Budget 2024

As part of Budget 2024, the government signed off on a package of €257 million for the Increased Cost of Business (ICOB).  The main aim of this Grant is to support small and medium sized businesses by contributing towards their rising business related costs including energy, labour, rent, etc.

To Qualify for the ICOB Grant

To qualify for the ICOB grant your business must meet the following conditions:

• It must be a commercially trading business, currently operating directly from a property that is commercially rateable.

• It must have been trading on 1st February 2024 and your intention must be to continue trading for at least three months.

• Your commercial rates bill must be equal to or less than €30,000 for 2023.

• You must submit confirmation of your bank details to the relevant Local Authority.

• The business must be considered rates compliant. This includes businesses with phased payment plans in place.

• It must possess a valid Tax Registration Number.

• It must be tax compliant.

The Grant Amount

The ICOB grant is a once-off payment based on the value of the 2023 commercial rates bill.

The grant is 50% of the commercial rates bill for eligible businesses with a 2023 bill of less than €10,000.

The grant is €5,000 for eligible businesses with a commercial rates bill of between €10,000 and €30,000.

Businesses, however, with a commercial rates bill over €30,000 are not eligible to receive this ICOB Grant.

Please be aware that Public institutions and financial institutions will not be eligible for the grant, except for Credit Unions and specific post office services.

Vacant properties will also not be eligible for the ICOB Grant.

It is important to keep in mind that this ICOB Grant is not a Commercial Rates waiver. Rateable businesses are still required to pay their commercial rates to their local authority.

Today, the Government issued two important updates concerning the Increase in Grant Scheme (ICOB):

• They specifically targeted businesses in the Retail and Hospitality sectors. Businesses operating within these sectors are now eligible for a second grant payment which is equivalent to the initial ICOB Grant amount.

• The closing date for eligibility confirmation which was 1st May 2024 has now been re- opened from 15^th May to 29^th May 2024.

Local Authorities are expected to begin paying out the ICOB Grant to eligible businesses in the coming weeks.

For further information, please follow the links:

https://www.mycoco.ie/icob

https://www.dlrcoco.ie/sites/default/files/2024-03/ICOB%20User%20Guide.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.

Ireland has legislated for the Pillar Two rules with effect from:

• 1^st January 2024 for the Income Inclusion Rule and
• 1^st January 2025 for the Under Taxed Profits Rule

The Pillar Two rules provide that income of large groups is taxed at a minimum effective tax rate of 15% on a jurisdictional basis.

These rules apply where the annual global turnover of the group exceeds €750m in two of the previous four fiscal years.

Ireland signed up to the OECD Two Pillar agreement in October 2021.

The new minimum tax rate, which is effective from the 1^st of January 2024, sees an increase from the previous corporate tax rate of 12.5% to 15%, for certain large companies.

Ireland will continue to apply the 12½% corporation tax rate for businesses outside the scope of the agreement, i.e. businesses with revenues of less than €750 million.

There are special rules for intermediate parent entities and partially owned parent entities as well as certain exclusions.

It is understood that Revenue estimates approximately 1,600 multinational entity groups with a presence in Ireland will come in scope of Pillar 2.

In addition, the EU Minimum Tax Directive (2022/2523) provides the option for Member States to implement a Qualified Domestic Top-up Tax (QDMTT).

A domestic top-up tax, introduced in Ireland from 1^st January 2024, allows the Irish Exchequer to collect any top-up tax due from domestic entities before the application of IIR or UTPR top up tax.

The QDTT paid in Ireland is creditable against any IIR or UTPR top up tax liability arising elsewhere within the group.

It is important to keep in mind that IIR or UTPR top up tax may not apply in relation to domestic entities in circumstances where the domestic top-up tax has been granted Safe Harbour status by the OECD.

As there will be separate pay and file obligations and standalone returns for IIR, UTPR and QDTT, Revenue guidance material will be provided, in due course, in relation to all administrative requirements.

