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Taxes on Corporate Income – Pillar Two – Ireland

 

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

  • 1st January 2024 for the Income Inclusion Rule and
  • 1st 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 1st 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 1st 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.

 

Share Option Changes – 2024 – Ireland

 

 

From 1st January 2024 employers will be required to report, collect and remit Income Tax, USC and PRSI, under the PAYE system, on any gains arising on the exercise, assignment or release of unapproved share options by employees and/or directors.  From 1st January 2024, the tax collection method for share option gains will become a real-time payroll withholding obligation for the employer instead of the individual self-assessment system known as the Relevant Tax on Share Options (RTSO) system.

 

These new rules are a welcome development for employees and directors who, from 1st January 2024, will no longer be responsible for filing and submitting Income Tax, USC and PRSI arising on the exercise of their share options.

 

Employees may still, however, be required to file an Income Tax Return for a relevant tax year, if that individual remains a “chargeable person.”

 

The due date for such returns is 31st March 2024 and there are different returns required depending on the type of share scheme operated / share remuneration provided.

 

Penalties for failure to file Returns may apply.

 

 

The following Forms are required for the following share schemes:

 

  1. Form RSS1 for share options and any other rights to acquire shares or assets awarded to employees and Directors. https://www.revenue.ie/en/employing-people/documents/form-rss1.xlsm

 

  1. Form KEEP1 – Key Employee Engagement Programme (KEEP) – Details of qualifying share options granted. https://www.revenue.ie/en/employing-people/documents/form-keep1.xlsm

 

  1. Form ESOT1 – Employee Share Ownership Trust (ESOT) – Details of approved Employee Share Ownership Trust (ESOT) schemes. https://www.revenue.ie/en/employing-people/documents/form-esot1.pdf

 

  1. Form ESS1 for details of Approved Profit Sharing (APSS) schemes. https://www.revenue.ie/en/employing-people/documents/form-ess1.xlsm

 

  1. Form SRS01 for details of Save As You Earn Schemes (SAYE) https://www.revenue.ie/en/employing-people/documents/form-srso1.pdf

 

  1. Form ESA – Restricted Stock Units (RSUs), Discounted / Free / Matching Shares, Employee Share Purchase Plans (ESPP), Restricted Shares, Convertible Shares, Forfeitable Shares, Phantom Shares, Stock Appreciation Rights, Growth/Hurdle/Flowering Shares and other Shares. https://www.revenue.ie/en/employing-people/documents/form-esa.xlsm

 

 

In circumstances where employers have globally mobile employees working outside Ireland for part of the year, the gains arising on the exercise of the stock option may need to be apportioned based on the number of days those employees worked in Ireland during the grant to vest period.  Employers will need to monitor the Irish workdays for these employees throughout the entire vesting period of the options.  Employers will also need to determine whether the stock option gain is exempt from PRSI.

 

Consideration must be given as to how the tax liabilities will be funded, especially in situations where there is insufficient income to cover the payroll taxes, where the globally mobile employee is not subject to Irish tax at the date of exercise but a portion of the gain has given rise to an Irish tax liability or where the employee or director has ceased their employment with the organisation. For example, by introducing a “sell to cover” mechanism.

 

 

In Summary:

 

  • The RTSO system will be abolished with effect from 1st January 2024.

 

  • From 1st January 2024, taxes arising on stock option gains will be collected through the payroll system.

 

  • Currently there are no proposed changes that affect the obligation to file an annual RSS1 informational return by the employer. Therefore, the reporting obligations for share options by employers remain due on or before 31st March of the following tax year.

 

  • Share Option gains realised before 31st December 2023 will be liable to tax under the self-assessment system with the employee being responsible for filing a Form RTSO1 along with the relevant tax payment within 30 days of the date of exercise.

 

 

 

 

 

 

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.

 

 

BUDGET 2024 – IRELAND

 

Today, 10th October 2023, the Minister for Finance, Michael McGrath and Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe presented the 2024 Budget.

 

 

Budget 2024 tax measures feature a range of supports for individual and business taxpayers under the following headings:

 

 

PERSONAL TAX

 

  • All PRSI contribution rates will increase by 0.1% from 1st October 2024. There will be an increase of 0.1% in Employee and Employer’s PRSI contributions from 1st October 2024. Class A1 Employee PRSI will rise from 4% to 4.1%.  Employer’s PRSI will rise from 11.05% to 11.15% and the reduced rate of Employer’s PRSI for earnings of €441 per week or less will rise from 8.8% to 8.9%.

