Upcoming Changes in Finance Bill 2021

finance bill 2021

The information below outlines upcoming changes in Finance Bill 2021 which will affect non-resident corporate landlords. The Bill is currently passing through the Oireachtas and is due to be signed into law by the president by 25th December 2021.

Section 18 of the Finance Bill 2021 brings companies not resident in Ireland that are in receipt of Irish rental income within the charge to Corporation tax. At the moment these companies are liable to income tax on their Irish rental profits.

This will result in the rate of taxation on such income increasing from 20 per cent to 25 per cent. This change is due to take effect from 1st January 2022.

There will be no change to the tax deductibility of any expenses in relation to the rental property. Provisions have also been made to ensure that rental losses & capital allowances will not be lost on the transition from income tax to corporation tax.

The Bill also amends the payment date for certain affected companies’ preliminary corporation tax for 2022. Those companies whose accounting period ends between 1 January 2022 and 30 June 2022 have until 23rd June 2022 to pay preliminary corporation tax where the payment is made using ROS.

As these non-resident corporate landlords will now be liable to corporation tax, they will also be subject to the new Interest Limitation Rules (ILR) which have been introduced to comply with the EU’s Anti-Tax Avoidance Directives (ATAD). The ILR seek to link a taxpayer’s allowable net borrowing costs directly to its level of earnings. The ILR does this by limiting the maximum tax deduction for net borrowing costs to 30% of earnings before tax and before deductions for net interest expense, depreciation, and amortisation (EBITDA).

If you have any queries, please contact Eddie Murphy, Partner & Head of Tax Services.

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Budget 2022 Highlights

Budget 2022 was delivered by Minister for Finance, Paschal Donohoe and Minister for Public Expenditure, Michael McGrath today. Below we highlight the main changes that could affect you.

COVID-19 Support Measures

  • The EWSS will remain in place until 30th April 2022 in a graduated form. The scheme will close to new entrants on the 31st December 2021. Those in the scheme at the end of December may continue to avail of the supports until the end of April. A two-rate structure of €151.50 and €203 per week will apply for the months December, January and February. For the final two months of the scheme a flat rate of €100 will apply however the reduced Employer’s PRSI rate will not apply in these two months.
  • The 9% VAT rate for the hospitality and tourism sector will remain in place to the end of August 2022.
  • The waiver from Commercial Rates for those in the Arts, Hospitality and Tourism sectors will apply for Q4 2021.
  • The tax debt warehousing scheme will be expanded to allow self-assessed income taxpayers with employment income who have a material interest in their employer company to warehouse income tax liabilities relating to their Schedule E income from that employer company.

Climate and Environmental Measures

  • A Carbon tax yearly increase of €7.50 until 2030, equivalent to about 2c per litre for Petrol and 2.5c per litre for Diesel.
  • From the 1st January 2022 a revised 20 band VRT table will come into effect. 1% increase for vehicles between bands 9-12, 2% increase for bands 13-15 and 4% increase for bands 16-20.
  • The €5,000 VRT relief for battery electric vehicles to continue until the end of 2023.
  • Accelerated Capital Allowances scheme for Energy Efficient Equipment extended for gas vehicles and refuelling equipment for 3 years.
  • Accelerated Capital Allowances scheme for Energy Efficient Equipment will not be available where the equipment is directly operated by fossil fuels.
  • An exemption from Tax on the sale of surplus electricity to the National Grid, limit of €200, by households.
  • Commencing in 2023 the BIK exemption for batter electric vehicles will be extended out to 2025 with a tapering effect on the vehicle value. The original market value of the vehicle will be reduced by €35,000 for 2023; €20,000 for 2024; and €10,000 for 2025.

Housing Measures

  • Introduction of a new Zoned Land Tax based on the market value of the land and outset rate of 3% to encourage house building. However, there is a two-year lead-in time for land zoned before January 2022 and a three-year lead-in time for land zoned after January 2022. It will replace the current 7% vacant site levy but unlike the levy there will be no minimum site size.
  • The relief for landlords for pre-letting expenditure will continue for a further 3 years.
  • Help to Buy Scheme will be continued in 2022 in its current form.

Business Measures

  • For the vast majority of companies, the 12.5% trading rate will remain. The increased 15% will apply only to those large multinational companies with turnover greater than €750m.
  • A refundable Digital Gaming Tax Credit for expenditure incurred on the design, production and testing of a game. The relief will be available at a rate of 32% on eligible expenditure of up to a maximum limit of €25m per project.
  • Extension of 3 years to the Employment Investment Incentive Scheme (EIIS) – wider range of investment funds and the 30% expenditure rule will be removed, to make it more attractive and accessible for investors and start-up businesses.
  • The relief from Corporation Tax for start-up companies will be amended such that the relief will be available for up to five years rather than three.
  • Threshold for the higher rate of Employers’ PRSI will increase from €398 to €410.