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.

Finance (No. 2) Act 2023 introduced a new Capital Gains Tax relief – “Relief for Investment in Innovative Enterprises.”

Its objective is to encourage investment in innovative small and medium start-up businesses entities.

This new relief provides a 16% CGT rate where a qualifying investor makes a qualifying investment in a qualifying company and subsequently disposes of those shares.

This new CGT Relief applies an effective rate of 16% on qualifying gains up to twice the value of their initial investment if the investment is made by an individual or 18% if the investment is made through a partnership.  As you can see both rates are very attractive when compared to the standard 33% rate of Capital Gains Tax.

There is a lifetime limit of €3 million for the Relief.

The Relief, calculated as 33% – 17% for individuals or 33% – 15% for partnerships, is available on the lowest of the following:

1. the chargeable gain,
2. twice the amount of the qualifying investment in the eligible shares disposed of or
3. the €3m lifetime limit less chargeable gains from all claims made under this Relief.

Conditions for the Relief include the following:

1. To qualify, the scheme involves a certification process whereby the investee company must obtain a Certificate of Going Concern and a Certificate of Commercial Innovation from the Revenue Commissioners. In addition, the company must be incorporated and tax resident in Ireland, an EEA state or the UK, be an innovative enterprise (i.e. based on a business plan, approved by Enterprise Ireland and demonstrate compliance with GBER), carry on or intend to carry on certain trading activities in Ireland and hold a tax clearance certificate.
2. The company must exist wholly for the purpose of carrying on relevant trading activities or holding shares in certain subsidiaries.
3. The company must not be controlled by another company and must be an unquoted SME.
4. Each company, which is a member of the relief group of which the company is a member, must be unlisted.

The criteria governing certificates of qualification are provided for under s600F TCA 1997.

For the investor, a qualifying investment under the terms of the relief includes:

1. A minimum qualifying investment is €20,000 or
2. An investment in the form of fully paid up newly issued shares in the qualifying company valued at a minimum of €10,000 where the investment represents at least 5% of the company’s ordinary share capital.
3. The investment cannot be for more than 49% of the qualifying company’s ordinary share capital, entitlement to profits available for distribution, voting rights and assets available for distribution.
4. The eligible shares have been held for at least three years from the date of the investment.

For the purposes of this Angel Investor Relief, the investor must not be “connected” with the investee company or any other company within the Relief Group.  In other words, in order to claim this Relief, the investor cannot be a partner, director or employee of the relevant company or have any interest in the share capital of this or any company which is a member of the Relief Group.  The investor must subscribe for shares in the investee company (i) for consideration wholly in cash, (ii) by way of a bargain at arm’s length and (ii) for bona fide commercial reasons.

IMPORTANT POINTS

• An investment will not be a qualifying investment unless it is based on a business plan and the company seeking to raise funds from the investor (i.e. the individual or partnership) must be able to provide a certificate of going concern and a certificate of commercial innovation issued by the Revenue Commissioners.

• Please be aware that the 5% shareholding threshold does not apply in circumstances where the qualifying investment is €20,000 or more.

• Angel Investor Relief is currently applicable in relation to the disposal of eligible shares issued on/before 31^st December 2026.

• New Angel Investor Relief will work with other CGT Reliefs including Retirement Relief and Revised Entrepreneur Relief. This means, priority will be given to either Retirement Relief or Revised Entrepreneur Relief if it provides a higher amount of tax relief to the qualifying investor than Angel Investor Relief. It is not possible, however, to claim Angel Investor Relief in conjunction with Revised Entrepreneur Relief or Retirement Relief.

• It is not possible to avail of Angel Investor Relief as well as E.I.I. in relation to the eligible shares.

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.

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 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 Income Tax 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 Income Tax Returns or cancel the registration within 21 days of the letter, Revenue will cease the income tax registration without further notice.

Once the Income Tax registration is ceased, if the taxpayer wishes to re-register for income tax 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.”

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.