New Procurement Threshold to Significantly Increase Public Sector Accessibility to Goods and Services

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Changes to Procurement Rules, Changes to Procurement Thresholds

In March 2023, the Department of Public Expenditure and Reform issued updates to existing procurement guidelines This update, contained in Circular 05/2023, have made some significant changes to the thresholds for procurement and are intended to facilitate easier procurement for SMEs. To this end, there has been a loosening of procurement rules covering procurements of a value between €25,000 and €50,000. Below, we go through the most important changes to procurement regulations.

It should be noted that, at the time of publishing, the procurement guidelines PDF available on the Office of Government Procurement website has not been updated to take account of Circular 05/2023. However, Circular 05/2023 states that the new guidelines have come into effect immediately.

Changes to Procurement thresholds:

The updates have made changes to rules for procurement for goods and services and procurement for works. Under the previous guidelines relating to procurement for goods and services, there were three separate thresholds for procurement, each with a different set of requirements for a contracting authority. These thresholds were:

  1. less than €5,000;
  2. €5,000 – €25,000;
  3. €25,000 – EU threshold.

After the Circular 05/2023 revisions, these thresholds for procurement for goods and services are now as follows:

  1. less than €5,000;
  2. €5,000 – €50,000;
  3. €25,000 – EU threshold.

Guidelines for the €5,000 – €50,000 Procurement Threshold

The significant change here is clearly to the €5,000 – €50,000 threshold. What this means is that now procurement for goods and services for any amount within this range can be conducted according to the following guidelines:

  1. Seek at least three written tenders from interested and competent suppliers/service providers
  2. Evaluate offers against relevant requirements using a scoring sheet;
  3. Select the most suitable offer and advise all tenderers regarding the decision.

Previously, procurements above €25,000 were required to be conducted through a more extensive and formalized process. This included using an Open Procedure and advertising the contract on the eTenders website. These requirements now apply to procurements above €50,000. In other words, one way of understanding these changes is to see that the methods previously required for conducting procurement of a value between €5,000 and €25,000, now apply to conducting procurement of a value between €5,000 and €50,000.

However, it should be noted that there are several exceptions to this rule. Crucially, while procurement contracts between €25,000 and €50,000 do not have to be advertised on eTenders, contract award information does have to be published for these contracts. Upon award of the contract, you are still required to publish the contract information on eTenders, even if you are no longer required to advertise the contract on eTenders. Additionally, while there is no requirement to advertise on eTenders, the Circular still encourages contracting authorities to do so if they wish.

A further exception to the updates worth noting is that it remains the case that where Government Departments and Offices have agreed contracts above €25,000 without a competitive process, this should be reported to the Comptroller and Auditor General.

Works Thresholds and Other Issues in Circular 05/2023:

Similar to the goods and services changes, the thresholds related to works contracts have also been adjusted. Now, for works contracts of a value less than €200,000, it is sufficient to seek at least five written tenders from interested and competent contractors. As with procurement for goods and services, this represents a raising of the threshold.

However, the Circular is explicit in adding that “the threshold at which contracting authorities are required to advertise all contracts for works-related services remains at €50,000”. A typical example of this sort of service might be consultancy; for this sort of procurement, the threshold remains unchanged.

Finally, Circular 05/2023 does contain an extensive range of advice regarding how to go about conducting procurement. While this advice is not binding, it may be useful to for conducting procurement and includes recommendations such as:

  1. Undertake preliminary market consultations prior to tendering
  2. Subdivide contract into lots
  3. Sue Prior Information Notices to facilitate SMEs forming a consortium prior to tendering
  4. Use the “open procedure” for tendering where possible
  5. Ensure selection criteria set for tenderers are relevant and proportionate to the contract
  6. Ensure any turnover/financial capacity requirement is proportionate to the risk involved
  7. Indicate in tender documents where reasonable variants to the specifications are acceptable.
  8. Use a Dynamic Purchasing Systems (DPS) for the procurement of commonly used goods, works or services which are generally available on the market.

Contributors
                                                    

Vincent Teo | Partner & Head of Public Sector & Government Services

Vincent Teo
Partner & Head of Public Sector & Government Services

 Dr. Conor Dowling | Research & Policy Executive | Risk Consulting

Dr. Conor Dowling
Research & Policy Executive
Risk Consulting
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Benefits in Kind: Small Benefit Exemption

Benefits in Kind: Small Benefit Exemption

Employers will be familiar with the Small Benefit Exemption (SBE) which is a Revenue concession in respect of non-cash benefits/vouchers provided to employees. Finance Bill 2022 announced the extension of the SBE to allow for up to two vouchers/benefits to be granted by an employer in a year, with an increase in the annual exemption from €500 to €1,000 in aggregate.  These changes were applicable from the 2022 year of assessment.

