Understanding the EU VAT in the Digital Age (ViDA) Reforms: Key Points for Irish Businesses

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Understanding the EU VAT in the Digital Age (ViDA) Reforms: Key Points for Irish Businesses

The EU’s VAT in the Digital Age (ViDA) package will enter into force on 14 April 2025 and will be rolled out in stages. ViDA has been called the biggest VAT reform since the Single Market, but what is it and what does it mean for Irish businesses?

There are three pillars to the ViDA package:

  With effect from Key Points
Pillar 1 – Digital Reporting Requirements & eInvoicing 1 July 2030
  • eInvoicing will be mandatory for intra-Community B2B and B2G transactions
  • Data from the eInvoice must be reported in real-time to revenue authorities
  • Withdrawal of VIES returns/ EC Sales List reporting
Pillar 2 – Updated rules for the platform economy 1 July 2028 (voluntary)

1 July 2030 (mandatory)
  • Platforms facilitating supplies of passenger transport or short-term accommodation will become responsible for collecting and remitting VAT to tax authorities when their users do not
Pillar 3 – Single VAT Registration 1 January 2027

 

 
  • OSS Scheme extended to include B2C supplies of electricity and natural gas
1 July 2028
  • OSS Scheme further extended to include B2C supply and install contracts, and certain domestic supplies of goods and services by taxable persons not established in the Member State of consumption
  • New OSS module to report intra-Community movement of own goods
  • Mandatory reverse charge on B2B services received from non-established suppliers

Explanatory notes with detailed guidance on how ViDA should be implemented are currently being drafted at EU level. It is expected that Irish Revenue will publish implementation guidance for Irish businesses during 2025. Aligned with this, Irish Revenue is looking to modernise Ireland’s administration of VAT generally so there could be further changes to the Irish VAT system.

How Should Irish Businesses Prepare for ViDA Changes?

Irish businesses selling goods or services within the EU should take this opportunity to evaluate how the ViDA package will affect their VAT processes and registrations and take necessary actions to ensure they are ready for the ViDA changes.

Please contact us if you require assistance with preparing for these changes.

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Celebrating 50 Years of Excellence: Announcing Our Latest Promotions

Celebrating 50 Years of Excellence: Announcing Our Latest Promotions

As we celebrate our 50th anniversary, we are delighted to announce the promotion of eight committed individuals to key leadership and management positions within our firm. These promotions reflect their dedication, hard work, and exceptional contributions to our success.

Managing Partner James O’Connor stated:

“We are incredibly proud of David, Anne, Eibhlín, Andrea, Lara, Conor (Ennis), Conor (Martin) and Gavin and their contributions to the firm. As we mark 50 years in business, it’s a time to reflect on our journey and the incredible team that has driven our success. These promotions are a testament to the talent and commitment of our colleagues. We are proud to recognise their achievements and look forward to their continued contributions to our firm’s growth and excellence.”

These promotions highlight our continued dedication to nurturing and advancing our people, ensuring that our values of innovation, client-centricity, and excellence in service delivery are maintained at every level of the firm.

Congratulations to our newly promoted leaders as we celebrate this significant milestone in our history.

Meet Our Newly Promoted Team Members

Meet Our Newly Promoted Team Members

If you are interested in developing your career with Crowleys DFK, please visit our Careers page. 

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New VAT Rules for Small Businesses | EU VAT SME Scheme

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New VAT Rules for Small Businesses (VAT SME Scheme)

The domestic VAT SME scheme allows small businesses to sell goods and services to their customers without charging VAT. In Ireland, the VAT registration thresholds are:

  • €42,500 for businesses supplying services; and
  • €85,000 for businesses supplying goods.

Irish businesses operating below these thresholds making supplies of goods and services within Ireland are not required to register and charge for VAT. However, up to 31 December 2024, if the Irish business made supplies in another EU Member State, there was no registration threshold and the business could have registration and filing obligations in the Member State where the supply took place.

