Non-resident landlords may have received a letter from Revenue advising of upcoming changes to the administration of withholding tax for non-resident landlords. Up to now, non-resident landlords had two options to report rental profits to Revenue:
Non-resident landlords asked their tenant to withhold 20% of the rent and to pay this to Revenue on their tenant’s personal income tax return. The tenant should have given the non-resident landlord a Form R185 (certificate of income tax deducted) so that a credit could be claimed for the tax deducted when submitting a personal income tax return.
Non-resident landlords appointed a Collection Agent, who registered for Income Tax on their behalf using a Collection Agent Income Tax Registration Form. Their Collection Agent was responsible for reporting the non-resident landlord’s rental profit for the year by filing an income tax return and paying any liability to Revenue on behalf of the non-resident landlord.
What are the upcoming changes?
A new Non-Resident Landlord Withholding Tax system is expected to go live from 1 July 2023 which will see changes to the obligations of tenants, collection agents and non-resident landlords.
Tenants will be required to withhold and pay to Revenue 20% of the rent by making a rental notification through the new withholding tax platform. They will not be responsible for paying the 20% tax deducted on their personal income tax return.
Collection Agents will no longer be responsible for filing an income tax return. A Collection Agent will be required to withhold and pay to Revenue 20% of the rent by making a rental notification through the new withholding tax platform.
Non-Resident Landlords will be responsible for filing their personal income tax returns. A credit will be allowed for the tax withheld in the new system.
What actions are required by non-resident landlords?
If you are a non-resident landlord whose tenants already withhold 20% of the rent or if you have appointed a Collection Agent, there are no actions required by you at this time. Further information will be released by Revenue shortly and a new Tax and Duty Manual will be published in due course.
All other non-resident landlords must now decide whether they want their tenants or a collection agent to withhold and pay to Revenue 20% of the rent under the new Non-Resident Landlord Withholding Tax system and take action accordingly.
Please contact us if you have further queries on this.
Employee share incentive schemes can be an effective way of offering tax savings to employees in addition to encouraging employee participation and loyalty. One type of share incentive scheme is an unapproved Share Option Scheme. We have set out below some frequently asked questions on the tax treatment of unapproved Share Option Schemes:
What do I receive when I am granted a share option by my employer?
When your employer grants you a share option, you receive the right to acquire shares in the company at a future specified date at a pre-determined price. You must actually exercise the option in order to take beneficial ownership of the shares.
What information will I get from my employer when I am granted a share option?
Your employer will generally issue documentation covering:
The number of shares that you can acquire,
The price that you have to pay for the shares (“Option Price”),
The dates from which, and by which you can exercise your option (“Exercise Period”), and
The conditions regarding the right to exercise the option, which may include good leaver and/or bad leaver provisions.
What is meant by “date of exercise”?
The “date of exercise” is the date at which the employee takes up their right to acquire shares.
Must I pay to acquire the shares under a share option?
The shares may be at no cost to the employee (nil option) or at a predetermined price that the employer has set. In some cases, the employee will have to pay something for the option itself.
Are there different types of unapproved share option schemes?
There are two types of share options for tax purposes:
(a) a ‘short option’ – which must be exercised within seven years from the date it is granted; and
(b) a ‘long option’ – which can be exercised more than seven years from the date it is granted.
There are tax implications for employees participating in unapproved share option schemes and reporting obligations for both employers and employees:
Tax Implications for Employees
Date of grant
There is no tax or reporting obligations due at the grant of short options. Where a share option is a long option, a charge to income tax may arise on both:
The grant of the share option (where the option price is less than the market value of the shares) and
The exercise, assignment or release of the share option.
Credit is given for any income tax charged on the grant of the share option against the income tax due on the exercise, assignment or release of the share option.
Date of exercise
When an employee exercises his/her right to the share options and acquires the shares at the pre-determined price, the difference between the price paid to acquire the shares (the exercise price) and the market value of the shares at the date of exercise of the option is called the share option gain. The share option gain can be reduced by any payment made by the employee for the initial grant of the option.
Where an employee exercises a share option he or she must pay what is referred to as “Relevant Tax on Share Options” (RTSO) in respect of any income tax due on any gain realised on the exercise of the share option. The relevant tax at 40% is calculated on the share option gain as well as universal social charge (USC) at 8% and PRSI at 4% (unless you have advance approval from Revenue to pay at a lower rate). RTSO is payable within 30 days of an option being exercised.