 

  • The standard rate band for Income Tax (i.e. the amount of income subject to tax at the 20% rate) will be increased by €2,000, meaning that the first €42,000 of a single individual’s income and the first €51,000 for married couples, with one earner, will be taxed at the 20% Income Tax rate.

 

  • The ceiling for the 2% USC rate will be increased from €22,920 to €25,760. The 4.5% rate of USC will be reduced to 4% and the reduced rate of 2% USC currently applying to full medical card holders as well as those individuals aged over seventy, whose total income does not exceed €60,000, will be extended to the end of 2025.

 

  • The Personal Tax Credit, the Employee Tax Credit and the Earned Income Tax Credit will each be increased from €1,775 to €1,875 for the tax year 2024 onwards.

 

  • The Home Carer tax credit will be Increased by €100, from €1,700 to €1,800.

 

  • The Single person child Carer tax credit will be increased from €1,650 to €1,750.

 

  • The Incapacitated Child Tax credit will be increased from €3,300 to €3,500.

 

  • The Sea-going Naval Personnel Tax Credit has been extended for a further year to 31st  December 2024.

 

  • The Rental Tax credit for principal private residence has been increased from €500 to €750 per year for 2024 or from €1,000 to €1,500 per jointly assessed couple (i.e. married couples or civil partners). Parents who pay for their student children in Rent-a-Room or digs accommodation can now claim relief for rent paid. This change has been backdated and will apply retrospectively to the years 2022 and 2023.  In order to qualify for this tax credit, the children must attend an approved course.

 

  • A temporary one year tax credit in relation to mortgage interest has been introduced for 2024.  It will apply at the standard Income Tax rate of 20%, subject to a maximum tax credit of €1,250 per property, on an outstanding mortgage balance on the taxpayer’s Principal Private Residence of between €80,000 and €500,000, as of 31st December 2022.  To claim the tax credit, the taxpayer must be compliant with Local Property Tax requirements and file a Tax Return.  The tax credit will be available for offset against the taxpayer’s Income Tax liability for the 2023 year of assessment.  Prorating of the relief will apply where the interest paid is less than twelve months.

 

  • The Company car Benefit-in-Kind relief introduced in Finance Act 2019 to apply from 1st January 2023 have been extended to 2024.  With effect from 1st January 2023, BIK on employer provided cars is calculated based the vehicle’s CO2 emissions.  The amount liable to tax as BIK is determined by (a) the original market value of the car, (b) the annual business kilometres driven and (c) the CO2 emission rate of the vehicle.  In March 2023, a temporary change was introduced to combat the negative impact of this new BIK rule on the employee’s net or take-home pay.  It provided for a reduction of €10,000 to the original market value of vehicles in categories A to D.  There is no reduction to Open Market Values for cars in the E category.  In addition, the highest business mileage band was reduced from 52,001 Kms to 48,001 Kms as part of that amendment.  These temporary universal measures have been extended to 31st  December 2024.

 

  • The Temporary Universal Relief of €10,000 applied to the Original Market Value of a company car, including vans, for vehicles in Category A-D is being extended to 31st December 2024.

 

  • The special Benefit-in-Kind rule on Electric Vehicles is being enhanced and extended. The current Original Market Value deduction of €35,000 will be extended until 31st December 2025. Along with the additional €10,000 introduced in Budget 2024, Electric Vehicles will see a deduction of up to €45,000 on the open market value.  The tapering of this discount will, therefore, be deferred by two years.  In summary, the current reduction of €35,000 in OMV will continue to apply for all EVs until the end of 2025, and will taper to €20,000 for 2026 and €10,000 for 2027.

 

  • The Department of Finance will be launching a public consultation on modernising share based remuneration.

 

  • It was confirmed that EU State aid approval to deliver the Finance Act 2022 amendments to the Key Employee Engagement Programme (KEEP) has been received and will be commenced by Ministerial order shortly. This will include an extension of the scheme until 31st December 2025 as well as doubling the lifetime company limit for KEEP shares to €6 million.  It will also enable the Capital Gains Tax treatment to apply to the buy back of KEEP shares by the company from a relevant employee, provided all the conditions are met.

 

 

 

 

BUSINESS TAX

 

  • In his Budget 2024 Statement, Minister McGrath reaffirmed Ireland’s commitment to the OECD’s Two Pillar Agreement to address the tax challenges arising from the digitalisation of the economy. The legislation to implement the 15% minimum tax rate under the OECD’s Pillar Two agreement will be published in the Finance Bill next week.  Under the BEPS 2.0 initiative, these rules require EU Member States to introduce a global minimum effective tax rate (ETR) of 15% for corporate/multinational groups with annual global turnover of in excess of €750 million. This minimum rate will apply in each jurisdiction in which the group operates.  The ETR will be calculated on adjusted financial accounting profits less tax expenses.