From 1 January 2025, the EU VAT SME scheme allows these small businesses the option to avail of the registration thresholds in other Member States. If eligible, these businesses will not have to register for VAT when supplying goods and services there.

To be eligible to use this EU VAT SME scheme in another Member State, an Irish business must:

  • be established for VAT purposes in Ireland only,
  • not exceed the domestic turnover threshold(s) of the other Member State(s) where supplies are made,
  • not exceed the Union turnover threshold of €100,000,
  • be registered in Ireland to use the scheme and file quarterly reports once registered. These reports declare the turnover of the small business in all EU Member States.

An Irish business wishing to register to use the scheme in other Member States must make a formal application to Revenue. If successful, it will receive an individual identification number with the suffix “EX”. This number must be provided on any invoices issued by the business.

Business customers located in other EU countries who receive an invoice with “EX” are not obliged to account for VAT using the reverse charge mechanism on that invoice. It is the business customer’s responsibility to check the VAT exempt status of the small enterprise using the SME verification check.

The EU VAT SME scheme is only open to small businesses established within the European Union. It does not apply to small businesses established in the United Kingdom, including Northern Ireland.

It is possible for a small business to avail of the EU VAT SME scheme in some Member States and the standard VAT regime or One Stop Shop scheme in others. As businesses that avail of the VAT SME schemes cannot reclaim VAT on their costs, each small business must assess the best option for them.

However, this new scheme will significantly reduce compliance for small EU-based businesses selling to other EU countries.

If you require further information or assistance, please contact us.

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Why Choose Ireland for Holding Companies?

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Holding Companies – Why chose Ireland for Holding Companies?Ireland is an attractive place to set up a Holding Company for many reasons as outlined below.

The main advantage of setting up a Holding Company in Ireland is the introduction of the new participation exemption which exempts qualifying distributions received by a holding company from its subsidiary from Corporation Tax in Ireland. Prior to this, the tax rate of dividends received from foreign subsidiaries was reduced to 12.5% in certain cases so the introduction of the new participation exemption is welcomed.

We have outlined the main benefits of setting up a Holding Company in Ireland below:

  • Dividend income between two Irish companies is exempt from tax in Ireland.
  • As mentioned above, there is a new participation exemption for foreign dividends which exempts qualifying distribution from corporation tax. The key conditions of this participation exemption are as follows:
    • Resident in and EEA state or a country which has a DTA with Ireland.
    • The recipient of the dividend must hold at least 5% of the shareholding of the paying company for an uninterrupted period of 12 months.
    • It must not be tax deductible in any other jurisdiction.
    • Made out of profits of the paying company.
    • The company must opt in for this exemption on a yearly basis.
  • There is also a participation exemption on the disposal of shares in a trading subsidiary company on shareholdings of at least 5 years that have been held for at least 12 months.
  • Dividend Withholding Tax (DWT) exemptions:
    • Group exemption – exemption from DWT if the Holding Company is a 51% parent of the paying company.
    • EU Parent Subsidiary – Provides an exemption from DWT on the dividends between parents and subsidiaries. The parent company must own 5% of the shares during an interrupted period of 2 years.
    • DTA DWT exemptions.
  • The tax rate for trading companies in Ireland is 12.5% and for passive income is 25%.
  • Expenses of managing a holding company are generally tax deductible in Ireland.
  • English speaking country.
  • Part of the EU.

CFC Rules Ireland

CFC rules prevent the artificial diversion of profits from controlling companies to CFCs (offshore entities in low-tax or no-tax jurisdictions). The Irish regime can be summarised as:

  • The charge applies to undistributed income of a CFC arising from non-genuine arrangements put in place essentially to avoid tax.
  • Such undistributed income is attributed for taxation purposes to the Irish controlling company, or connected company, where that company has been carrying out significant people functions (“SPF”) in Ireland.
  • There are exemptions for CFCs with low profits or low profit margin or where the CFC pays a comparatively higher amount of tax in its territory that it would have paid in Ireland.
  • The CFC rules will not apply where the arrangements under which SPFs are performed have been entered into on an arm’s length basis or are subject to transfer pricing rules.
  • Unless an exemption applies, undistributed income, with an Irish nexus by reference to Irish SPFs, which has been artificially diverted from Ireland, will fall to be taxed in Ireland.
  • To prevent double taxation, a credit will be available against the CFC charge for foreign tax paid on the same income.