Benefit for Employees:

Employees are not liable for PAYE, USC and PRSI on value of award.

Benefit for Employers:

Employers are not liable for employer PRSI (11.05%) on value of award.

Conditions for SBE to apply:

  • The award must be a “qualifying incentive” which is a non-cash incentive and:
    • in the case a single benefit is provided, the value does not exceed €1,000.
    • where two benefits are provided, the cumulative value of the first and second benefit does not exceed €1,000.
  • Where any award exceeds €1,000 in value the full value of that award is subject to PAYE, USC and PRSI.
  • If more than two benefits are given in a year, only the first two may qualify for tax free status.
  • Tax-free vouchers/benefits can be used only to purchase goods or services. They cannot be redeemed for cash.
  • The voucher or benefit must not form part of a salary sacrifice arrangement.

To maximise the tax efficiency of the SBE and avoid subsequent awards being liable to tax, some companies use a ‘recognition and rewards’ system which allows employees to accumulate points over the course of a year.  This minimises the tax liability where employees are recognised multiple times in a year.

Please see below some examples to further explain the SBE:

Example 1

Company A awards a voucher of €500 in February and a €500 voucher in December to an employee.

Tax Treatment

The employee can avail of the SBE and as the two vouchers do not exceed the annual exemption of €1,000, both vouchers can be provided to the employee tax free.

Example 2

Company B awards an employee a voucher worth €500 in January, a hamper in July worth €50 and a €500 voucher at Christmas.

Tax Treatment

The first two awards, which total €550 will be covered by the SBE, but the third award will be fully liable to PAYE, USC and PRSI. The value of the third voucher (€500) should be processed through payroll in the month the award is made i.e. the December payroll.

Had Company B awarded the second €500 voucher before the €50 hamper, the employee would have maximised the full benefit of SBE and only €50 would be subject to tax.

Example 3

Company C awards an employee a voucher worth €500 in April and another voucher in December worth €600.

Tax Treatment

Where two vouchers exceed €1,000 in value, the full value of the second voucher is subject to tax. The value of the second voucher (€600) should be processed through the December payroll and the relevant withholding taxes applied.

If you have any queries about the small benefit exemption, please contact Ciara Colbert, Senior Manager in our Tax Services’ Department.

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Are you ready for mandatory Charities SORP compliance?

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As you may be aware, the Charities (Amendment) Bill 2022 is with the Oireachtas to be passed into legislation. Upon the passing of this bill, this will bring significant changes to the Charities’ Act 2009.

The bill will make Charities SORP (FRS 102) mandatory for organisations who meet certain thresholds.

The proposed thresholds are as follows:

Charities SORP

The updated legislation will apply to all registered charities in Ireland. Please note the following:

  • There is an understanding that the exemption in place regarding educational bodies will remain, however university foundations will no longer be exempt.
  • It is also expected that a charity will be able to prepare in accordance with another industry wide recommended practice e.g. Housing SORP.

The Bill is expected to pass by the end of 2023 with the expected applicable dates to be accounting periods starting 01 January 2025. This will mean mandatory Charities SORP will be applicable for year ends 31 December 2025.

What steps should I take now?

  • As SORP will require two years of comparative figures with the breakdown of figures between restricted / unrestricted, you should ensure that from the 2024 accounting period, the information recorded in the accounts package is posted in line with SORP or presented in the SORP format in charities management accounts. This information will be essential for the annual audit.
  • A working should be prepared to ensure reserves are split between restricted and unrestricted as appropriate.
  • Ensure your current accounts package is adequate for the needs of Charities SORP postings.
  • Attend any webinars available over the coming months hosted to help you become familiar with the legislation and requirements.

While your organisation may be already preparing the financial statements in accordance with Charities SORP, you may need to review available resources to ensure FULL compliance is being met once Charities SORP is introduced.

Please contact Elaine Murphy, Assistant Manager in our Audit & Assurance department if you have any queries regarding the migration to SORP.

Disclaimer: The information contained above is accurate at the time of publication and as the Bill has not been fully published, the information is subject to final changes.

