Tax Advice Dublin

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 21^st 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:

1. 80% of the qualifying expenditure per project or
2. €25 million per project

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:

1. An interim certificate which is issued to companies who are in the process of developing their game or
2. A final certificate which is issued to companies who have completed the development of their game.

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.

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.

WHAT IS IT?

The Local Property Tax or LPT is a self assessed tax payable by an individual on the market value of his/her “residential property or properties” located in Ireland.

WHAT DOES THAT MEAN?

It means the LPT is a self assessed tax.  You are responsible for valuing your own property, filing your tax return and making the relevant payment.

WHAT’S MEANT BY “Residential Property?”

A “residential property” is any building (or part of a building) which is used or is suitable for use as a residence.  It includes the driveway, yard, garden, garages, sheds and any other land associated with the property up to one acre in area.

HOW IS THE PROPERTY VALUED?

Because the LPT is a self assessed tax the property owner must decide on the market value of the property.  Once the market valuation has been made it will hold for LPT purposes until the end of 2016 regardless of any improvements or renovations to the property or indeed any changes to the property market.

Revenue will not be valuing individual properties.  Instead they will provide guidance to assist the property owners in valuing their own property.  The LPT information guide uses the following resources as suggestions on how to honestly value your property:

• Property Websites including www.daft.ie, www.myhome.ie, etc.
• Local Estate Agents
• The Property Services Regulatory Authority’s Property Price Register
• www.revenue.ie for a guide on average values for a range of different property types  based on a number of factors including age of property, average price of type of property for each electoral district in Ireland.  There is also a Valuation Technical Paper available on this website to assist you accurately value your property regardless of where you live in Ireland.

If in doubt, it is advisable to get a valuation from an independent Auctioneer, Valuer or Estate Agent.

CAN THE VALUATION BE CHALLENGED?

There is a presumption of honesty with this new tax.  An exact valuation will not be required unless the property is valued at €1 million or more.  However, Revenue will challenge cases where it is obvious that an undervaluation has occurred in which case they can raise an assessment on the undervaluation.

If such a situation arises, the tax payer can appeal the assessment to the Appeal Commissioners.

HOW IS LPT CALCULATED?

The amount of LPT depends on the property value.

Property values are organised into bands.  The first band is for property values between €0 and €100,000.  After that all values are in €50,000 bands.  Where the property has a value of in excess of €1m an exact valuation is required.

Once the property owner has identified the band in which his/her property falls into, the LPT will be calculated automatically when filing on line via ROS (Revenue on line System).

It is not necessary to ask your Accountant / Tax Adviser to calculate this tax as there is a ready-reckoner provided to assist those completing their Returns.

But just in case you want to know how to calculate the tax liability, it’s computed as follows:

• Apply 018% to the mid point of the relevant band.
• If your property is valued at €1m or over then the first €1m will be assessed at 0.18% with the remainder at 0.25%

Again, please make sure you have an exact valuation if your property is worth €1m or over.

WHO HAS TO PAY THE LPT?

The simple answer is the owner of the property on the date the LPT falls due.

The filing date for 2013 is 1^st May 2013.  For 2014 onwards it will be 1^st November.

If you are in the process of selling your property but still haven’t sold it by 1^st May 2013 then you will be considered the “liable person” for 2013 even if the property is sold before the end of the year.

The following individuals are liable to pay the LPT:

• Any one who owns property situated in Ireland regardless of whether he/she lives in Ireland or not.
• The landlord in situations where the property is rented under leases of less than twenty years.
• Trustees in circumstances where the property is held in a trust.
• Local authorities or organisations that provide social housing.
• Any one who holds a “life interest” in a residential property.
• An individual who legally occupies a property on a “rent free” basis.
• Lease holders whose leases are more than twenty years.
• The personal representative of a deceased owner including executors and administrators of the deceased’s estate.

If two or more people own a residential property they are both liable for the LPT.  It is essential that they agree who should file the return and pay the relevant tax.  If neither owner pays the LPT then Revenue can collect the tax from either party.

ARE THERE ANY EXEMPTIONS?