 

  • Minister McGrath also reaffirmed his commitment to introducing a participation exemption for foreign sourced dividends in Finance Bill 2024.

 

  • In his speech, the Minister confirmed that the R&D Tax Credit will be increased from 25% to 30% in respect of qualifying expenditure incurred in 2024. The first claims will be filed in 2025. There is a payment limit on the amount that can be paid to a claimant in the initial year of a claim. The Minister announced an increase in the payment threshold from €25,000 to €50,000 thereby doubling the amount of the R&D Tax Credit available for refund to the company, as part of its first year R&D Tax credit instalment.

 

  • The Accelerated Capital Allowances Scheme for Energy Efficient Equipment, which is available to companies and unincorporated businesses, will be extended for a further two years until 31st December 2025. The scheme allows for 100% Accelerated Capital Allowances to be claimed in year one, on capital expenditure on certain energy efficient equipment, used for the purposes of its trade, provided the qualifying conditions are met.

 

  • As you may remember Finance Act 2022 extended film relief to 31st December 2028. The Section 481 Film Corporation Tax Credit is a corporation tax credit of 32% of the qualifying costs of certain audiovisual productions. Budget 2024 increased in the current project cap for the film credit from €70 million to €125 million.  This is subject to EU State Aid approval.

 

  • Employment Investment Incentive Scheme (EIIS) provides Income Tax Relief for investment in qualifying small and medium sized businesses, provided qualifying conditions are satisfied. Budget 2024 standardised the minimum holding period required to obtain relief to 4 years and it doubled the limit on the amount on which an investor can claim such relief to €500,000.  It is expected that further changes to EIIS will be made in the Finance Bill to take into account amendments to the EU General Block Exemption Regulation (GBER).

 

  • Capital Gains Tax Retirement Relief applies on the disposal of business assets, farming assets and/or shares in certain family companies by an individual, aged fifty five years or over, provided certain qualifying conditions are met. A reduced Capital Gains Tax Relief is available where the individual is aged sixty six years and over. From 1st January 2025, that upper age limit for Capital Gains Tax Retirement Relief is to be extended to the age of seventy years.  In summary, the reduced relief which is available on disposals from age 66 onwards will now apply from age 70. There will also be a new limit of €10 million on the relief available for disposals to a child up until the age of 70 provided all the qualifying conditions are satisfied.

 

  • No changes to Revised Entrepreneur Relief were announced in the Budget.

 

  • A targeted new capital gains tax relief for individual angel investors in innovative start-ups, in line with the recommendation from the Commission on Taxation and Welfare, was announced today. The relief will be available to an individual who invests in an innovative start-up small and medium enterprise for a period of at least 3 years.  The investment by the individual must be in the form of fully paid-up newly issued shares costing at least €10,000 and constituting between 5 percent and 49 percent of the ordinary issued share capital of the company.  This relief will consist of a 16% rate of Capital Gains Tax (18% if invested through a partnership) on the disposal of qualifying investments, capped at twice the level of investment.  In other words, the gain to which this reduced CGT rate can apply is capped at 200% of the investment made.  Any gain above that will be liable to CGT at the standard rate of 33%. A lifetime gains limit of €3m will apply.   Further details will be available in the upcoming Finance Bill.  The scheme will include a certification process, carried out by Enterprise Ireland, to ensure the relief is targeted at innovative SMEs that can demonstrate financial viability and compliance with the requirements of the EU General Block Exemption Regulation (GBER).

 

 

PROPERTY

 

  • As you’re aware, Finance Act 2022 introduced a Vacant Homes Tax which applies to residential properties which are in use as a dwelling for less than thirty days in a twelve-month chargeable period. With effect from 1st November 2023, the rate will increase from three to five times a property’s existing base Local Property Tax liability.

 

  • The Minister announced a one year extension to the liability date for Residential Zoned Land Tax (RZLT) to facilitate engagement with the mapping process by affected landowners. RZLT was previously intended to be charged and levied from 1st February 2024 onwards. This has been deferred and will now apply from 1st February 2025.