We can assist on all aspects of setting up a Holding Company in Ireland whether it is incorporating the company, tax compliance and advice, or the preparation and audit of financial statements. If you wish to discuss, please contact us.

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Crowleys DFK Reaccredited with The KeepWell Mark

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Crowleys DFK Reaccredited with The KeepWell Mark

Pictured L-R: Paul Mulcahy (HR Generalist), Paula McCann (Project Lead for the KeepWell Mark & HR Assistant Manager), and Múireann McCarthy (HR Generalist)

We are delighted to announce that we have once again been reaccredited with the prestigious KeepWell Mark™; an evidence-based accreditation and award that recognises Irish employers for investing in workplace health and wellbeing.

In 2020, Crowleys DFK became the first indigenous accountancy firm to be accredited with The KeepWell Mark™, and we were reaccredited in 2022, further reinforcing our dedication to fostering a healthy and supportive work environment.

Commenting on our latest reaccreditation, Paula McCann, Project Lead for The KeepWell Mark™ said:

“We are incredibly proud to be reaccredited with The KeepWell Mark™. This achievement reflects our ongoing commitment to employee wellbeing and the continuous improvements we have made to ensure a healthy, balanced, and inclusive workplace. Our people are at the heart of everything we do, and we will continue prioritising their wellbeing as we move forward.”

Since our 2022 reaccreditation, we have continued to enhance our workplace wellbeing initiatives. We introduced a Work from Anywhere Policy and a Flexible Bank Holiday Policy, expanding our suite of work-life balance and flexibility measures. Additionally, we hosted workshops on Managing Mental Health in the Workplace, offered health screenings, and organised various other wellness events and social activities as part of our annual Health & Wellbeing Programmes.

We continued to invest in professional development through our Competency and Career Paths Development Framework and Learning & Development Programme. Furthermore, we established the Crowleys DFK EDI Committee to drive a long-term strategy for equity, diversity, and inclusion.

Making time for charitable fundraising and volunteering continues to be a priority for us. Since launching our Charity Partner of the Year initiative in 2019, we have raised over €100,000 for charities in Ireland. Our team remains committed to giving back to the community and making a positive impact beyond the workplace.

The reaccreditation process involved a comprehensive audit conducted by The KeepWell Mark™ Assessor. This audit covered eight key areas: leadership, absence management, smoke-free environment, physical activity, health and safety, mental health, healthy eating, and intoxicants. Additionally, the Assessor engaged with key stakeholders and facilitated focus groups with both employees and management.

The Assessor noted:

“Crowleys DFK is dedicated to the wellbeing of its 140-strong workforce in Cork and Dublin, making significant progress over three accreditations. Employees appreciate the supportive, fast-paced culture and the company’s flexibility, which includes policies for flexible working. Initiatives like the EDI Committee, Mental Health Training, and a strong fundraising ethos promote employee wellbeing. Overall, it is evident that Crowleys DFK prioritises the wellbeing of its employees and is committed to making progress across all KeepWell Mark pillars.”

Sarah McSharry, KeepWell Mark™ Account Managre in Ibec commented:

“We are delighted to award Crowleys DFK their third Ibec KeepWell Mark™ accreditation. Upon joining the programme, organisations like Crowleys DFK receive our framework of standards across all aspects of workplace wellbeing, along with tools to benchmark their current performance and establish new standards to enhance employee wellbeing. We look forward to continuing our work with Crowleys DFK on the next phases of their wellbeing journey.”

Looking ahead, we remain focused on continuously improving our initiatives, following best practices, and incorporating employee feedback as we progress on our KeepWell Mark™ journey.

If you are interested in working with a firm that has a core focus on wellbeing, please check out our careers.