Personal Tax

  • Income tax standard band increase by €1,500 to €36,800 (single) and €73,600 (married).
  • Increase Personal, Employee and Earned Income Tax Credit by €50 to €1,700.
  • The Dependent Relative Credit will increase from €70 to €245.
  • Tax relief for remote working from home of 30% of vouched expenses for heat, electricity and broadband.
  • Small change to the second rate-band of Universal Social Charge which will increase from €20,687 to €21,295.
  • Amendments are proposed to be announced in the Finance Bill to s.127B TCA’97 which covers the taxation of international air crews to exclude non-resident air crew.

 Anti-Avoidance

  • Introduction of new Interest Limitation Rule will see a limit on deductible interest expenses of 30% of EBITDA for companies within scope of the Anti-Tax Avoidance measures. Disallowed interest may be carried forward and may be deducted in future years if the company has sufficient interest capacity.
  • Finance Bill 2021 will introduce a new anti-reverse-hybrid rules which will bring certain tax transparent entities within scope of Irish tax where the entity is 50% or more owned/controlled by entities resident in a jurisdiction that regard it as tax opaque and, as a result of this hybridity, double non-taxation occurs.

VAT

  • 9% rate to cease at the end of August 2022.
  • Farmers’ Flat Rate Addition is reduced from 5.6% to 5.5%.

 Agri Measures

  • Stock relief to end of 2024.
  • Young Trained Farmer Stamp Duty relief continue to end of 2022 at 1%.

 Other Matters

  • No changes to Capital Gains Tax or Capital Acquisitions Tax.
  • The State Pension (Contributory) will increase from €248.30 to €253.30 per week from 2022.
  • Public Consultation to be launched in coming weeks to inform Commission on Taxation and Welfare.
  • The Finance Bill is due to be published on the 21st October.

For more information, please contact Eddie Murphy, Partner & Head of Tax Services.

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Crowleys DFK Awarded Excellence in Public Sector Services Award 2021

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For a consecutive year, Crowleys DFK has been named the outright category winner of Excellence in Public Sector Services Award by The Public Sector Magazine’s 2021 Excellence in Business Awards.

Public Sector Services Award 2021

The awarding committee deemed Crowleys DFK worthy recipients of the Excellence in Business Award for our consistent high-quality services to the public sector.

Vincent Teo, Head of Public Sector Services commented:

“Winning this award once is a great achievement, but to win for a second year in a row is a testament to the hard work and commitment of our dedicated Public Sector teams. We are very proud of the reputation and long-term relationships we have built with our public sector clients over the years and this recognition from our peers and clients is a great honor.”

Click here to read the full Public Sector Magazine award editorial, featuring commentary from Vincent.

About the award

The annual awards recognise excellence in key providers to the Irish Public Sector acknowledging the professionalism of companies that excel in what they do.

Each year The Public Sector Magazine invites public sector agencies and local authorities to nominate organisations for consideration.  Nominees are judged by a panel of experts drawn from previous award winners and representatives from a diversity of sectors. The top three scoring nominations in each category are shortlisted with the highest scoring nomination as the winner.

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Charities Governance Code – Reporting on Compliance in 2021

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In 2021, all charities registered in Ireland must complete their first annual Compliance Record Form to comply with the Charities Regulatory Authority (CRA) Governance Code (the Code). 

How to demonstrate compliance with the Code

  1. The Code sets out the minimum standards that charity trustees should meet to effectively manage and control their charity.
  2. To demonstrate compliance with the Code, charities must complete the Compliance Record Form and subsequently update the Compliance Record Form every year.
  3. The Code operates on a ‘comply or explain’ basis, meaning that charities must comply with the Code or else explain why they have not done so.
  4. Compliance with each specific standard must be demonstrated as part of the Compliance Record Form. Organisations must record the actions that the charity has taken to meet each standard of the Code and reference the evidence that backs this up. The Compliance Record can also be used to explain why a charity is not in compliance with any particular standard in the Code.

Reporting on compliance with the Code in 2021

Under the Charities Act 2009, every registered charity in Ireland is required to submit an Annual Report to the Charities Regulator within ten months of the charity’s financial year-end. From 2021, charities will be required to submit a declaration in relation to compliance with the Code with their Annual Report.

A charity will be required to determine if:

  1. It does not need to meet the Additional Standards of the Charities Governance Code.
  2. It does need to meet the Additional Standards of the Charities Governance Code.
  3. It has not yet commenced compliance with the Charities Governance Code.

Additional standards of the code are those standards which a charity that is considered “complex” should meet or charities who are not complex but decided to apply the additional standards.