 

  • A new temporary tax relief for small landlords will apply from 2024 to 2027. This Rented Residential Relief will provide relief at the standard rate of tax on a portion of the landlord’s rental income from residential properties.  Subject to certain conditions, €3,000 will be disregarded at the standard rate of tax in 2024.  The new relief will rise to €4,000 in 2025 and €5,000 in 2026 and 2027.  This will be equivalent to a tax credit of €600 in 2024, €800 in 2025 and €1,000 in 2026 and 2027.  The relief will be clawed back if the landlord removes the property from the rental market within four years of the initial claim.  To avail of the relief, the tenancies must be registered with the Residential Tenancies Board or with the public authority, where relevant.  In situations where the landlord owns multiple properties, the relief will be apportioned.  Where the property is jointly owned, the relief will be divided based on the percentage to which each owner is entitled.  Further information will be provided in the Finance Bill.

 

  • The Help-to-Buy Scheme is being extended until 31st December 2025. The relief takes the form of a repayment of Income Tax paid for the four years of assessment prior to making the application.  The scheme will be amended to make it more accessible to those purchasing properties through the Local Authority Affordable Purchase Scheme.  The affordable dwelling contribution received under the LAAP scheme can be used for the purpose of computing the 70% loan to value requirement of the Help to Buy Scheme.  This change will be implemented tomorrow, 11th October 2023.

 

  • The Defective Concrete Products Levy is being amended so that it will no longer apply to the pouring of concrete used to manufacture precast concrete products. A refund scheme will be introduced for those who paid the levy between 1st September and 31st December 2023.

 

 

 

 

AGRICULTURE

 

  • The flat rate VAT compensation rate for unregistered farmers will be reduced from 5% to 4.8% from 1st January 2024. This is a measure introduced to compensate unregistered farmers for the VAT they cannot claim on their farming purchases.

 

  • Consanguinity Relief (Stamp Duty) will be extended for a further five years to 31st December 2028. This reduced Stamp Duty rate of 1% applies to transfers of farmland between certain blood relatives.

 

  • The scheme of accelerated capital allowances, at 50% per annum over two years, for capital expenditure incurred by farmers on certain farm safety equipment will be extended for a further three years, to 31st December 2026. The expenditure must be certified by the Minister for Agriculture, Food and the Marine.

 

  • The Minister announced that the Income Tax Relief for leased land will be amended so that it only applies to land which has been owned for seven years. Currently, no ownership period condition exists for the relief to apply. This amendment is targeted at active farmers and will apply to lessors who acquire farmland from 1st January 2024. The change will require a lessor who purchases the farmland for market value on/after 1st January 2024 to have owned the land for a minimum of seven years before they are eligible to make a claim for Land Leasing Income Tax Relief.

 

  • From 1st January 2024, the aggregate lifetime limits have been increased from €70,000 to €100,000 for the following Agricultural Reliefs: Stock Relief for Young Trained Farmers, Relief for Succession Farm Partnerships and Young Trained Farmers’ Stamp Duty Relief.

 

  • The maximum Stock Relief for Registered Farm Partnerships will be increased from €15,000 to €20,000 for qualifying periods commencing on/after 1st January 2024.

 

 

 

VAT

 

  • With effect from 1st January 2024, the current VAT business registration thresholds will increase from €37,500 to €40,000 for services and from €75,000 to €80,000 for goods.

 

  • The 9% VAT rate for gas and electricity has been extended for an additional twelve months until 31st October 2024. It had been due to end on 31st October 2023.

 

  • The Minister announced that a public consultation will be launched by the Revenue Commissioners shortly on the modernisation of the VAT invoicing and reporting system. The digitisation of the VAT system is expected to be introduced in line with EU tax digitisation measures.

 

  • From 1st January 2024, the zero rate of VAT will apply to e-books and audiobooks.

 

  • From 1st January 2024, the zero rate of VAT will apply to the supply and installation of solar panels in schools.

 

  • From 1st January 2024, the total annual capped fund for the Charities VAT Compensation Scheme will be double to €10 million.

 

 

 

 

MISCELLANEOUS

 

  • No changes were announced in relation to the Capital Gains Tax rate, Capital Acquisitions Tax rate or the amount of the Capital Acquisitions Tax thresholds.

 

  • In accordance with the recommendation of the Commission on Taxation and Welfare, foster children will now be able to avail of the Group B Capital Acquisitions Tax lifetime tax free threshold (currently €32,500) based on their relationship to their foster parent. This amendment will be introduced in the Finance Bill.

 

  • The VRT relief for battery Electric Vehicles has been extended for a further two years to 31st December 2025. This applies to EVs valued up to €50,000.

 

  • The review of the Funds sector is ongoing.

 

  • Tax Relief available to taxpayers who donate items under the Heritage Item Donation Scheme in any one year will be amended to take into account an increase in the aggregate value of such items from €6 million to €8 million. The tax relief available is a credit of 80% of the market value of the heritage item donated.