There are a number of exemptions including:

• New and unused properties which have been purchased from a builder or developer between 1^st January 2013 and 31^st October 2016.  They will be exempt until 31^st December 2016.
• Residential Properties purchased by a first time buyer between 1^st January 2013 and 31^st December 2013.  These properties are exempt until the end of 2016 providing they are used as the individual’s principal private resident (sole or main residence).
• Properties that are unsold and are not used as a residential property.  These properties must be constructed and owned by a builder / developer.
• Registered Nursing Homes.
• Diplomatic properties including embassies.
• Mobile homes, vehicles or vessels.
• Properties used by charitable bodies.  They must provide residential accommodation in connection with the recreational activities for which they were set up.
• Residential properties owned by a charity or public body to provide accommodation to people with a particular need.  For example, sheltered housing for elderly or disabled individuals.
• Properties which are certified as having significant pyritic damage in line with Government regulations.
• Properties purchased or adapted for the use of a severely incapacitated individual who has received an award from P.I.A.B. (Personal Injuries Assessment Board) or from a trust established.  The property must be the individual’s main or sole residence.
• Properties in unfinished housing estates (“Ghost Estates).
• A property owned by an individual which has been vacated due to long term mental or physical infirmity.

HOW DO WE PAY THE LPT?

The liable person must complete the tax return and select the preferred payment option.

If you prefer submitting a paper return the due date for both filing and paying is 7^th May 2013.  In other words you must enclose a cheque, bank draft or postal order with the completed form.

If you wish to submit a return on line there is an extended filing date to 28^th May 2013 with the following options:

• You can pay by single debit authority.  The payment deadline date in this instance is 21^st July 2013.
• If you wish to pay on a phased basis, the commencement date is 1^st July 2013.

WHAT IS MEANT BY A “PHASED BASIS”?

A phased basis means:

• A deduction from salaries, wages or occupational pensions.
• A deduction from certain payments from the Department of Social Protection.
• A deduction from certain payments made by the Department of Agriculture, Food and the Marine.
• Direct Debits
• Cash payments including debit and credit card payments which are made in equal instalments through an approved payment provider.

HOW WILL AN EMPLOYER KNOW TO DEDUCT LPT?

Revenue will advise the employer of the amount to be deducted.

If a payment is deducted from the individual’s salary at source it is not subject to charges or interest.

WHAT HAPPENS IF THE LPT RETURN IS NOT SUBMITTED?

Revenue will pursue the amount by raising a “Notice of Estimate” using a wide range of collection options including:

• Mandatory deductions of the required amount from salaries, wages, pensions, Government payments.
• Notices of Attachments on bank accounts.
• Handing the debt to the Sheriff.
• Referring the debt to the Revenue Solicitor.
• Withholding refunds of other taxes due until the LPT is paid in full.

WILL INTEREST AND PENALTIES APPLY?

Interest and penalties on late payments will apply.

Not submitting an LPT Return could result in a penalty of the amount of the LPT that would have been payable on a correctly completed return up to a maximum of €3,000.00.  This penalty could arise even if the individual has actually paid the LPT.

A Tax Clearance Certificate will not be issued to the individual.

If you are obliged to file Income Tax, Corporation Tax or Capital Gains Tax Returns, you will incur a 10% surcharge at the relevant filing dates,  if you have not filed your LPT Return and paid the corresponding liability or entered into a payment agreement.  The surcharge will be capped at the amount of the LPT liability only in situations where the LPT position is subsequently brought up to date.

WHAT HAPPENS IF I OWN MORE THAN ONE PROPERTY?

Taxpayers who own more than one property are obliged to pay and file on line.  They do not have the option of submitting a paper return and accompanying cheque, draft or postal order.

WHAT IF I CAN’T PAY THE LPT?

In certain circumstances an individual can opt to defer the payment of taxes if certain conditions are met.

It is important to remember that a deferral is not an exemption.

The deferred tax will remain as a charge on the property until the property is sold or transferred to another person.

There are four categories of deferral of the LPT:

1. Hardship Grounds
2. Personal Insolvency
3. Personal representative of a deceased person.
4. Income Threshold

Revenue will review applications in respect of the first three categories and following its review will grant or deny the deferral application.  These deferrals are not restricted to owner occupiers.  They can apply to personal representatives of deceased liable persons, individuals who have entered into insolvency agreements under the 2012 Personal Insolvency Act as well as those who have suffered unavoidable and unexpected significant financial loss and cannot pay the LPT without excessive hardship.

The fourth category dealing with the Income Threshold does not involve an approval process.  The thresholds are based on gross income providing certain conditions are met.  The standard income threshold can be increased if the claimant pays mortgage interest and this category of individuals must be owner occupier i.e. it does not apply to owners of multiple properties.

I STILL HAVE QUESTIONS

If you still have questions, please contact us on 01-  872 8561 or visit the revenue site http://www.revenue.ie