Amendments to Dwelling House Exemption

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There were two amendments made to the Capital Acquisitions Tax Dwelling House Exemption by Finance Act 2017, in such cases where the recipient of the dwelling house is a dependent relative of the disponer.

A ‘dependent relative’ is defined as a relative who is permanently and totally incapacitated due to mental or physical infirmity from maintaining himself or herself, or who is of the age of 65 years or over at the date of gift or inheritance.

The position following the amendments is as follows:

  1. In the case of a gift or an inheritance of a dwelling house taken by a dependent relative, the dwelling house is not required to have been the only or main residence of the disponer.
  2. A gift of a dwelling house that becomes an inheritance as a result of the disponer dying within two years of making the gift can qualify for the dwelling house exemption, where the beneficiary is a dependent relative.

All other provisions to the exemption remain unchanged.

The amendments to the Dwelling House Exemption take effect from the date of passing of the Finance Act 2017, 25 December 2017.

Should you require any further details on the above, please contact a member of our Tax Department.

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Revenue Publishes Updated Transfer of Business Document

On 31st July 2018, Revenue published an updated Transfer of Business document, revising the previous document which was reviewed in December 2017.

There are significant differences between the two versions when it comes to which transfers of property come within the transfer of business (TOB) provisions.

 

The December 2017 document confirmed Revenue’s view that TOB applied:

  • where a property had been let on a continuing basis and was being sold to a tenant who is an accountable person; and
  • in the case of a vacant property that was let or partially let on a continuing basis in the past.

Whereas, the 31st July 2018 version confirms that TOB will not apply to:

  • “The transfer of a let property to the tenant…as the only asset being transferred in those circumstances is the property itself and the transfer of a property without any additional assets, which together with the property would constitute an independent undertaking…regardless of how the property had been used prior to its transfer”; and
  • “A transfer of [property], of itself, without any additional assets (such as a letting agreement), which together with the immovable good, would constitute an independent undertaking…regardless of how the [property] had been used prior to its transfer”.

Vendors, their solicitors and tax advisors should review all property transactions currently in progress to ensure the correct VAT treatment is being applied in light of this updated Revenue guidance.

For further assistance please get in touch.

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Crowleys DFK launches Overview Video on Foreign Direct Investment Service Offering

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Crowleys DFK is delighted to launch an overview video of the Firm’s Foreign Direct Investment service offering.

Edward Murphy, Partner and Head of Foreign Direct Investment and Siobhán O’Hea, Partner, Tax Services provide an insight into how Crowleys DFK can help foreign owned companies to set up operations in Ireland.

For more information on our Foreign Direct Investment service offering, please contact Edward Murphy.

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Avoiding VAT Pitfalls on Property Transactions

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  • VAT pitfalls on property transactions
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Crowleys DFK are currently running a series of CPD accredited VAT on Property briefings for solicitors in Cork and Dublin. The purpose of the seminars, presented by Tax Partner Siobhán O’Hea, is to raise awareness of common VAT pitfalls on property transactions.

VAT on property can be a complicated area but it is vital to thoroughly investigate the potential VAT impact before embarking on any property transaction, Siobhán advises.

“We are seeing problems crop up in many different situations. For example, more people have got involved in letting property in recent years and this is an area where VAT issues can often arise. While lettings are exempt from VAT, landlords can opt to tax the letting and charge 23% VAT on the rent. This can be advantageous if the landlord wants to claim repayment of VAT incurred on the acquisition or development of the property, however it is important to be aware that there are restrictions. For example, you cannot opt to tax the letting if the property is occupied for residential purposes or occupied by the landlord or a person connected with the landlord.

“On sales of commercial property, liability to VAT depends on whether the property is considered ‘new’. There are Revenue rules governing the definition of ‘new’ for property VAT purposes. Generally, the supply of older properties is exempt from VAT however, in some circumstances, the vendor and purchaser may jointly opt to have the transaction subject to VAT.