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New EU VAT Rules on Live Streamed & Virtual Events from 1 January 2025

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New EU VAT Rules on Live Streamed & Virtual Events from 1 January 2025

What are the new EU VAT changes?

Previously, VAT was applied to live-streamed and virtual events based on the location of the event itself, regardless of where the viewers were located or the status of the customer.

With effect from 1 January 2025, the provision of services such as live streaming of cultural, artistic, sporting, scientific, educational events, as well as online courses and conferences, provided to private individuals (i.e. not VAT registered), will now be subject to VAT where the customer is located.

The applicable VAT treatment for live streamed and virtual events will now be as follows:

  1. For Business-to-Consumer (B2C) supplies – the supplier will now be responsible to collect and remit VAT in the EU country where the customer is located. A pan-European €10,000 registration threshold applies for EU and NI businesses, and a nil threshold applies for non-EU established businesses.
  2. For Business-to-Business (B2B) supplies – the EU business recipient will continue to self-account for reverse charge VAT in their EU country of establishment.

This change is intended to bring the VAT treatment of virtual events into alignment with that of other telecommunication, broadcasting and electronically (TBE) supplied services (including streaming services or the delivery of other pre-recorded content).

What is an “Event” for VAT purposes?

To determine whether a business’s service offering falls within these new VAT regulations, it is necessary to determine what constitutes an “event” for VAT purposes.

Although EU VAT legislation does not clearly define the term “event,” the interpretation of this concept has been subject to review by both the Advocate General, the VAT Committee and the Court of Justice of the European Union (CJEU) with regards to the case of Skatteverket v Srf konsulterna AB CJEU (Case C-647/17)(March 2019).

The CJEU’s judgement in this case found that five-day accounting and management seminars provided by a Swedish company to private individuals in other EU Member States were taxable in each of those Member States as an admission to an “educational event” and subject to VAT where the customer was located.

In arriving at this decision, the CJEU considered a range of factors to determine what qualifies as an “event” for VAT purposes and these include:

  • Short Duration – An event is more limited in scope than an ongoing activity. An event typically lasts from a few hours to, at most, seven consecutive days. Longer-term courses/ training, which span weeks or months, are less likely to qualify as events.
  • Uninterrupted Activity – If a course runs over several consecutive days, it is more likely to be considered an event. A brief break in the schedule does not automatically disqualify it as such. In contrast, courses spread over several weeks with multiple breaks are less likely to be classified as events, falling instead under the category of training activities.
  • Planning – Events are typically planned in advance, with a predefined agenda and specific subject matter. This distinguishes them from more open-ended activities that may offer a general framework for education
  • Payment Method – The payment method – whether a subscription, periodic fee, or ticket – does not affect whether an activity qualifies as an event.

Businesses should carefully assess whether their services meet the criteria for an “event” under EU VAT regulations, taking into account factors like duration, continuity, planning, and the nature of the service.

What does this mean for providers of online events?

The VAT treatment for Business-to-Consumer (B2C) live streamed/virtual events has undergone significant changes, now requiring that VAT be due in the country where the customer is located. This shift will likely lead to increased compliance costs for businesses offering these services.

Suppliers of these events will now need to identify the location of their customers, and they may need to register and charge VAT in each EU country where their final customers reside (subject to relevant registration thresholds being exceeded).

There is a VAT registration simplification available, known as the VAT One Stop Shop (VAT OSS), to facilitate one single EU-wide registration to remit output VAT on supplies and to efficiently manage the VAT reporting for these services.

However, suppliers will face challenges in determining and monitoring the various applicable VAT rates across the EU for their service offerings which may impact pricing strategies, contracting processes, and invoicing procedures.

The impact on cross-border B2B supplies should be less significant, as business customers can continue to self-assess for VAT on the reverse charge basis in their country of establishment.

As the landscape for VAT compliance continues to evolve, seeking professional advice will be essential to navigating these changes effectively.

Should you require any assistance in this area, please contact us.

