Tax News

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.

If you have recently moved to the UK and intend selling your home in Ireland, please be aware that even if you qualify for Principal Private Residence Relief under Section 604 TCA 1997 in Ireland you may not qualify for UK Private Residence Relief.

This article is aimed at individuals who have become UK resident and who are in the process of selling their Irish principal private residence.

In general, you do not pay Capital Gains Tax when you sell or ‘dispose of’ your home if all the following conditions apply:

• you have only one home and you’ve lived in this property as your main home for the entire time you’ve owned it
• you have not let part of it out (Please be aware that this does not include having a single lodger)
• you have not used part of the property for business purposes only
• the grounds, including all buildings, are less than 5,000 square metres in total
• you did not buy the property with the sole or main intention to make a gain

If all the above conditions apply you will automatically get a tax relief called Private Residence Relief.

Your period of ownership begins on the date you first acquired the dwelling house or on 31st March 1982 if that is the later date. It ends when you dispose of or sell the property.

The final 18 months of your period of ownership will always qualify for Private Residence Relief regardless of how you use the property during that time but providing the property has been your only or main residence at some point.

The following periods of absence are treated as periods of occupation for the purposes of calculating Private Residence Relief:

• Any periods of absence, for whatever reason, not exceeding three years in total
• Any period of absence when carrying out the duties of your employment outside the United Kingdom
• Any periods not exceeding four years in total which are due specifically to employment requirements.

In order for these periods of absence to qualify as “deemed occupation” there must be a time both before and after the absence when the dwelling house is the individual’s sole or main residence. It is important to keep in mind that absences due to the conditions of an employment will qualify for the Relief even if the individual does not return to the dwelling house afterwards provided the reason for not their returning is due to their contract of employment requiring them to live somewhere else.

Any period of absence which requires the individual to live in job/work related accommodation will qualify for Private Residence Relief if there is an intention to occupy the dwelling as a main residence at some point.

HMRC will, by concession, allow a period of up to one year before the individual begins to occupy the property as his/her principal private residence to be treated as a period of occupation provided the property is then occupied as his/her only or main residence. In exceptional cases, HMRC may extend this period to two years.

From April 2015, the PRR rules were amended so that a property may only be treated as an individual’s main or sole residence for a tax year where that person or his/her spouse/legally registered partner has either:

(a) been tax resident in the same country as the property for the tax year in question (For further information on residence rules please follows this link:  https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1) or

(b)  has stayed overnight in the property at least 90 times in that UK tax year.  Time spent in another property owned in the same jurisdiction/country can also be included in the ninety day count so that the total number of days in all properties in the territory in question are added together.

The new rules apply equally to a UK resident individual disposing of an overseas home as well as to a non-UK resident disposing of a home in the United Kingdom.

Finally, Lettings Relief may be available in circumstances where Principal Residence Relief is restricted because all or part of a property has been rented out.

This Relief is particularly important for individuals who, due to the current economic climate, experience difficulty selling their former home and, as a result, find they need to rent it out while they’re trying to sell it.

A maximum gain of £40,000 per owner is exempt from Capital Gains Tax provided that property has at some time been the main or only residence of the owner.

From 6th April 2020 there will be a change to this Relief whereby Lettings Relief will only be available in situations where the owner shares occupancy with the tenant.

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.