 

 

 

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.

Annual Return for Companies – Ireland

 

 

Filing an annual return is a legal obligation for every company registered in Ireland.  This is a requirement even if the company hasn’t generated a profit or hasn’t started trading.

 

There is an obligation on the company officers, being the Directors and Secretaries, to ensure that the annual return is correctly filed with the Companies Registration office.

 

Failure to comply with this regulation can have serious implications including:

 

  1. Late filing fees
  2. loss of audit exemption for two years.
  3. Strike off and dissolution of the company
  4. Prosecution of the Company and/or its Director

 

For further information, please click link: CRO – Annual Return – Missed Deadlines

 

 

An annual return, also known as Form B1, is a document that every company registered in Ireland must file with the Companies Registration Office (CRO) every year.

 

 

An Irish company’s first Annual Return is due within six months of incorporation. No accounts are required with the first Annual Return.

 

 

All subsequent Annual Returns must be filed every twelve months.

 

 

For second and subsequent annual returns, companies are required to file their annual return or B1, along with their financial statements, within 56 days of the ARD.

 

 

An Annual Return Date (ARD) of a company is the latest date to which an annual return must be made up.

 

 

An Annual Return Date (ARD) must be filed no more than nine months from the financial year end. For example, if the Irish company has a 31st December year end, their latest annual return date would be 30th September.

 

 

The Annual Return date can be changed from the second Annual Return onwards but no more than once every five years.  A company cannot, however, extend the ARD more than six months from the original ARD and no more than nine months from the financial year end.  The ARD can be set to a later date by filing Form B1B73.  For further information, please click: https://www.cro.ie/en-ie/Annual-Return/Financial-Year-End-Date

 

 

The annual return must accurately reflect the company’s details as of the Annual Return Date and include information about the company directors, secretary, registered office, share capital, shareholder details as well as confirmation that the financial statements are attached.  Since 11th June 2023 Directors are required to disclose their PPS numbers when filing the B1 form and if they do not have a PPSN, RBO numbers and/or VINs can be used.

 

 

It is the responsibility of the Board to approve the financial statements for a company. Therefore, it is advisable that a meeting should be held before the financial statements are filed in the CRO.

 

 

To file an Annual Return:

 

  1. Complete the B1 Form through CORE or an approved software package.
  2. Upload the signed financial statements and/or other required documents in PDF.
  3. Download a signature page or request signature page by email.
  4. It’s important to keep in mind that the signed financial statements must be uploaded before the signature page is generated.
  5. The signature page must be signed by two company officers e.g. one Director and one Secretary. In other words, it cannot be the same person.
  6. The signature page cannot be digitally signed.
  7. There is an option for an Electronic Filing Agent to sign on behalf of the company. To do this, a Form B77 must be filed.
  8. There is an online filing fee of €20.

 

For further information, please click: https://www.cro.ie/en-ie/Annual-Return/Filing-Electronically

 

 

 

 

Central Register of Beneficial Ownership

 

All Irish companies now have a statutory obligation to file their Beneficial Ownership information with the Central Register of Beneficial Ownership within five months from the date of incorporation.

 

For existing companies, if there is any change in the beneficial ownership details, the Central Register of Beneficial Ownership must be updated within fourteen days of the change.

 

Unlike the B1 Annual Return above, there is no requirement to make an annual filing with the RBO.

 

 

 

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 advice.

CRO mandatory requirement for company directors to provide PPSNs from 11th June 2023

 

The Companies Registration Office (CRO), under Section 35 of The Companies Corporate Enforcement Act (2021), will require Company Directors to provide their personal public service numbers (PPSNs) when filing the following forms. This will be a mandatory requirement from Sunday, 11th June 2023:

 

  1. Form A1- Company incorporation,
  2. Form B1 – Annual return,
  3. Form B10 – Change of director and, or in their particulars,
  4. Form B69 – Notification by the individual that he/she/they has/have ceased to be a director or secretary.

 

Directors’ PPSNs will be required for validation purposes only.  PPS numbers, RBO numbers and VINs will not be accessible on the public register.

 

The purpose of the new disclosure requirement is to reduce the risk of identity theft by introducing additional identity validation checks.  This will affect individuals who may, wrongly, hold more than twenty five active directorships under different name variations.

 

It is important to note that non-compliance will constitute a Category 4 offence.

 

Please be aware that if the PPS Number does not match the PPS Number held by the Department of Employment and Social Protection, this may result in the submission being rejected.  Therefore, to avoid any discrepancies and delays with filings, Directors should act now to make sure that the information held by the DEASP is consistent with that held by the CRO.  It’s important to keep in mind that CRO rejections could lead to late filing penalties and delays in meeting annual return filing dates.