Example
Stock Option Exercise
Exercise of Shares
Market Price @ date of purchase
$100
Purchase price
$85
$15
Number of shares
10 shares
Total exercise price
$150
FX rate at date of purchase
1.1014
Share Option Gain
€136
Tax on exercise
Gross Gain
€136
Income tax @ 4%
€54
USC @ 8%
€11
PRSI @ 4%
€5
Total liability
€71
Net Gain
€65
Sale of Shares
An employee who acquires shares by the exercise of a share option is chargeable to capital gains tax (CGT) on any chargeable gain realised on the subsequent disposal of those shares.
Where due, CGT must be paid to Revenue within the following deadlines:
Date of Disposal
Payment Due
1 January – 30 November
By 15 December the tax year
1 December – 31 December
By 31 January in the following tax year
An individual must file a return by 31 October in the year after the date of disposal. A return is required even if no tax is due because of reliefs or losses. An individual must file a Form CG1 if not usually required to submit annual tax returns; Form 12 if a PAYE worker or a Form 11 if considered a chargeable person for tax purposes.
Reporting obligations for Employees
The employee must submit a Form RTSO 1 within 30 days from the date of exercise of the share option. A payment of Relevant Tax on Share Options must also accompany the submission.
Employees liable to pay RTSO must then submit an income tax return, containing details of all share option gains in a tax year, by 31 October following the year in which the gains are realised. The income tax return must be filed for the relevant year in addition to the form RTSO1.
Reporting obligations for Employers
The employer will have to complete and file a Form RSS1 by 31 March following the year of exercise.
Please contact us if you require assistance with the above.
This index, published by Business & Finance in partnership with Ibec, recognises top businesses of all sizes who lead the way and have improved their performance in supporting employee mental health and wellbeing.
Speaking about this achievement, Paula McCann, Health & Wellbeing Lead said:
“The health and wellbeing of our employees is a core priority for us. We are striving towards a true culture of wellbeing and the inclusion of Crowleys DFK in this index for the third year in a row is a great acknowledgement of the progress we have made.”
Ian Hyland, Publisher, Business & Finance, commented:
“We are honoured to be working with our partners Ibec to recognise the companies that place employee wellbeing at the top of their priority list. It is imperative for businesses that the wellness of the entire team plays a core part of their business strategy to cultivate a healthy and rewarding working environment which is crucial for business and employee development.”
Danny McCoy, CEO, Ibec commented:
“It’s important to recognise the efforts being made by businesses in supporting the wellbeing of their people. Environmental, social and governance (ESG) criteria is now driving how investors evaluate companies. Mental health and overall wellbeing of employees is increasingly forming part of the measurable foundation of the ‘S’ within ESG.”
If you are interested in working in one of Ireland’s Top 100 Companies Leading in Wellbeing, take a look at our career options.
https://www.crowleysdfk.ie/wp-content/uploads/Leading-in-Wellbeing-2.png6281200Alison Bourkehttps://www.crowleysdfk.ie/wp-content/uploads/CDFK_50YR_Logo.pngAlison Bourke2023-05-02 13:11:522023-05-02 13:24:56Crowleys DFK Recognised in Top 100 Companies Leading in Wellbeing Index 2023
Revenue’s Debt Warehousing Scheme allowed businesses who experienced trading difficulties during the COVID-19 pandemic to warehouse their tax debt interest-free. The scheme enabled a business to defer paying certain tax liabilities until it was in a better financial position.
The interest free period for any tax debts that have been warehoused will end on this Sunday 30th of April 2023. From this date, Revenue will charge interest at a rate of 3% until all tax liabilities are paid off.
Revenue have given businesses who availed of this Scheme until 1 May 2024 to enter into a formal payment plan with them.
If you would like our assistance with agreeing a payment plan with Revenue, please contact us.
From 23 April 2023, all Company Directors of Irish companies have a statutory filing obligation to disclose their Personal Public Service (PPS) Number to the Companies Registration Office (CRO).
PPS Numbers are to be disclosed when filing the following forms:
Form A1 – Incorporation Application.
Form B1 – Annual Return.