“Where property is supplied in connection with an agreement to develop the property, these transactions are always taxable.

“In our experience, there are VAT pitfalls in many every day property transactions and these can prove very costly for clients. This is why Crowleys DFK are running these seminars for solicitors. It’s an opportunity to raise awareness and to help ensure common mistakes are avoided,” Siobhán concluded.

For further information on Crowleys DFK VAT briefings, please get in touch.

Talk to us

Siobhán O’Hea
Partner, Tax Services
siobhán.ohea@crowleysdfk.ie

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The Importance of a Company’s Registered Office

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Choosing an appropriate location for a company’s registered office arises under the Companies Act 2014. It is the duty of each director and secretary of a company to ensure the requirements are complied with.

The location must be disclosed publicly on the Companies Registration Office (CRO) website.

It must be an actual physical location within the State. A post office box number is not sufficient.

Company statutory registers must be kept at a Company’s registered office and members of the public can inspect registers at that location. Documents may be delivered by hand to the registered office.

It is the address to which all legal notices, including correspondence from the CRO and at times the Revenue Commissioners, may be sent.

Any document will be validly served on a company by leaving it at, or sending it by post to the registered office of the company.

Crowleys DFK’s Corporate Compliance team have been providing a professional registered office facility for a number of years through offices located in Cork and Dublin.

For further information please contact Emma Dunne, Manager of our Corporate Compliance Department.

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U.S. Tax Reform and it’s impact on Ireland

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President Trump signed into law H.R. 1, originally known as the “Tax Cuts and Jobs Act”, on 22 December 2017, resulting in the most significant U.S. tax reform in over 30 years.

The key business measures in the U.S. tax reform package are:

  • The corporate income tax rate is reduced to 21% from 35% with effect from 1 January 2018.
  • There is a move to a full dividend exemption regime for dividends from non-US companies, requiring a 10% holding.
  • As part of the transition to a participation exemption regime, a one-time mandatory tax will be imposed on foreign earnings retained outside the US. This “deemed repatriation” tax applies in respect of any company in the world (including Ireland), if it is controlled by either a U.S. company or by U.S. citizens. This includes either:

(a) any company where the shares are owned (directly, indirectly or constructively) 50.01%+ by US shareholders, or

(b) where 10% of the shares are owned by a US corporate shareholder.

  • The deemed repatriation tax rates for the transition to a territorial tax system are 15.5% for earnings held in cash or liquid assets and 8% for the remainder.
  • There will be a minimum tax on profits arising to foreign subsidiaries of US multinationals from the exploitation of intangible assets, known as “global intangible low-taxed income” (GILTI).
  • A “base erosion anti-abuse tax” (BEAT) will be adopted. The BEAT will generally impose a minimum tax on certain deductible payments made to a foreign affiliate, including payments such as royalties and management fees but excluding cost of goods sold.
  • Interest deductions for tax years beginning after 31 December 2017 are restricted to 30% of EBITDA (earnings before interest, tax, depreciation and amortisation). For tax years beginning after 31 December 2021, the limitation will be 30% of a measure similar to EBIT (no add-back for depreciation and amortisation).
  • Other provisions target cross-border transactions, including revised treatment of hybrids and a new special tax incentive for certain foreign-derived intangible income.

Any business with U.S. connections should consider what exposure to U.S. tax (if any) may exist in light of the above changes.

Should you require any further details on the above, please contact Edward Murphy, Head of Tax Services.

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Revenue moves to PAYE Modernisation and Real Time Reporting

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What is PAYE Modernisation?

With effect from 1 January 2019, employers will be required to notify Revenue with details of the amount of the emoluments and the tax due for each employee on/ before the payment date on a real time basis. This means that each time an employee receives a payment or benefit from their employer, the PAYE due and remitted to Revenue must be 100% accurate.

This real time reporting (RTR) process abolishes the requirement to file P30’s, P35’s, P45’s, P46’s and employers will no longer have to produce P60’s at the end of each tax year.