 

 

In circumstances, where a director does not have a PPS Number, but has been issued with an RBO number in connection with filings with the Central Register of Beneficial Ownership, this RBO number can be used for the relevant CRO filings.

 

In situations where a director does not have either a PPS number or an RBO transaction number, they must apply to the CRO for an “Identified Person Number” by means of a Form VIF i.e. Declaration as to Verification of Identity.

 

The VIF requires the name, address, date of birth and nationality of the individual. It must be declared as true by the director and verified by a notary.

 

 

TO DO

 

  • Directors should check that their personal details are consistent with those on record with the Department of Social Protection.  Where DSP records need to be checked or amended, please be aware that Directors must do so themselves, as filing agents are unable to do so on their behalf

 

  • Directors without a PPSN or RBO number should take steps to obtain a VIN.

 

 

 

For further information, please click the link below:

https://www.cro.ie/en-ie/About-CRO/Whats-New/PPSN-FAQ?_cldee=6g_4nKxbwJzYd6gOdHH3WoVFU8RM7T2gir_xOhjUaYHBA2OGEzy3hGo7s18ZbYuP&recipientid=contact-7f5d2b33fbf9e71180fb3863bb358f88-9a94001c46624edb84969e8300fbbb53&esid=6bd3fe70-e006-ee11-8f6e-6045bd905fa8

 

 

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 advice.

HMRC late payment interest rates increase

 

 

Today, HMRC announced an increase in its interest rates, due to another increase in the Bank of England base rate, from 4.25% to 4.5%.

 

The new rates will take effect from Monday, 22nd May 2023, for quarterly instalment payments.

 

The new rates will take effect from Wednesday, 31st May 2023, for non-quarterly instalments payments.

 

 

The two new increased rates of interest are:

  • Late Payment Interest which is set at base rate plus 2.5%.  This will increase from 6.75% to 7% on 31st May 2023.

  • Repayment Interest which is set at base rate minus 1% with a lower limit of 0.5% (known as the ‘minimum floor’).  This will increase to from 3.25% to 3.5% from 31st May 2023.

 

 

For further information, please click: HMRC late payment interest rates to be revised after Bank of England increases base rate – GOV.UK (www.gov.uk)

 

 

 

 

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.

 

 

ROS Pay & File Extension Date – 2023

 

 

Today, the Revenue Commissioners announced that the extended ROS Pay & File deadline date for self assessed taxpayers is 15th November 2023.

 

 

This extended deadline applies to:

  • Certain self assessed Income Tax payers who both pay and file through ROS.

  • Taxpayers liable to file Capital Acquisitions Tax Returns and payments, as beneficiaries in relation to gifts and/or inheritances with valuation dates in the year ended 31st August 2023.   The extension is only available to Taxpayers who both pay and file through ROS.

 

Please be aware that this extension is only available to taxpayers who both pay and file through ROS. In situations where only one of these actions is completed through ROS, then the deadline for submission and payment is 31st October 2023.

 

 

 

For further information, please click: Revenue eBrief No. 088/23

 

 

 

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.

 

 

UK Tax – Deadline extension for voluntary National Insurance contributions – 31st July 2023

 

 

In 2016 the ‘New State Pension’ was introduced.  As part of transitional arrangements to the new State Pension, taxpayers have been able to make voluntary contributions in relation to any incomplete years in their National Insurance record between April 2006 and April 2016.

 

Anyone who is retiring on or after 6th April 2016, under the ‘new State Pension’ rules, requires approximately thirty five qualifying years to claim the full state pension.

 

The U.K. government has extended the voluntary National Insurance contribution deadline from 5th April 2023 to 31st July 2023. This will allow taxpayers more time to fill gaps in their NI records to maximise the amount they will receive in State Pension.

 

Therefore, if you’re a man born after 5th April 1951 or a woman born after 5th April 1953 you have until 31st July 2023 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016, providing you’re eligible.

 

Where there are gaps in an individual’s National Insurance record, voluntary NICs can be paid to be eligible for a higher State Pension or entitlement to other state benefits.  Therefore, anyone with gaps in their National Insurance record from April 2006 onwards still has time to fill the gaps and increase their State Pension.

 

After 31st July 2023 you’ll only be able to pay for voluntary contributions for the past six years which may not be sufficient to qualify for a new State Pension if you have less than four qualifying years on your National Insurance record. Normally, you would require at least ten qualifying years in total.

