Ireland: Tax measures in Finance Bill 2022

Finance Bill 2022 (published 20 October 2022) contains many tax provisions that were already announced in the budget speech for 2023. Moreover, there are certain measures in the bill that were not previously announced as part of the budget. 

• Employer reporting on certain benefits: The bill provides (subject to a Ministerial Commencement Order) for the mandatory reporting to Revenue by employers of the following “reportable benefits” provided to employees without the deduction of tax: (1) the payment of the remote working daily allowance of €3.20, (2) the payment of vouched travel and subsistence expenses, and (3) the provision of small benefits that are exempt from tax.
• Pension amendments: The bill includes several pension related amendments, such as: (1) providing that employer contributions made on behalf of an employee to a personal retirement savings account (PRSA) would no longer considered a taxable benefit in kind for the employee, (2) aligning the tax treatment of the new Pan European Pension Product (PEPP) with the tax treatment that currently applies to PRSAs, and (3) aligning the tax treatment of lump sums drawn down by an Irish tax resident from a foreign pension with the treatment that currently applies to Irish pensions.
• Cargo bikes: The bill provides for a tax-free benefit threshold of €3,000 under the “cycle to work” scheme for cargo bikes.
• Offshore funds: The bill provides that an interest in a unit trust scheme would not be regarded as an interest in an offshore fund provided that: (1) the general administration of the scheme is ordinarily carried out in Ireland, (2) the trustee is resident in an EU/EEA Member State and (3) the trustee supplies their trustee services through an Irish branch.

• Business energy support scheme: The bill provides for the new temporary business energy support scheme to help business with energy costs that were announced in the budget. The scheme would, subject to certain conditions, be open to businesses engaged in a trade or profession chargeable to tax under Case I or II of Schedule D, which would include self-employed individuals, companies, partnerships and certain tax-exempt charities and sporting bodies. The support would be subject to a monthly cap of €10,000 per trade / location of the business, and a maximum of €30,000 per month per qualifying business. In addition, an overall cap of €500,000 would apply to each qualifying business with lower limits applying to businesses engaged in farming and fishing related activities (€62,000 and €75,000 respectively).
• FX movements subject to corporation tax: The bill includes an amendment that would confirm that gains or losses resulting from foreign exchange movements on items such as trade debtors and creditors and trading bank accounts would be treated as part of profits or losses of a company’s trade subject to corporation tax and not subject to capital gains tax.
• Knowledge development box: The bill confirms the measure announced in the budget regarding the extension of the knowledge development box (KDB) relief for a further four years, to include accounting periods beginning before 1 January 2027. However, the bill also provides (subject to a Ministerial Commencement Order) for a new effective rate of 10% for profits within scope of the KDB (currently 6.25%).
• Patent rights: The bill would amend the treatment of capital sums received for the sale of patent rights to provide relief for intra-group transfers of such rights in a similar manner to the relief which is generally available to intra-group transfers of chargeable assets.
• Reporting by certain funds: The bill provides that additional information would need to be reported to Revenue in the annual statement of exempt unit trusts, common contractual funds (CCFs) and investment limited partnerships (ILPs) about their assets and business activities. This would include information on matters such as asset values, connected party transactions and material transactions.  

• Value added tax (VAT)
  • The bill includes a measure that would require businesses with a “domestic-only” VAT registration to notify Revenue within 30 days of becoming involved in Intra-Community supplies or purchases of goods enabling the VAT registration status to be updated.
  • The bill includes a measure that would enable Revenue to request information from financial institutions when that information has been sought by another EU Member State under certain international agreements and for the application of a penalty for non-compliance.
  • The bill clarifies that a VAT exemption would apply to the provision of medical care supplied by registered medical professionals.
  • The bill includes a provision that would apply a VAT exemption to the management of certain funds based in other EU States which could affect the VAT recovery position of the fund manager. The bill also contains measures that would result in no longer exempting from VAT, services relating to the management of “Section 110” entities when those entities hold plant and machinery, and agency services provided in relation to the management of certain funds.
  • The bill confirms that the 0% rate of VAT would apply to the supply of newspapers (including e-newspapers) from 1 January 2023 but that the 0% rate would not apply to other periodicals such as magazines.
  • The bill includes a change to the rules around VAT deductibility on costs associated with certain finance raising activities (e.g., new share issues) so that VAT deductibility would arise under general provisions.
• Excise: The bill includes a provision that would clarify how betting duty would apply to certain “free” or promotional bets and would provide for a new tax geared penalty regime for deliberately or carelessly submitting incorrect returns or failing to file returns.

• Stamp duty on acquisition of multiple residential units
  • The bill includes technical amendments that would clarify that a partial interest acquired in a residential property would count towards the 10 residential property thresholds for the purposes of the 10% stamp duty charge.
    
  • The bill also introduces an exemption from the application of the 10% rate of stamp duty on acquisitions of residential properties by a home reversion firm authorised by the Central Bank of Ireland under a home reversion agreement.
• Refunds of stamp duty on certain residential property acquisitions
  • The bill provides that purchasers of residential property would be able to apply for a full refund of stamp duty charged on the acquisition of residential property when, subject to certain conditions being satisfied, the property was acquired and then sold for the purposes of affordable home arrangements under the Affordable Housing Act 2021.
  • The bill also provides that purchasers of residential property subject to the higher 10% rate of stamp duty would be able to seek a partial refund when the property is acquired for the purposes of providing accommodation in the community for people with intellectual/physical disabilities, or for children in care (subject to the properties being approved by the relevant regulatory authorities).
• Stamp duty on financial cards, cheques and insurance policies: Finance Act 2021 contained several measures to modernise the collection of stamp duties on financial cards, cheques and insurance policies which remain subject to commencement order. Finance Bill 2022 includes further amendments that would streamline the electronic collection and filing of these levies and set specific commencement dates for these provisions to come into effect.
• Electronic trading in securities: The bill provides for certain technical amendments to the application of stamp duty to electronic trading in securities. This includes clarifications on the scope of the stamp duty charge and the record-keeping obligations of parties to such transactions and those inputting transfer orders into security settlement systems.

• Reporting in relation to estate of a deceased person: The bill provides for several technical amendments about information to be supplied to Revenue and the probate office in respect of the estate of a deceased person. The bill also introduces a statutory obligation for banks to provide information about a deceased person’s bank accounts to the person applying for probate in relation to the deceased’s estate or to an agent acting on their behalf.

• Tax appeal procedures: The bill provides for an extension to the timelines for parties appealing a determination of the Tax Appeals Commission (TAC) to the High Court on a point of law. The bill provides that an appellant would have 42 days (instead of 21 days as is the case currently) to appeal a determination to the High Court and the parties to the case will have 42 days (instead of 21 days as is the case currently) to respond to a draft of the “case stated” prepared by the Appeal Commissioners. 
   

Read an October 2022 report prepared by the KPMG member firm in Ireland