revenue Authorities via ROS.

It is the responsibility of the Irish Revenue Authorities to then forward the EVR claim to the E.U. state in question to process the refund.

The EVR application must include the following:

• The Supplier’s details
• The Country
• Import information
• The VAT details
• Details regarding the type of supply made
• In some member states invoices may need to be included with the claim.

The EVR application must be filed on or before 30th September 2019 in relation to VAT incurred between 1st January and 31st December 2018.

The refund payment will be made by electronic funds transfer (EFT) to the bank details provided in the claim.

A maximum of five applications can be made via the EVR  in a calendar year.  The refund period can’t be greater than one calendar year (i.e. 1st January to 31st December) and it can’t be less than three calendar months except in circumstances where the application is in relation to the last quarter of the year.

It is not possible to amend a claim to increase a VAT refund.

Please be aware that EVR reclaims are governed by the VAT recovery rules of the E.U. member state to which the claim relates.  In other words, if you are an Irish VAT registered business making an EVR reclaim in, say, France then you must comply with the French VAT rules and not the Irish rules.

If, however,  you are registered or have an obligation to register for VAT in a particular EU member state then, any reclaim of VAT incurred there must be made directly to the tax authorities of that particular E.U. jurisdiction.

For further information, please click on to the link:

https://www.revenue.ie/en/vat/reclaiming-vat/irish-vat-registered-traders-reclaiming-vat-from-european-union-eu-member-states.aspx

From 1st January to 31st December 2021 (i.e. for a three year period) there will be no Benefit in Kind charge on vehicles solely powered by electricity if the original market value is less than €50,000.

Please be aware this favourable treatment does not apply to hybrids.

In situations where the open market value of the vehicle is greater than €50,000 the excess will be liable to tax as a Benefit in Kind.

Electric vehicles valued at in excess of €50,000 that were provided to the employee between 1st January 2017 and 9th October 2018 continue to be exempt from a BIK charge.  Please keep in mind, however, that this exemption could be affected if the electric car which was provided to the original user  between 1st January 2017 and 9th October 2018 is subsequently provided to a new user.

For further information, please follow this link:

https://www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/private-use-of-company-cars/exemptions.aspx

There have been two updates to SARP legislation in the most recent Finance Act.

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

The Chancellor announced today that the government will extend first-time buyers relief to all first-time buyers of shared ownership properties in England and Northern Ireland.

The relief will not apply to purchases of properties valued over £500,000.

This amendment will apply to relevant transactions with an effective date of on or after 29^th October 2018.  The measure will also apply retrospectively to transactions with effective dates on or after 22^nd November 2017, which was the date first-time buyer’s relief was originally introduced.

The relief must be claimed in an SDLT Return or by amending an SDLT return which has already been filed.

For those who completed their transaction before 29^th October 2018, the opportunity to amend their SDLT Return will be extended by a further 12 months until 28^th October 2019.

A technical correction was included to extend the time frame in which the 3% SDLT on additional dwellings can be reclaimed.  This applies to situations where an individual sells his or her home within three years of making a replacement purchase.  The amendment, which comes into effect from 29^th October 2018, extends the reclaim period from three to twelve months following the sale of the old home.

The Chancellor announced two key changes to Entrepreneurs’ Relief in today’s budget which will impact shareholders and business owners.

What is Entrepreneurs’ relief?

Entrepreneurs’ Relief reduces the rate of Capital Gains Tax on disposals of certain business assets from 20% to 10%.

What changes were introduced today?

 Today’s Budget introduced two new additional tests to be met:

1. The First one which extends the qualifying holding period from one year to two years for disposals on or after 6^th April 2019.  In other words, it increases the holding period for shares held by individual shareholders. Individuals will now be required to hold the shares for at least 24 months rather than the current 12 months before they can claim Entrepreneurs’ Relief on the disposal of their shares. This change will apply to disposals made on or after 6 April 2019.
2. The second change immediately introduces two further tests that must be satisfied before Entrepreneurs’ Relief is available. These tests will require the claimant to have at least a 5% interest in both (a) the distributable profits and (b) the net assets on a winding up of the company. The measure will have effect for disposals on or after 29 October 2018.

What does the 5% Rule mean?

 The changes introduced in today’s Budget mean that along with existing conditions that an individual must hold at least 5% of the ordinary share capital and voting rights of a trading company, the individual must also be entitled to:

a)       5% of distributable profits and

b)       5% of assets available on a winding up of that company.

How is Entrepreneurs’ Relief affected by Dilution?

 As previously announced, the Government confirmed that legislation will be implemented from 6^th April 2019 in relation to individuals’ shareholdings diluted below 5% as a result of a commercial cash investment.