 

Please be aware that any payments made will be at the lower 2022 to 2023 tax year rates.  In other words, where the rates of voluntary National Insurance contributions were due to go to up from 6th April 2023, payments made by 31st July 2023 will be paid at the lower rate.

 

 

 

Actions for taxpayers to take before 31st July 2023: 

 

  1. Check your NI record. Taxpayers can check their National Insurance record, via the HMRC app or their Personal Tax Account.

 

  1. Identify any discrepancies between NI contributions paid and those showing on HMRC’s system.

 

  1. Identify any NI credits that are missing from periods in which they should have been received.

 

  1. Identify any shortfalls in contributions.

 

  1. Confirm that you are eligible to pay voluntary contributions in respect of any gaps.

 

  1. Contact HMRC if you think there are any errors.

 

  1. Decide whether to make voluntary NI contributions. Establish how much making the voluntary contributions will cost and consider making up any shortfall by 31st July 2023, particularly for the period April 2006 to April 2017 before this opportunity is lost.

 

 

 

To look at your personal tax account to view your National Insurance record and obtain a state pension forecast, without charge, please click link: https://www.gov.uk/check-state-pension

 

 

The Future Pension Centre can tell you if paying for extra national insurance years will increase your state pension entitlement.  For full details, please click: https://www.gov.uk/future-pension-centre

 

 

Based on the information you receive from HMRC, if you have returned to Ireland and you decide to top up your pension contributions before the deadline date, please find link to Application Form: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1102905/CF83.pdf

 

 

 

Please click for full HMRC guidance material which may be relevant to you if you have returned from working in the UK: https://www.gov.uk/government/publications/social-security-abroad-ni38/guidance-on-social-security-abroad-ni38#deciding-whether-to-pay-voluntary-national-insurance-contributions

 

 

 

 

Why is it so important to act before 31st July 2023?

The ability to buy back years by looking back to 2006 is scheduled to end on 31st July 2023. After the cut-off date, it will only be possible to pay for gaps in your National Insurance record by looking at the past six years. This means that you could lose out on the opportunity to maximise your UK State Pension for gap years before 2017.

 

 

 

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.

Revenue “Cancellation of Income Tax Registrations” Notice

 

 

From 10th 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 13th 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.

SARP – 2023 Update

 

 

The Special Assignee Relief Programme (“SARP”) was introduced on 1st January 2012 to provide Income Tax Relief for eligible employees assigned to work in Ireland from abroad.  It was due to expire for new entrants on 31st December 2022, however, Finance Act 2022 extended the relief for a further three years, up until 31st December 2025.

 

 

Prior to 1st January 2023, an individual was required to earn a minimum basic salary of €75,000 per annum (excluding all bonuses, benefits or share based remuneration) in order to be eligible for SARP.

 

 

From 1st January 2023 onwards the employee must have a minimum base salary of €100,000 per annum.  This amount excludes all bonuses, commissions or other similar payments, benefits or share-based remuneration.

 

 

A number of conditions need to be satisfied for this relief to apply, as follows:

 

  1. The individual must be an employee of either (i) a company incorporated and tax resident in a country with which Ireland has a Double Taxation Agreement/Exchange of Information Agreement or (ii) an associated company of a relevant employer. The individual must arrive in Ireland in any of the tax years, from 2012 to 2025, at the request of his/her/their employer, to perform employment duties in Ireland for that employer or with an associated company of that employer.

 

  1. The individual must have been employed by a relevant employer for six months immediately prior to arriving in Ireland.

 

  1. The individual must perform employment duties in the State for at least twelve consecutive months from the date of arrival in Ireland.

 

  1. The employee must not have been tax resident in Ireland for the five tax years preceding the year of arrival.

 

  1. The individual must be Irish tax resident, although he/she/they may also be tax resident in another country.

 

  1. The individual must be tax resident in Ireland for all years for which he/she/they claim the relief.

 

  1. When applying, SARP applicants must have a PPS number issued to them.

 

  1. Within ninety days of the individual’s arrival in Ireland, the employer must submit the SARP application (SARP 1A) to Revenue’s SARP Unit, certifying that all the above conditions have been met for the relief to apply. In addition, the employer company must have complied with the normal PAYE employee commencement regulations.

 

  1. If the individual is not Irish tax resident in the year of arrival, Relief may start from the following year.

 

 

Example

Mark arrived in Ireland from USA on 17th October 2019 on a 5-year contract.

 

He was not Irish tax resident in 2019.

 

As Mark was tax resident in Ireland in 2020, he was entitled to claim relief under SARP.

