The Revenue Commissioners acknowledge the on-going efforts by taxpayers and agents and in light of the current Covid-19 developments, the Pay and File deadline for ROS customers has been extended to Friday, 19th November at 5.00pm.
For full information, please follow link: https://www.revenue.ie/en/tax-professionals/ebrief/2021/no-2112021.aspx
On 12th October 2021 the Irish Government announced the introduction of a Digital Games Tax Credit, i.e. a refundable Corporation Tax Credit available to digital games development companies.
On 21st October, Section 33 of the Finance Bill introduced section 481A TCA 1997 in relation to the new tax credit for the digital gaming sector which provides relief at a rate of 32% of the qualifying expenditure incurred in the development of digital games (i.e. the design, production and testing of a digital game) up to €25 million.
In other words, the credit of 32% will be on the lower of:
In order to qualify for the relief, the minimum expenditure per project is €100,000.
The digital gaming corporation tax credit will be available up to 31st December 2025.
This tax credit is available to companies who are resident in Ireland, or who are EEA resident and operate in Ireland through a branch or an agency.
To qualify for this tax credit, the digital game must be issued with one of two types of Certificate from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media:
A digital games development company may not make a claim for the tax credit unless it has been issued with either an interim or a final certificate.
If a company has been issued with an interim certificate, it can claim the tax credit within twelve months of the end of the accounting period in which the qualifying expenditure is incurred.
Relief will not be available for digital games produced mainly for the purposes of advertising or gambling.
A digital game development company will be required to sign an undertaking in respect of “quality employment” which is similar to the requirements contained in section 481 TCA 1997 for tax relief for investment in films.
A claimant company will not be allowed to qualify for any additional tax relief under Section 481 Film Relief or the R&D tax credit.
As the credit will require EU state aid approval, it is to be introduced subject to a commencement order.
The Finance (Covid-19 and Miscellaneous Provisions) Bill 2021 has extended the Employment Wage Subsidy Scheme (EWSS) until 31st December 2021.
It also amended the comparison periods for determining eligibility for EWSS for pay dates from 1st July 2021.
The main criterion for eligibility is that employers must be able to prove that they were operating at no more than 70% of either (a) turnover or (b) customer orders received for the period 1st January to 30th June 2021 as compared with 1st January to 30th June 2019. It must also be able to clearly demonstrate that this disruption was caused by Covid19.
In other words, an employer must be able to show, to the satisfaction of Revenue Commissioners, that their business is expected to suffer a 30% reduction in turnover or customer orders, which was due to Covid19.
Simultaneously, Revenue introduced a new requirement for employers to submit a monthly Eligibility Review Form (ERF) on ROS. The ERF requires (a) data relating to actual monthly VAT exclusive turnover or customers order values for 2019 in addition to actual and projected figures for 2021 for all relevant businesses as well as (b) a declaration.
The initial submission should be made between 21st and 30th July 2021 and by 15th of every month from August onwards.
On 15th of every month during the operation of this scheme, employers will be required to provide the actual results for the previous month, together with a review of the original projections they provided so as to ensure they continue to remain valid.
The eligibility for EWSS must be reviewed on the last day of each month. If the business is deemed ineligible, then that business must de-register for EWSS from the following day.
If, however, the situation changes, then the business can re-register again.
The following subsidy rates, based on employee’s gross pay per week, will continue to apply for the months of July, August and September 2021 as follows:
For further information please visit: https://www.revenue.ie/en/employing-people/ewss/how-to-claim-for-employees-and-subsidy-rates.aspx
The Registrar of Companies has decided to extend the filing deadline for companies with an Annual Return Date falling on 30th September 2020 or later until Friday, 11 June 2021.
The extension of the deadline from 28th May 2021 was in recognition of difficulties being experienced when trying to file Annual Returns in the run-up to the filing deadline, which the CRO are currently working to resolve.
For further information, please click the link: https://www.cro.ie/en-ie/About-CRO/Latest-News/filing-extension?
From 21st May 2021 Revenue will recommence their assessment of the tax clearance status of businesses.
Please be aware that this may result in the rescinding of the tax clearance status of businesses that are currently in receipt of the EWSS and/or the CRSS. It is essential to check the status of your tax clearance as your business may becoming ineligible to receive further payments under these schemes until the compliance issues concerned are fully resolved.
If Revenue have contacted you to remind you of your requirement to file outstanding returns or to address other compliance issues in order to retain your tax clearance status, please make sure you do so as a matter of urgency.
In summary, businesses which are reliant on the EWSS and/or the CRSS should take immediate action by contacting Revenue and addressing the outstanding issues.
Revenue published Tax and Duty Manual Part 29-02-03 – Research and Development (R&D) Tax Credit today.
These updated guidelines clarify Revenue’s treatment of rental expenditure as well as including information on the treatment of subsidies received under (i) the Temporary Wage Subsidy Scheme (TWSS) and (ii) the Employment Wage Subsidy Scheme (EWSS).
According to previous guidance material on this matter issued on 1st July 2020 Revenue’s position was that “rent is expenditure on a building or structure and is excluded from being expenditure on research and development by section 766(1)(a) TCA 1997”.
Since then, Revenue’s position has been the source of continuous discussion and debate with many disagreeing with Revenue’s interpretation of the treatment of rent in relation to R&D claims.
Clarity had been sought from Revenue with regards to their position on rent in relation to both historic and new claims for Research and Development tax relief.
In this latest update, Revenue has clarified that rent will qualify in such circumstances where “the expenditure is incurred wholly and exclusively in the carrying on of the R&D activities.”
According to Paragraph 4.2 of the updated Revenue Guidance Manual:
“In many cases expenditure incurred on renting a space or facility, which is used by a company to carry on an R&D activity, may be expenditure that is incurred “for the purposes of”, or “in connection with”, the R&D activity but will not constitute expenditure incurred wholly and exclusively in the carrying on of the R&D activity. The eligibility of rental expenditure incurred by a company will relate to the extent to which it is incurred wholly and exclusively in the carrying on of the R&D activities. Where the nature of the rented space or facility is such that it is integral to the carrying on of the R&D activity itself then it is likely that the rent can be shown to be more than merely “for the purposes of” or “in connection with” the R&D activity.”
Therefore, it is possible for rental expenditure to be included as part of an R&D tax relief claim but only where that rented building is deemed to be integral to the carrying on of R&D activities. According to Revenue’s guidance material, an example of a rental expense that may be considered qualifying expenditure might relate to the rental of a specialized laboratory used solely for the purposes of carrying out R&D activities. This is contrasted with the rental of office space necessary to house an R&D team, but which is not deemed to be integral to the actual R&D activity. In this case, this rent would not be treated as eligible expenditure.
Revenue have confirmed that this position will only apply for accounting periods commencing on or after 1st July 2020.
Revenue’s Manual has also been updated to include:
For further information, please follow the link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-29/29-02-03.pdf
The new CORE Portal will be launched on 16th December 2020.
The new Portal will make filing with Companies Registration Office easier and more efficient.
Main Features of the new CORE Portal include:
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:
Revenue has defined e-working to be where an employee works:
The guidance material goes on to state that e-working involves:
The revised Revenue guidance clarifies that the following conditions must also be met:
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:
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:
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:
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:
You can access the record of your payroll details for 2019 as follows:
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
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:
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:
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 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:
This milestone in the Switzerland and USA tax relationship is likely to make Switzerland far more appealing to U.S. multinationals.