Form B10 – Change of company officers or their particulars.
Form B69 – Notice of cessation of company officer where a company has failed to file the notice.
What is a PPS Number?
Your PPS Number is a unique reference number that helps you access social welfare benefits, public services and information in Ireland.
A PPS Number is always 7 numbers followed by either one or 2 letters. It is sometimes called a PPSN.
You have a PPS Number if:
You were born in Ireland in or after 1971
You started work in Ireland after 1979
You are getting a social welfare payment
You are taking part in the Drugs Payment Scheme
Note: The CRO plan to redact the PPS Number from all forms, by placing hashes over the numbers and letter(s). No publicly accessible form or document will display your PPS number.
What if I do not have a PPS Number?
If a director does not have a PPS number but has been issued with an RBO number by the Central Register of Beneficial Ownership, then the director can use their RBO number as their Verified Identity Number (VIN) for CRO filings.
If a director does not have a PPS Number or an RBO Number, they must apply to the CRO for a VIN which will be issued by the CRO.
Consequences for non-compliance
This new requirement is being introduced to help with the identification of directors and to prevent fraud.
A director that fails to comply with the regulations commits an offence under Section 35 “888A (2)” of the Companies (Corporate Enforcement Authority) Act 2021 and shall be guilty of a category four offence.
What should you do next?
We strongly advise all clients who have not already provided us with their PPS number, RBO number or obtained a new VIN to do so, as a matter of urgency, to avoid any material discrepancies and delays with the next in-scope filings due at the CRO.
Directors should further ensure that the information held at the DEASP with the PPS number is consistent with the information held at the CRO.
https://www.crowleysdfk.ie/wp-content/uploads/shutterstock_1537199279-scaled.jpg14412560Alison Bourkehttps://www.crowleysdfk.ie/wp-content/uploads/CDFK_50YR_Logo.pngAlison Bourke2023-04-17 08:29:122023-04-17 08:29:12Director Obligations to Disclose PPS Number
A new Vacant Homes Tax (VHT) was introduced in Budget 2023. The primary objective of this is to increase the availability of housing, but landlords need to be aware of the restrictions on allowable pre-letting expenses when calculating their rental profits.
Vacant Homes Tax (VHT)
VHT applies to residential properties which have been occupied for less than 30 days in a chargeable period.
VHT is calculated at three times the residential property’s local property tax (LPT) liability.
The following will be exempt from the VHT:
Properties recently sold or listed for sale or rent.
Properties vacant due to illness or long-term care of the occupier.
Properties which were the principal residence of a deceased chargeable person in either the chargeable period or in the 12-month period prior to the commencement of the chargeable period.
Properties which were the principal residence of a deceased chargeable person where a grant to administer the estate issues in the chargeable period and for any chargeable period following such a grant, where the administration of the estate has not yet completed.
Properties which are vacant due to significant refurbishment work.
The first chargeable period runs from 1 November 2022 to 31 October 2023.
A VHT return will be due by 7 November 2023, with the tax payable by 1 January 2024.
Pre-Letting Expenses
In determining the taxable rental profits from the letting of residential property, a landlord may claim a deduction for the following expenses:
Costs not repaid by tenant – e.g., light & heat costs.
Capital allowances on qualifying capital items – e.g., furniture, white goods.
However, with the exception of property-related fees such as letting or legal fees incurred on the first letting, a deduction is not permitted for expenses incurred prior to the first letting of the property.
The Finance Act 2017 sought to address the above and introduced an allowable deduction of up to €5,000 for certain pre-letting expenses incurred on vacant residential properties. From 1 January 2023, this cap on the authorised deduction has been increased to €10,000 and the specified period for which the property was vacant has been reduced from twelve to six months. The landlord must incur the expenditure during the twelve months prior to first letting the property.
If the landlord ceases to let the property within four years, the deduction for the pre-letting expenses will be clawed back in the year in which the property ceases to be let as a residential property. Importantly, a clawback will be triggered if there is a change of use from residential or if the property is sold.
If you need any assistance with VHT or Pre-Letting Expenses, please contact Niall Grant, Partner in our Tax Services’ Department.