The CRA has not defined what is considered a “complex” charity and the charities trustees of each organisation are best placed to make that decision. Charity trustees can base this decision on indicators such as income streams, number of employees, complexity of activities, working with vulnerable people or operating overseas.

The charity will be required to declare if, at the time of filing its Annual Report, they have:

  1. Complied with all sections of the Charities Governance Code.
  2. Complied with some of the sections of the Charities Governance Code.

Formal adoption of the Code at Board meetings

All charities are expected is to discuss and agree at board meetings how they will meet the standards of the Code and to document their decisions in the minutes. The Compliance Record Form should record the actions taken to meet each standard of the Code and all minutes of meetings relevant to each standard of the Code.

Monitoring

The Charities Regulator will adopt a balanced and proportionate response in relation to any charity which is not in full compliance with the Code in 2021, with an emphasis on understanding common reasons for partial or non-compliance. This will enable the Regulator to identify common reasons for non-compliance and provide further guidance to charities on meeting the standards set out in the Code.

How Crowleys DFK can help

We recognise that completing the Compliance Record Form and ensuring compliance is properly documented is a time-consuming task and the process will be challenging for many organisations. At Crowleys DFK, we can assist you through the process of completing the Compliance Record Form. We have developed a suite of templates for the Compliance Record Form and the various policies and documents needed as evidence of compliance.

For more information and expert advice, contact a member of our Charities & Not-for-Profit team.

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Import One Stop Shop – 1 July 2021

The new EU-wide Import One Stop Shop (IOSS) will go live from 1 July 2021.

From that date the current VAT exemption for goods in small consignments of a value of up to €22 is abolished and all goods imported into the EU will be subject to VAT.

The IOSS will allow suppliers making distance sale of goods imported from third countries to final consumers in the EU (e.g. online retailers) to declare and pay the VAT due on those goods by submission of a monthly return via the IOSS in the Member State where they have registered for the scheme.

Continue reading about the new EU VAT changes

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Crowleys DFK Recognised in Top 100 Companies Leading in Wellbeing Index 2021

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Top 100 Companies Leading in Wellbein

We are delighted to be recognised in the Top 100 Companies Leading in Wellbeing Index. This index, published by Business & Finance in partnership with Ibec, acknowledges companies across Ireland that are leading the way for employee wellbeing and who, through their commitment to instilling a best practice approach, have made a lasting impact on their employees and on the business community.  

Speaking about this achievement, Colette Nagle, COO and Head of Corporate Social Responsibility said: 

“We are very proud to have been included in the Top 100 in Wellbeing list.  Having received the Ibec KeepWell Mark Accreditation in August 2020, continuously improving our workplace wellbeing practices across all levels of the business has remained a key priority for us.  We will continue to strive towards achieving the ultimate goal of providing the highest standard of workplace health, wellbeing, and safety for our employees.” 

 Speaking about the launch of the Index, Ibec CEO, Danny McCoy commented:  

“It is encouraging to note the diversity of industries spanning the full breadth and scope of the Irish economy that are represented in this index. These 100 companies that we are celebrating today are leading the way in workplace wellbeing and their commitment to instilling a best practice approach to wellbeing has made a lasting impact on their employees and on the business community.” 

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Crowleys DFK Partner Appointed to the Council of Gaisce

We are delighted to announce that Vincent Teo, Partner and Head of Public Sector & Government Services, has been appointed by the Minister for Children, Equality, Disability, Integration and Youth, Roderic O’Gorman to the Council of Gaisce. The appointment is effective from 1 March 2021 and is for a period of three years.

Gaisce – The President’s Award is a self-development programme for young people aged 15-25 which enhances confidence and wellbeing through participation in personal, physical and community challenges.  Appointments to the Gaisce Council is a ministerial appointment and can only be awarded by the current presiding Minister for Children, Equality, Disability, Integration and Youth.  Uachtaráin na hEireann, Michael D. Higgins, is patron of the Award.

Commenting on his appointment, Vincent said:

I am delighted and honoured to have been given this wonderful opportunity to serve the Council.  I am looking forward to supporting the Council, and indeed Gaisce, in enabling young people to shape their own path to self-discovery.

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Postponed Accounting for VAT on Imports

Postponed Accounting for VAT on imports is available from 1st January 2021. It provides a major cash-flow benefit for traders who import goods from all non-EU countries into Ireland.

Postponed Accounting enables you to self-account for import VAT on your VAT returns rather than having to pay import VAT upfront. It also allows you to reclaim import VAT at the same time as it is declared on a VAT return, subject to normal rules on deductibility.