These individuals will be able to elect to preserve their Entrepreneurs’ Relief on gains to the date of dilution by treating their shareholding as having been disposed of and simultaneously reacquired at market value at the time of dilution. Another way of looking at this is, under the new rules, a shareholder can elect to claim Entrepreneurs’ Relief on the capital gains accrued before dilution below 5%.  This is provided the dilution resulted from an issue of new shares for cash. The Entrepreneurs’ Relief will be claimed on the eventual disposal of those qualifying shares.  There is, of course, the prerequisite that the share issue has not occurred for the purposes of tax avoidance.

There will also be an election allowing the individual to defer any tax due until a future liquidity event.

It is important to keep in mind that this provision will also not be available if the percentage entitlement falls below 5% due to a part-disposal of shares.

What about Entrepreneurs’ Relief in situations where there has been a transfer of a business to a limited company?

 The changes to Entrepreneurs’ Relief introduced in today’s Budget will affect the availability of the relief on the sale of shares originally issued after the incorporation of a trade.

A transfer of a trade in exchange for shares in a trading company should benefit from Entrepreneurs’ Relief if the trade existed for at least two years prior to the date of incorporation.

Under the current regime the claimant was required to hold the resultant shares for at least two years prior to the date of disposal.

Therefore, this amendment to the Entrepreneurs’ Relief is deemed to benefit sole traders who incorporate the trade shortly before selling their business.

Current UK Legislation

Principal Private Residence Relief (PPR) is a capital gains tax relief on the disposal of an individual’s only or main residence.

Under current U.K. legislation, an individual can claim relief for any period where the relevant property is deemed to be the individual’s “Principal Private Residence” (PPR).

The individual can claim Principal Private Residence relief for the final eighteen months of ownership providing the property had been that individual’s principal or main residence at any point during his or her ownership.  In other words, the final eighteen months always qualify for Principal Private Residence Relief even if the dwelling was no longer the individual’s only or main residence.

Lettings relief currently provides relief of up to £40,000 to individuals who let out a property which is or has been their main or principal residence.

Budget 2018 Amendments

The government proposes to make the following two changes with effect from April 2020:

1)      The Lettings Relief will be reformed so that it only applies where the owner of the property is in “shared-occupancy” with a tenant.  The relief can reduce the capital gain, per person, by up to £40,000, giving a potential tax saving of up to £11,200 (£40,000 x 28%) and

2)      The final period of exemption, which applies if a property has been an individual’s PPR at any point during their period of ownership, will be reduced from eighteen months to nine months.   There are no proposed amendments to the thirty six months that are available to disabled persons or those residing in a care home.

The government will consult on the proposed changes before legislating.

For taxation purposes, Capital Allowances are deemed to be amounts a business can deduct from its profits in respect of “qualifying Capital Expenditure” which was incurred on the provision of certain assets (i.e. plant and machinery) used for the purposes of the trade.

As depreciation is not allowable for the purposes of calculating tax, Capital Allowances allow the taxpayer to write off the cost of the asset over a certain period of time.

The 2018 Finance Act introduced the following amendments to Capital Allowances as follows:

Accelerated Capital Allowances for Energy-Efficient Equipment

Section 285A TCA 1997 came into effect on 9^th October 2008 to provide relief to companies purchasing energy efficient equipment for the purposes of their trade.

This Capital Allowance Relief was provided in the form of a deduction which equalled 100% of the value of the equipment in the year of purchase provided certain conditions were met (see Schedule 4A TCA 1997).  In other words, this relief reduces the taxable profits, in year one, by the full amount incurred on the purchase of the equipment.

Finance Act 2017 amended the definition of “relevant period.”  As a result, the qualifying period was extended until 31^st December 2020.

On 14^th February 2018, Revenue issued eBrief No. 22/2018 confirming that the Tax and Duty Manual has been updated to reflect the extension of the relief to 31st December 2020.

Section 17 FA 2018 contains further amendments to the scheme.

It sets out criteria as to which products qualify for accelerated wear and tear allowances.

To qualify for the relief, the equipment must be new.

Section 17 FA 2018 makes reference to the Sustainable Energy Authority of Ireland (SEAI) being allowed to establish and maintain a list of energy-efficient equipment under the scheme.  In summary, in order for energy equipment to qualify for the accelerated capital allowances, it must appear on the SEAI list.  These amendments remove the requirement for government to issue Statutory Instruments, on a regular basis, setting out the criteria for “qualifying assets.”

This section of legislation comes into operation on 1st January 2019.