A Revenue Payroll Notification (RPN) will replace the current Tax Deduction Card (P2C) and from the 1 January 2019 all employers will be required to:

  • Obtain the most up to date RPN before making any payments to employees
  • Report employee payments (amount of pay, payment date, amount of PAYE, USC and PRSI deductions) to Revenue in real-time, and
  • Reconcile Revenue’s response to the payroll submission

At the end of each month, employers will receive a statement from Revenue with payroll submission totals. Employers must either:

  • Accept the statement as their monthly return, or
  • Correct payroll data if the statement is incorrect

The statement issued by Revenue will be deemed to be the return if no amendments or corrections are made before the return due date i.e. 14 days after the end of the month (23 days for ROS users who file and pay online).

The legislation governing the new regime, provides that a failure by an employer to correctly operate PAYE on a payment/ benefit to an employee, may result in the employer being liable for the payment of income tax on a grossed up basis. In addition, the existing €4,000 penalty for non-operation of PAYE may be enforced more readily.

Employers should take the time now to review their employee data, payroll processes, policies and systems to ensure that they are ready to comply with their RTR requirements on 1 January 2019.

Should you require any further details on PAYE modernisation or real time reporting (RTR), please contact Anne Comber, Manager of Payroll Services.

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Salary Sacrifice Arrangements

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What is a salary sacrifice arrangement?  

The term salary sacrifice is generally understood to mean an arrangement between the employer and employee under which the employee forgoes the right to receive any part of his or her remuneration due under the term of  his/her contract of employment and in return their employer provides a benefit of a corresponding amount to the employee.

Where an employee forgoes salary payable under an existing contract of employment in exchange for a benefit, the employee remains taxable on the “gross” income payable. The salary sacrificed will be an application of income earned by the employee, not an expense incurred by the employer.

Exceptions

However, there are Revenue approved salary sacrifice arrangements which are exempt from the tax treatment outlined above. These include the following scenarios where the employee’s gross salary is reduced in return for:

  • bus, rail or ferry travel passes through a travel pass scheme
  • exempt shares appropriated to employees under approved profit sharing schemes, provided certain conditions are met
  • the provision of bicycles and safety equipment through the cycle to work scheme

If you have any questions about salary sacrifice arrangements or other employee benefit queries, please contact us.

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The tax treatment of cryptocurrency transactions

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We welcome Revenue’s issuing of an eBrief on the tax treatment of cryptocurrency transactions.

For further information and details, please view Revenue eBrief No. 88/18.

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We are delighted to announce the merger of well-established Cork firm, Moylan Mulcahy & Co with Crowleys DFK

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Pictured (l-r): Tony Cooney (Crowleys DFK Partner), James O’Connor (Crowleys DFK Managing Partner) and Harry O’Sullivan (Moylan Mulcahy & Co Partner)

We are delighted to announce that the well-established Cork firm, Moylan Mulcahy & Co, will merge with Crowleys DFK, effective from 1 June 2018.

The merger will see us welcome Moylan Mulcahy & Co Partner Harry O’Sullivan, along with 5 members of staff, into the Crowleys DFK Cork offices at 5 Lapps Quay.

James O’Connor, Crowleys DFK Managing Partner, commented: “We are delighted with this merger. Moylan Mulcahy & Co has an excellent reputation, in particular in the services it offers to the SME sector. With a natural synergy, not just in terms of services and sectors but also in work practices and values, this provides a major growth opportunity for both firms”.

Harry O’Sullivan said: “This is an exciting time for us. This merger with such a highly-regarded firm is a great cultural fit as the team at Crowleys DFK share our core value of delivering high quality services to clients. We look forward to offering our clients the benefits of access to additional areas of expertise as well as access to the global reach of the DFK International network.”

James concluded, “The merger further cements our reputation as one of the country’s leading SME business advisors for both domestic and international businesses.  We look forward to welcoming Harry and his colleagues to our full-service team.”

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