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Employee Share Incentive Schemes

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Employee Share Incentive Schemes

Employee share incentive schemes can serve as an effective alternative to bonuses. They not only offer tax savings for employees, but also promote greater participation and loyalty within the company. There is also a tax saving of employer PRSI for the employer where remuneration is by way of equity participation when compared to cash or other benefits.

Depending on the type of scheme, employees might need to hold onto the shares for several years before they can enjoy the tax benefits.

One of the key considerations when implementing a share plan is the valuation of the shares. Accurate valuation from the outset is crucial to ensure the proper taxation of the awards, such as growth shares and restricted shares.

In this article we consider the following type of employee share incentive schemes:

  1. Share option schemes
  2. Restricted Stock Units (RSUs)
  3. ‘KEEP’ share option schemes
  4. Growth/Flowering Shares
  5. Restricted Shares

1. Share Options

This is an option granted by a company to its employees to subscribe for shares at a pre-determined price at some point in the future.  The option must be exercised in order for the employee to get beneficial ownership of the share. Prior to exercise, the employee does not have any rights relating to the shares. The employee pays taxes on any profit made when they eventually exercise the shares. There’s a deadline to exercise this option (usually 7 years) to avoid tax issues on granting. The burden for withholding tax is now placed on the employer for all options exercised on or after the 1st of January 2024. CGT is chargeable on any subsequent disposal of the shares.

2. Restricted Stock Units (RSU’s)

This scheme awards free shares to employees, and usually vest after a set period (can be time-based or performance-based). Employees are taxed on the market value of the shares at vesting, similar to a salary, and the employer withholds the tax. There are no tax implications at the grant. Conditions outlined in a plan document must be met before shares are issued.

3. Key Employee Engagement Programme (KEEP)

This is a tax advantageous share option scheme introduced specifically for certain qualifying SME companies for their employee or directors. Employees do not pay taxes when they exercise the option to buy shares. Instead, they pay capital gains tax (33%) when they eventually sell the shares. There are several conditions to be satisfied which can make KEEP challenging, including that options must be granted at market value. However, due to the tax benefits, KEEP is worth considering when deciding on what plan to utilise.

4. Growth/Flowering Shares

Growth shares are a special class of ordinary shares that generally have a low or nil value until a certain target or hurdle is reached by the business. The growth share is subject to income tax, USC and PRSI on award and must be valued for tax purposes. This type of share award can be attractive where the owners wish to share in future growth in the value of the company. CGT will be payable on any growth in value.

5. Restricted Shares

 Restricted shares are subject to income tax, USC and PRSI at the date of award. There is an abatement on the taxable value available under Section 128D which reduces the taxable value by 10% per year of restriction up to a maximum of 60%. There is a claw back of income tax if restrictions lifted or varied before the end of the restricted period. CGT will be payable on any growth in value.

If you are considering implementing an employee share incentive scheme and require advice on choosing the right plan to implement, please do not hesitate to contact us.

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Share Scheme Reporting Obligations

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Share Scheme Reporting ObligationsThere are several annual reporting obligations for employers and trustees who operate share schemes for their employees which are due by 31 March following year end.

The return to be filed is dependent on the type of share award or share option involved.

Form Name Plan Type
ESA                                                          Restricted Share Units (RSUs) – Share & Cash Settled

Discounted/Free/Matching Shares

Employee Share Purchase Plans (ESPP)

Restricted Shares

Convertible Securities

Forfeitable Shares

Phantom Shares

Stock Appreciation Rights

Growth/Hurdle/Flowering Shares

Other shares
RSS1 Share options and other rights
KEEP1 KEEP share options
ESS1 Approved Profit Sharing (APSS) Schemes
SRSO1 Save As You Earn (SAYE) schemes
ESOT1 Employee Share Ownership Trust (ESOT) schemes

Revenue are actively reviewing Share Scheme Reporting Forms and raising enquiries where there are discrepancies between the Forms and information reported via PAYE and/or employees personal tax reporting.

It is therefore more important than ever that employer Share Scheme Reporting is completed accurately and on a timely basis.