Energy-efficient equipment that has not been approved but is deemed to be plant and machinery can of the normal wear and tear allowances being 12½% over an eight year period.

Capital allowances on childcare and fitness centre equipment and buildings

Section 12 Finance Act 2017 introduced a new accelerated capital allowances regime for capital expenditure incurred on the purchase of equipment and buildings used for the purposes of providing childcare services or fitness centre facilities to employees.

The section amended the Taxes Consolidation Acts 1997 to include two new sections: s285B TCA 1997 and s843B TCA 1997.

The Relief was subject to a Commencement Order which was never issued.

Section 19 of Finance Act 2018 amends Parts 9 and 36 as well as Schedule 25B of the TCA 1997.

The scheme commences from 1^st January 2019.

Finance Act 2018 amends the definition of “qualifying expenditure” making the relief available to all employers, as opposed to just those carrying on a trade which wholly/mainly involves childcare services or the provision of facilities in a fitness centre.   In other words, the relief will be available to all employers since the restriction that the relief is only available to trades consisting wholly/mainly of the provision of childcare services or fitness facilities has been removed.

Where a person has incurred “qualifying expenditure” on “qualifying plant or machinery” a 100% wear and tear allowance is allowed in the year in which the equipment is first used in the business under Section 285B TCA 1997.

Section 843B TCA 1997 allows employers to claim accelerated industrial buildings allowances of 15% for six years and 10% for the seventh year in relation to capital expenditure incurred on the construction of “qualifying premises” i.e. qualifying expenditure on a building or structure in use for the purpose of providing childcare services or fitness centre facilities to employees of the company.

The facilities must be for the exclusive use of the employees and can be neither accessible nor available for use by the general public.

The relief will not be available to commercial childcare or fitness businesses nor will it be available to investors.

Accelerated Capital Allowances for gas vehicles and refuelling equipment

Section 18 Finance Act 2018 introduced accelerated allowances for gas vehicles and refuelling equipment which provides for an accelerated capital allowances rate of 100% on “qualifying expenditure” incurred between 1^st January 2019 and 31^st December 2021.  This section amends the Tax Consolidation Act of 1997 by inserting Section 285C.

Qualifying expenditure is defined as capital expenditure incurred during the relevant period on the provision of “qualifying refuelling equipment” or “qualifying vehicles” used for the purposes of carrying on a trade.

“Qualifying refuelling equipment” includes the following:

• a storage tank for gaseous fuel
• a compressor, pump, control or meter used for the purposes of refuelling gas vehicles or
• equipment for supplying gaseous fuel to the fuel tank of a gas vehicle.

The equipment in question must be new and installed at a gas refuelling station

“Qualifying vehicle” is defined as a gas vehicle, which is constructed or adapted for:

• the conveyance of goods or burden of any description
• the haulage by road of other vehicles or
• the carriage of passengers.

The vehicles in question must be new and do not include private passenger cars.

This section comes into operation on 1^st January 2019.

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.

The Minister for Finance, Public Expenditure and Reform Paschal Donohoe T.D. delivered Budget 2019 today, 9^th October 2018.

PERSONAL TAX

A number of changes aimed at easing the tax burden on low and middle income earners were announced in this year’s budget which include the following:

INCOME TAX

The income tax standard rate band will increase by €750 for a single earner.

This will raise the entry point to the 40% income tax rate

a)      from €34,550 to €35,300 for single earners and

b)      from €43,550 to €44,300 for married couples (with one earner).

The marginal rate of tax on income on earnings up to €70,044 per annum is now 48.5%.

The marginal rate of tax for those earning over €70,044 will remain at

a)      52% for employees and

b)      55% for self-employed individuals earning in excess of €100,000.

BENEFIT IN KIND

The 0% rate on BIK on electric cars has been extended to 2021 subject to a €50,000 cap in car value.

UNIVERSAL SOCIAL CHARGE

There will be a reduction in the third band of USC from 4.75% to 4.5%.

There will be an increase of €502 in the existing lower band of USC. This is worth a maximum of €139 per annum.   In other words, the band to which the 2% USC rate applies will be increased from €19,372 to €19,874.

TAX CREDITS

There will be a €200 increase in the Earned Income Credit for the Self Employed from €1,150 to €1,350.

There will be a €300 increase in the home carer credit from €1,200 to €1,500.   This credit can be claimed by a jointly assessed couple where one spouse/civil partner works in the home to care for children or other dependents, as defined.

PRSI

The weekly income threshold for the higher rate of employer’s PRSI will be increase from €376 per week (€19,552 per annum) to €386 per week (€20,072 per annum).