 

His first year of claim was, therefore, 2020.

 

He can continue to claim SARP up to and including 2025 if he continues to satisfy the relevant conditions for the Relief.

 

 

 

SARP Relief

The relief operates by:

  • exempting, from Income Tax,
  • 30% of a qualifying employee’s annual employment income above a qualifying income threshold (€75,000 prior to 1st January 2023 and €100,000 from 1st January 2023 onwards),
  • Subject to an earnings cap (since January 2019, an earnings cap of €1m has been in effect),
  • for a period of 5 years.

 

Relief is not extended to Universal Social Charge (USC) so the individual must pay USC on the full amount of his/her/their salary.

 

The specified amount is not exempt from PRSI, unless the employee is relieved from paying Irish PRSI under either an EU Regulation or under a bilateral agreement with another jurisdiction.

 

The relief operates by providing a deduction for income tax purposes from remuneration based on the following formula:

 

(A-B) X 30%

 

A = Qualifying Remuneration i.e. total remuneration.  This includes:

  • Income, profits or gains from his/her/their employment in the State with a relevant employer or associated Company.
  • Allowances, benefits-in-kind, bonuses, share awards, commissions, etc.
  • The following is deductible from the total remuneration figure when calculating the Relief: employee contributions to an Irish approved pension plan or a foreign pension plan eligible for Irish tax relief as well as remuneration eligible for Double Taxation Relief in Ireland.

 

B = €100,000 (prior to 1st January 2023 it was €75,000)

 

 

Example:

Thomas arrived in Ireland on 1st January 2023 and meets all the above conditions to qualify for SARP relief.

 

His salary is €120,000, his bonus is €15,000 and he receives a benefits in kind (e.g. medical insurance) valued at €3,000.

 

A = €138,000 i.e. €120,000 + €15,000 + €3,000

 

B = €100,000 i.e. qualifying Income Threshold

 

SARP Deduction = (€138,000 – €100,000) = €38,000 @ 30% = €11,400

 

Thomas’s marginal Income Tax rate in Ireland is 40%, therefore his Income Tax saving is €4,560 i.e. €11,400 x 40%

 

It’s important to keep in mind that 8% USC and 4% PRSI, if applicable, will apply to this employment income.

 

 

 

Important Points to keep in mind:

 

  1. Revenue recently clarified that employees must have at least one Irish workday each month in the first twelve months. Therefore, all employees eligible for SARP should take account of this when making travel arrangements in their first year in Ireland so as to ensure their SARP Relief isn’t withdrawn.

 

  1. In the case of new applicants arriving in Ireland from 1st January 2023 onwards, please be aware that the portion of employment income which is eligible for Relief is 30% of their annual employment income above €100,000. For qualifying employees who arrived in Ireland before 1st January 2023, however, their relief calculated as 30% of their annual employment income above €75,000.

 

  1. Employees who qualify for SARP Relief are also eligible to receive certain travel expenses and certain costs associated with the education of their children in Ireland tax free.

 

  1. Employees who have started their Irish role before actually arriving in Ireland, will not be entitled to claim SARP relief, unless (i) the employee was prevented from travelling to Ireland to take up his/her/their position here due to unforeseen circumstances beyond his/her/their control and (ii) the Irish employment duties carried out by the individual abroad do not exceed five “workdays” in the six months period prior to his/her/their arrival in Ireland.

 

  1. Employees must have a PPS number when making their application.

 

  1. Individuals should register their employment with Revenue before applying for SARP.

 

  1. The SARP Relief cannot be claimed by new hires with no previous group employment history.

 

 

 

EMPLOYEES

 

SARP relief can be claimed by the employee in one of two ways:

 

  1. Through the year-end Tax Return

An employee who receives SARP Relief is considered to be a “chargeable person” for Income Tax purposes.  He/she/they is/are required to submit an Income Tax Return to the Irish Revenue Commissioners in respect of each year for which relief is claimed.   The Form 11 Tax Return may be filed by way of a paper form or through the Revenue’s On-Line Service (ROS).

 

Employees who have registered and qualify for SARP must file a Form 11 Tax Return by 31st October following the end of the tax year.

 

 

 

  1. Through payroll

By completing Part C of Form SARP 1A and submitting it to Revenue, SARP Relief can be granted at source through the employee’s payroll.

 

The employer is required to make this application only once.

 

Relief can be granted at source through payroll for the duration of the assignment, up to a maximum of five years, providing the employee continues to satisfy all the relevant conditions.

 

 

 

If you would like further information on the new SARP regime, please contact us to make an appointment.

 

 

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.