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Public Sector Climate Action Mandate 2023 – What you need to know

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Public Sector Climate Action Mandate

In May of this year, the Government approved the updated 2023 Public Sector Climate Action Mandate (PSCAM). The Mandate, first introduced as part of the Climate Action Plan (CAP) 2021, sets out the goals Public Sector Bodies must achieve as part of the government’s overall strategy for reducing emissions. The newly updated Mandate is an expansion of the 2022 Mandate. New actions have been added and existing actions have been expanded. This article will talk through the updated Mandate, explain its purpose and describe the new requirements it presents.

What is the Mandate?

The CAP’s overall aim is to achieve a 51% reduction in greenhouse gas emissions in Ireland by 2030. While the CAP acknowledges that the public sector is not the major driver of emissions, the Mandate has been introduced to facilitate the public sector in taking a leading role in reducing emissions. The Mandate must be followed for those bodies it applies to, but it should be noted that it does not apply to every public sector body. Local Authorities, Commercial Semi-State Agencies and Schools are all exempt from the Mandate. Size is also a consideration when adhering to the Mandate. The Mandate places greater responsibilities on government departments and also on organisations that consume over 50 GWh of energy per annum than it does on smaller bodies, which can fulfil the Mandate’s minimum requirements.

Status of the 2022 Mandate

For those public bodies the Mandate does apply to, many of the requirements found in the updated Mandate are unchanged from previous years. For instance, the requirement to establish and support Green Teams has not been altered. Furthermore, nothing has been removed from the Mandate. This means that any work completed to fulfil the previous Mandate remains valid. Any organisation still working on fulfilling the previous Mandate can continue to use the guides made available by the Sustainable Energy Authority of Ireland. We anticipate that updated guidelines will be made available for the new Mandate, however, no timeline for this is available so far.

Changes from the 2022 Mandate

For those who are subject to the Mandate, the following are the major changes to be aware of:

  • A new requirement has been added stating that senior management complete a climate action leadership training course in 2023.
  • The requirement that sustainability and emissions be addressed in the annual report has been amended. The annual report must now also address: a) efforts to implement the Mandate; b) compliance with Circular 1/2020 related to air travel emissions.
  • The requirement to review use of paper has been amended to include the need to eliminate paper-based processes and, where this is not possible, to use recycled paper as the default.
  • The requirement to achieve formal environmental certification has been amended with distinct requirements for organisations spending more or less than €2m per annum on energy.
  • A requirement to implement Green Public Procurement (GPP) has been added. This should be performed in line with the EPA Green Public Procurement Guidance.
  • The requirement to create bicycle friendly buildings has been amended to indicate that the priority should be to facilitate moving away from individual car use.
  • A new requirement to phase out the use of parking in buildings, without compromising on supports for those with physical mobility issues, has been added.
  • New recommendations for retrofitting large building have been added.
  • The requirement to procure zero-emission vehicles only has been amended to include a requirement that any procurement contracts a public sector body enters into should use zero emissions vehicles whenever possible.

Contributors
                                                    

Vincent Teo | Partner & Head of Public Sector & Government Services

Vincent Teo
Partner & Head of Public Sector & Government Services

 Dr. Conor Dowling | Research & Policy Executive | Risk Consulting

Dr. Conor Dowling
Research & Policy Manager
Risk Consulting
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Non-Resident Landlord Withholding Tax (NLWT) System

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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:

  1. 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.
  2. 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.

  1. 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.
  2. 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.
  3. 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.

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Tax Treatment of Unapproved Share Option Schemes

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tax treatment of unapproved share option schemes

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:

  1. The grant of the share option (where the option price is less than the market value of the shares) and
  2. 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.

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New Solicitors Accounts Regulations 2023

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The Law Society has introduced new Solicitors Accounts Regulations 2023, which come into operation on 1 July 2023.

These regulations will impact solicitors, reporting accountants and Law Society investigations.

The existing Solicitors Accounts Regulations 2014 remain applicable for any accounting period that commenced before 1 July 2023.

Please visit the Law Society for information on the key updates.

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Crowleys DFK Recognised in Top 100 Companies Leading in Wellbeing Index 2023

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Top 100 Companies Leading in Wellbeing

We are delighted to be recognised in the Top 100 Companies Leading in Wellbeing Index, for the third year in a row.

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.

This follows our recent reaccreditation of the prestigious Ibec KeepWell MarkTM; an evidence-based accreditation and award that recognises Irish employers for investing in workplace 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.

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Debt Warehousing Scheme Deadline on 30 April 2023

Debt Warehousing Scheme

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.

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Director Obligations to Disclose PPS Number

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Director Obligations to Disclose PPS Number

Have you disclosed your PPS number to the CRO?

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.

Please email our Corporate Compliance Team if you require any assistance.

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