There will be a 0.1% increase in employers’ PRSI in 2019 from 10.85% to 10.95% and from 10.95 to 11.05% in 2020.

The National Training Fund Levy will increase from 0.8% to 0.9% from 1^st January 2019. The levy forms part of employer’s PRSI for Class A and Class H employments.

BUSINESS TAX

There is strong reaffirmation of the Government’s long-term commitment to 12½% corporation tax rate.

Key Employee Engagement Programme (KEEP)

There are Increases to the KEEP scheme. The scheme provides for tax relief for certain share remuneration provided to key employees by unquoted SMEs. The three separate amendments are as follows:

1. The ceiling on the maximum annual market value of shares that can be awarded must equate to the full amount of the employee’s salary.
2. A replacement of the three-year limit with a lifetime limit.
3. An increase in the value of shares granted under the scheme from €250,000 to €300,000.

Further clarification on these measures is expected in the forthcoming Finance Bill.

Film Relief

Film relief, which was due to expire at the end of 2020, has been extended until 2024.

Three Year Start Up relief

The Start up Relief from corporation tax has been extended until end of 2021.

Controlled Foreign Company (CFC) rules

Controlled foreign corporation rules are to take effect from 1^st Jan 2019.

Capital Gains Tax Exit Tax

CGT Exit Tax at 12½% is to apply from midnight on 9th October 2018 for companies ceasing to be Irish tax resident on any unrealised capital gains arising as well as in situations where the company transfers assets out the State.  This new exit tax regime is to ensure compliance with the EU Anti-Tax Avoidance Directive (ATAD) by 1^st January 2020.

AGRICULTURAL SECTOR

Income averaging

The Minister has proposed removing the restriction on income averaging for farmers with income from a non-farming source.

The current situation is that where a farmer or his/her spouse

a)      carries out another trade or profession or

b)      owns more than 25% of the share capital of a trading company

then they cannot avail of the income averaging provisions.

Stamp Duty Relief for Young Trained Farmers

The Young Trained Farmer Stamp Duty Relief which was due to expire at the end of 2018 will be extended for a further three years to 31^st December 2021.

Stock Relief

The current stock relief measures will be extended for a further 3 years up to and including 31^st  December 2021.

PROPERTY TAX

Interest relief for landlords

Interest relief on loans used to purchase, improve or repair a rental property will be increased from 85% in 2018 to 100% in 2019.

Review of local property tax

Any future changes will be moderate and affordable.

INDIRECT TAX

The Minister confirmed that the reduced 9% VAT rate which applies to certain tourism activities will be increased 13½% from 1^st January 2019.

The 9% VAT rate which applies to the provision of facilities for taking part in sporting activities is being retained.

The 9% VAT rate which applies to certain printed matter  will also be retained, e.g. newspapers

The VAT rate on e-books and electronically supplied newspapers will be reduced from 23% to 9% with effect from 1^st January 2019.

CAPITAL ACQUISITIONS TAX

CAT Threshold

The CAT Group A tax free threshold has been increased to €320,000 for gifts and inheritances received on or after 10^th October 2018.

Group A generally applies to gifts and inheritances from parents to their children.

Additional Measures

• The VRT relief available for hybrid vehicles including plug-in electric hybrids is being extended for one year i.e. until 31^st December 2019.
• A 1% VRT surcharge will apply to diesel engine passenger vehicles registered in Ireland from 1^st January 2019.  This VRT rate is being introduced across all VRT bands.
• Betting Duty on bets entered into by a bookmaker with an individual in Ireland will be increased from 1% to 2% effective from 1^st January 2019.
• From 1^st January 2019, the duty on commissions earned by betting exchanges or intermediaries which are used by persons in Ireland will be increased from 15% to 25%.
• The measure to allow accelerated capital allowances for employer provided fitness and childcare facilities, as introduced by Finance Bill 2017, will now take effect from 1^st January 2019.
• An accelerated capital allowances scheme will be introduced for refuelling equipment and gas propelled vehicles.

On 27^th February 2018, the Germany‘s Federal Ministry of Finance (MOF) issued guidance clarifying the VAT treatment of bitcoins and other “virtual currencies.”

It determined that although transactions to exchange a traditional currency for a virtual currency and vice versa were deemed to be a “taxable supply” these transaction are considered to be VAT exempt.

The guidance confirms that Germany will not impose a VAT charge in circumstances where the virtual currency is a substitute for a traditional currency and is used merely as a form of payment.

This guidance is in line with the ruling of the Court of Justice of the European Union (CJEU)— Hedqvist (C-264/14, 22^nd October 2015).