Deadline

The annual return must be filed on or before 31 March.

Contact us

If you require assistance with the preparation and submission of any of these returns, please contact us.

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Everything you need to know about Pillar Two

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Everything you need to know about Pillar Two

The Irish Revenue have now implemented the Pillar Two tax rules which may have consequences for Irish companies who are part of a multinational group.

To determine whether your company may be liable to file additional tax returns and pay a top up tax, we have prepared FAQs to provide you with the key characteristics of the Pillar Two Tax rules.

Who do the Pillar Two Rules apply to?

Multinational groups with an annual revenue exceeding €750 million. The test is based on the two of the four Fiscal Years immediately preceding the tested Fiscal Year.

What do these groups have to do?

The pillar 2 rules require these groups to pay minimum corporation tax of 15% on income earned in each jurisdiction in which they operate

If the tax rate is lower than 15% in a jurisdiction what must they do?

If the effective tax rate in a jurisdiction is below 15%, the new top-up tax may be levied.

If a top up tax is required, it is collected in one of three ways;

  1. Income Inclusion Rule:
  2. Qualified Domestic Top-up Tax:
  3. Undertaxed Profit Rule

These options can be discussed in detail if the Pillar Two rules apply to your group.

When do these rules come into effect?

Ireland has introduced the IIR and QDTT with effect for accounting periods beginning on 1 January 2024.

The UTPR will take effect for accounting periods commencing from 1 January 2025.

When should I register for the Pillar Two Taxes?

Within 12 months of the end of the first fiscal year in which the entity is subject to tax.

For example, a company who will be liable to the IIR and QDTT for 2024, must be registered for those taxes by 31 December 2025.

If they are then liable to UTPR, they must register by 31 December 2026.

What reporting obligations does a company have if they are within scope of the Pillar Two Rules?

They must submit a top up tax information return to Revenue within 15 months of their year-end. For the first year being within scope, this deadline is extended to 18 months.

E.g. a company with a December year end would be required to file a return by 30th June 2026 in their first year, and 30th March thereafter.

Are there any exemptions available from the Pillar Two Rules?

There are safe harbours available that we can discuss if the Pillar Two rules apply to your group.

Please feel free to contact us to discuss these new tax rules if you think they may apply to you.

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Joining Forces with Childline by ISPCC: Our Charity Partner for 2025-2026

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Joining Forces with Childline by ISPCC: Our Charity Partner for 2025-2026

We are delighted to announce that Childline by ISPCC has been selected by our employees as our Charity Partner for 2025 and 2026.

ISPCC is dedicated to enhancing the lives of children and young people across Ireland. They achieve this by providing a suite of relevant services under the Childline brand. Childline has expanded its reach by offering a variety of online support options alongside its well-known phone line. Now, Childline provides a 24/7 listening service via phone and webchat, making it more accessible than ever.

Focused on building resilience and enhancing coping skills, the charity’s child-centered services empower children and young people to better navigate life’s challenges and unlock their full potential. They are also dedicated to advocating for meaningful change to improve children’s lives today and create lasting benefits for future generations.

Commenting on the announcement, James O’Connor, Managing Partner, said:

“We are proud to support Childline by ISPCC’s important work in ensuring that every child and young person in Ireland has access to the care, support, and guidance they need. Giving back to the community is at the core of our values, and this partnership gives us a unique opportunity to make a meaningful difference in the lives of children across the country. We’re excited to collaborate with this wonderful charity to help create a brighter, safer future for the next generation.”

John Church, CEO at ISPCC said:

“Our mission at ISPCC is to protect childhood and to ensure that every child in Ireland is given the opportunity to thrive. We are incredibly grateful to everyone at Crowleys DFK for choosing us as their official charity partner for 2025 and 2026 and look forward to working together to raise funds to help make children all over Ireland lead better, happier and safer lives.”

In the coming weeks, Crowleys DFK will work closely with Childline by ISPCC to develop a fundraising calendar for this two-year partnership.

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