In recent months, there has been a wave of artificial intelligences (AI), known as Chatbots, made available to the general public. With more than one hundred million users having already engaged with these Chatbots, there has been much speculation regarding the implications of AI. Furthermore, as attention on AIs has increased, it has come to light that some industries have already incorporated these into their working processes. Much has been said about the almost limitless possibilities of AI, but from our own research, it is not likely that AI will supplant whole industries. What we expect is that AI is going to be an assistant, rather than a replacement, for workers.
What is an AI Chatbot?
To understand why this is, we have to understand how these AIs function. AI Chatbots are not self-aware in the manner we may be familiar with from science-fiction. These AIs operate by learning and then reproducing patterns, whether these are patterns of speech, presentation, computer code, and so on. They are exposed to huge amounts of data and learn to understand what a plausible-seeming answer to any given question might be. As a basic example, an AI does not understand what is meant by asking “how are you”, but it does know what sort of answers that question should be met with.
Even if AIs function through reproducing rather than creating, this does not prevent them from having impressive capabilities. For instance an AI, if the user feeds the correct data into it, can be used to draft legal documents or website content. Some newspapers have already experimented with using AIs to draft shorter online pieces, crediting these to the AI in the by-line. AIs can also be used to review data. A user can enter information into the question box along with a set of instructions for the AI to follow in sorting through the data. While there will probably need to be a few attempts to finetune the questions, in this way some forms of data analysis can be conducted in minutes. AIs can also be used as research tools. There have been several successful attempts at using an AI to produce research abstracts that are acceptable to peer review, while AIs can also be used to provide research bibliographies.
Drawbacks and Uses
It is in this reliance on pattern recognition where we begin to see the limitations that will prevent AIs from replacing work. For instance, as the AI only produces answers that fit the pattern of a correct answer, it may provide answers that are false. Our investigations into AI have found that, when asked to provide a list of texts for review, several of the texts and authors provided did not exist. Furthermore, where the AI was not challenged on this error, it would provide more information on these fictitious authors, inventing careers and reputations only because this seemed like the sort of answer the question required. The AIs, then, are entirely capable of error.
It is because these AIs can err that they cannot be expected to replace human working in the immediate future. The use AI will have will be as a tool for accelerating productivity. For instance, time-consuming study of documents to find errors or anomalies could now be conducted at a relatively brisk pace, with human input being necessary for review. In this way, time can be freed up for workers to perform more complex tasks that are beyond an AI’s scope. Similarly, an AI could be used to generate generic content for online marketing, with human input again coming through reviewing and refining the output. AIs, then, cannot be expected to operate independently. They will have to function as an aide and assistant for our own work.
Contributors
Vincent Teo Partner & Head of Public Sector & Government Services
https://www.crowleysdfk.ie/wp-content/uploads/shutterstock_2022030764-Converted.png21473814Alison Bourkehttps://www.crowleysdfk.ie/wp-content/uploads/CDFK_50YR_Logo.pngAlison Bourke2023-04-06 09:54:192023-04-06 09:54:19AI Chatbots – What are the implications?
Crowleys DFK is pleased to announce the appointment of Donna Gould as a Partner in its Accounting& Financial Advisory Department along with the promotion of a further 13 employees to new positions across the firm. This exciting news comes as a recognition of the employees’ hard work, dedication, and outstanding performance.
The following individuals have been promoted to their new roles:
Managing Partner, James O’Connor, shared,
“We are extremely proud to announce these promotions and recognise the talent, hard work, and dedication of our employees. All have made significant contributions to the continued success of Crowleys DFK and have demonstrated exceptional leadership qualities and a commitment to excellence. They will provide a great boost to our management and leadership teams and Donna is a fantastic addition to our Partner group.”
Today’s announcement is a testament to the firms’ dedication to employee growth and development and helping its employees reach their full potential.
James concluded,
“We are confident that these promotions will drive the continued growth and success of our company and we would like to congratulate everyone on these important career milestones.”
If you are interested in developing your career with Crowleys DFK, please visit our Careers page.
https://www.crowleysdfk.ie/wp-content/uploads/Promotions-Image-Website-Featured-Image-1.png720720Alison Bourkehttps://www.crowleysdfk.ie/wp-content/uploads/CDFK_50YR_Logo.pngAlison Bourke2023-03-21 10:09:012024-04-02 10:01:34Crowleys DFK Promotions 2023 – Our Largest and Most Diverse Yet
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