There are two steps to ensure you can apply postponed accounting to your imports:

Step One – Make sure your business is entitled to use Postponed Accounting

  • Traders who were registered for both VAT and Customs & Excise (C&E) with Irish Revenue at 11:00pm on 31 December 2020 have been given automatic entitlement to Postponed Accounting.
  • VAT registered traders who were not registered for C&E at 11:00pm on 31 December 2020 and who wish to import goods into Ireland must register for C&E (i.e. must obtain an Irish EORI number). Once registered for C&E, they will be given automatic entitlement to Postponed Accounting.
  • After 11:00 pm on 31 December 2020 all new intra-EU VAT applicants must get their Irish VAT number issued and then must register for C&E. When both the VAT and C&E registrations have been approved the applicant must request access to Postponed Accounting from Revenue.
  • After 11:00 pm on 31 December 2020 domestic-only VAT applicants who acquire goods from countries outside of the EU VAT area must apply to Revenue for Postponed Accounting and submit certain supporting documentation. Domestic-only VAT applicants will receive confirmation from Revenue when their Postponed Accounting application has been granted. Applicants will not have access to the Postponed Accounting facility prior to this confirmation.

Step Two – Make sure the electronic customs import declaration is completed correctly

  • The appropriate fields must be completed on the customs import declaration or you may be required to pay import VAT upfront.
  • Revenue have issued guidance on exactly what needs to be inputted on the AIS and AEP systems.
  • If you do not complete the customs import declaration yourself, you should tell your supplier or customs agent that you wish to avail of postponed accounting for import VAT and ensure that the customs import declaration indicates this to Revenue.

For further assistance, please contact Siobhán O’Hea, Partner in our Tax Services Department.

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Employment Wage Subsidy Scheme (EWSS)

Update 22 December 2020

Businesses on the Employment Wage Subsidy Scheme (EWSS) will have to provide Revenue with a six-month sales projection within 10 days or will lose their eligibility for the scheme.

Employers claiming a subsidy under the scheme must now show a 30% reduction in turnover will occur for the period January 1 to June 30 2021. Companies must make the calculation by December 31 and compare it to the corresponding period in 2019, to ensure their business will still qualify for the scheme.

Furthermore, businesses will now have to review their eligibility monthly, based on their actual incremental revenue figures.

Employers who no longer qualify based on amended projections will have to deregister from the scheme. Incorrect submissions will be clawed back by Revenue or offset against future payments under the scheme.

On July 23, the Government announced the Employment Wage Subsidy Scheme (EWSS). This scheme provides a flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll.

EWSS will replace the Temporary Wage Subsidy Scheme (TWSS) from 1 September 2020 and is expected to continue until 21 March 2021.

Qualifying Criteria for Employers

In order to be eligible for the EWSS, employers must demonstrate that:

  • their business will experience a 30% reduction in turnover or customer orders between 1 July and 31 December 2020;
  • the disruption is caused by COVID-19; and
  • must maintain tax clearance for the duration of the scheme.

The reduction in turnover or customer orders is relative to:

  • the same period in 2019 where the business was in existence prior to 1 July 2019;
  • the date of commencement of a business to 31 December 2019; or
  • where a business commenced after 1 November 2019, the projected turnover or customer orders had COVID-19 disruption not arisen.

Employers are required to conduct a monthly review to ensure they continue to meet the eligibility criteria under the EWSS. The EWSS will be administered by Revenue on a ‘self-assessment’ basis. The normal requirement to operate PAYE on all payments will be re-established under the EWSS however, a 0.5% rate of employers PRSI will continue to apply for employments that are eligible for the subsidy.

From 31 July:

  • TWSS employers can claim for non-TWSS employees (new hires) under the new EWSS.
  • Non-TWSS employers, who have not previously availed of TWSS, will only be eligible to apply for the EWSS.

Rates

As of 20 October 2020, the EWSS is being amended to align with the amendment to PUP, with the rate bands as follows:

Employee gross weekly wages Subsidy payable
Less than €151.50 Nil
From €151.50 to €202.99 €203
From €203 to €299.99 €250
From €300 to €399.99 €300
From €400 to €1,462 €350
Over €1,462 Nil

This revised scheme will run to end January 2021 when it will revert back to the below rates:

Employee gross weekly wages Subsidy payable
Less than €151.50 Nil
From €151.50 to €202.99 €151.50
More than €203 and less than €1,462 €203
More than €1,462 Nil

If you have any queries or need assistance registering for the scheme, please contact our COVID-19 Client Response Team at crteam@crowleysdfk.ie or on +353 1 679 0800/+353 21 427 2900.

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Revenue Publish Tax and Duty Manual “VAT – Postponed Accounting”

Revenue have published a new Tax and Duty Manual VAT – Postponed Accounting. It contains information on procedures, conditions and the operation of the new postponed accounting system for import VAT. The publication of this manual brings welcome clarification for traders importing goods to Ireland from all non-EU countries (including the UK post-Brexit) from 1st January 2021.

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