25 January 2019


Government publishes draft Brexit ‘No Deal’ legislation

The Government has published the General Scheme of the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill 2019. This contains proposed primary legislative measures required in the event of a “no deal” Brexit. The draft Bill includes measures on tax, financial services, social welfare, protection of employees and healthcare. There are 36 proposed tax measures which cover corporation tax, income tax, capital gains tax, capital acquisitions tax and stamp duty. The draft provisions extend existing legislative definitions to include the UK in the event that they are no longer a member of the EU/EEA. The intention of the provisions is to maintain the status quo in the immediate future for Irish taxpayers.

The amendments include:

  • Group loss relief (sections 410 and 411 TCA 1997)
  • Loans to participators (Section 438 TCA 1997)
  • Tax credit for R&D expenditure (section 766 TCA 1997)
  • Agricultural relief (section 89 CATCA 2003)
  • Employment Investment Incentive (EII) and Start-up Relief for Entrepreneurs (SURE) (section 489 TCA 1997)
  • Anti-avoidance provisions dealing with non-resident persons and trusts (section 806, 579,579A and 590 TCA 1997)

Read the press release

Read the Bill

Revenue Commissioners address Finance Committee on Brexit preparations

Yesterday, Revenue Chairman, Niall Cody and Revenue Commissioner, Gerry Harrahill addressed the Joint Oireachtas Committee on Finance, Public Expenditure, Reform, and Taoiseach on Revenue’s preparations for Brexit. The Commissioners answered questions on a range of issues including:

  • Customs IT developments
  • Staff recruitment and training
  • Revenue’s engagement with the business community on Customs matters
  • Practical issues for SMEs, including the importance of preparing now for any new Customs requirements

Revenue has been holding Brexit seminars in a number of locations across the country. Seminars are scheduled for Wexford, Limerick and Sligo over the next two weeks. These seminars are being held in conjunction with the Department of Agriculture, Food and the Marine and the HSE – Environmental Health Service and can be booked via the Revenue website.

The Chairman also addressed the Committee on Revenue’s review of the flat-rate expenses system. A comprehensive review of flat rate expenses began in 2018 and is still underway. According to the Chairman, the review is intended to ensure expenses previously agreed are still justified and are in accordance with the legislative requirements for deductions. Engagement with the various representative groups is continuing.

The Chairman said “At the end of the process, there will be adjustments to decrease or increase rates to reflect actual expenses incurred by employees; or to withdraw rates in some categories, if they are no longer in keeping with legislative requirements”.

It was initially intended to implement any changes on a phased basis, as the categories were reviewed. The Chairman noted that all the changes will be implemented together, on 1 January 2020.

Read the Chairman’s opening statement

Minister for Finance discusses Irish corporation tax policy at Davos

The Taoiseach, Leo Varadkar T.D. and the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe, T.D. both attended the World Economic Forum in Davos in Switzerland this week. Minister Donohoe participated in a panel session on Rethinking Taxes: Creating a Fair and Balanced System. He reiterated Ireland’s support for the corporate tax reform work of the OECD, through collaboration with the EU. He confirmed that Ireland does not support the introduction of minimum tax rates across the world, as a country’s ability to set its rate is an important part of national sovereignty . He said “Ireland will continue to address matters in relation to corporation tax policy to ensure that our code is consistent with global best practice.”

Corporation tax reform and the changing global tax landscape will be central themes at the Institute’s Global Tax Policy Conference in Dublin Castle on 22-24 May 2019. You can secure your place at this key event here.

Institute responds to Consultation on Hybrids and Interest Limitation

The Institute has made a detailed submission to the Department of Finance in response to the public consultation on the implementation of hybrids and interest limitation measures contained in the EU Anti-Tax Avoidance Directives (ATAD and ATAD2). The submission makes detailed recommendations including the following:

  • If the Government moves to introduce ATAD interest limitation rules before 2024, this should be confirmed without delay, together with a clear announcement given on grandfathering of existing loan arrangements. This is critical so that businesses can have the necessary certainty regarding the tax consequences of arrangements that they have entered. Any early adoption of the interest restriction measures under ATAD should take place no earlier than 2021, because there will undoubtedly be a great deal for taxpayers to absorb and businesses will need time to put the necessary systems in place.
  • Our existing domestic legislation should be fundamentally reformed, in parallel with the implementation of the new ATAD compliant interest limitation rules in the tax code. In our view, the reformed corporate tax code should reflect a broad base for interest deduction against both trading and non-trading income, using the protection of the new 30% EBITDA ratio rule under ATAD against base erosion risks and removing the existing interest restrictions within sections 247/249 Taxes Consolidation Act 1997.
  • Ireland should not go beyond the framework for hybrid mismatch rules in ATAD and ATAD2. Any changes to Irish tax legislation should be limited to payments that are actual hybrid payments and not for mismatches arising because of another country’s tax system or from transfer pricing adjustments.
  • For the purposes of anti-hybrid rules, Irish legislation should treat as “included” income payments that are taxed in another jurisdiction, even if these payments are not taxed upon the same entity, as the entity that is considered the taxable entity from an Irish perspective. For example, in an US/Ireland scenario, Ireland should not deny a tax deduction if a payment is not taxed in the immediate recipient company, based in the US, as it might ultimately be taxed in another US company, if the immediate recipient is treated as disregarded under the US check-the-box rules or under the global intangible low-taxed income (GILTI) provisions.
  • Using a version of the control test in section 432 TCA 1997 would introduce concepts, such as participators and associated persons that would be inappropriate in the context of the anti-hybrid rules. It would include non-bank lenders, which would radically extend the scope of the Directive. Associated enterprises could be defined by reference to section 7, Companies Act 2014, which refers to control of the composition of the board of the directors and dominant influence and would be in line with the policy objective of ATAD2.

It is an imperative that all stakeholders are provided with an opportunity for extensive consultation on draft legislation well in advance of the anti-hybrid and interest limitation measures commencing, to ensure the new rules within the tax code do not give rise to any unintended consequences.

Read the Institute’s submission

Revenue Manual on iXBRL surcharge - waiver due to a technical issue

In some instances, difficulties have been experienced in filing iXBRL financial statements on ROS due to a technical issue. Revenue has published the procedure to follow if the file displays as “processing” for an extended period and it cannot be submitted by the due date. The ROS Helpdesk should be contacted, with a request to release the file, so that it can be re-submitted. If the due date for filing the iXBRL financial statements should pass while awaiting the release of the file, the Revenue Branch dealing with the case should be contacted with a request that any surcharge arising as a result of this issue is waived.

Information on the material required to support a waiver request (for example, “screen grabs” and a copy of the iXBRL file) is outlined in paragraph 3 of Revenue’s Manual Return Filing Dates – Forms 11 and CT1: Surcharge for Late Filing; Surcharge where there is a delay in uploading iXBRL financial statements through ROS.

Read the eBrief

PAYE Modernisation - “Hot Topics” updated with advice on dealing with duplicate RPNs

Revenue has updated its PAYE Modernisation “Hot Topics” webpage to explain why employers may receive duplicate RPNs, in some instances, and how to resolve the matter.

View the “Hot Topics”

DEASP updating forms to reflect abolition of P45

The Department of Employment Affairs and Social Protection (DEASP) is currently updating its social welfare application forms to reflect that a P45 is not required for employments which cease after 31 December 2018. A notice on the DEASP website advises claimants of this development.

Read the DEASP notice

Update to Revenue’s Manual on failure to cooperate fully with a Revenue compliance intervention

Revenue’s Manual Failure to Cooperate Fully with a Revenue Compliance Intervention has been updated. The paragraph on Revenue powers (paragraph 4) now notes that a penalty imposed by section 900, section 903 and section 904 TCA 1997 is a “stand alone” penalty from the tax-geared penalties. These sections concern Revenue powers to request for the production of books and information and powers to enter a premises to inspect PAYE and RCT records.

Read Revenue’s eBrief.

Reminder of 31 January CGT payment deadline

Capital Gains Tax (CGT) on disposals in December 2018 is due for payment by 31 January 2019. A CGTB payslip is available on the Revenue website.

Read Revenue’s eBrief

ComReg proposals on 1890 numbers

Revenue recently launched a new technology platform which replaced 1890 phone numbers with “01” numbers, to reduce the cost of calling Revenue. Members who call organisations that currently use 1890, 1850, 0818 or 076 Non-Geographic Numbers may be interested in ComReg’s plans to address consumer concerns about call costs. ComReg is introducing two measures:

  • A Geo-Linking Condition: From 1 December 2019, a call to 1850, 1890, 0818 or 076 Non Geographic Numbers (NGN) will cost no more than the cost of calling a landline number. This means that if landline calls are included in your “bundle of call minutes” then NGN calls will also be “in bundle”. No separate charge will apply for any NGN call (unless you have used up your bundle of call minutes).

  • NGN Consolidation: From 1 January 2022, the five NGN ranges will be reduced to two. The 1850, 1890, and 076 ranges will be withdrawn and the 1800 (Freephone) and 0818 ranges will remain. This 3 year period is to allow organisations that use NGNs time to prepare.

Further details are available on the ComReg website


UK consultation on the taxation of trusts
HMRC is carrying out a review of the taxation of trusts. They are inviting views on the principles that the UK government believes should underpin the taxation of trusts, i.e., transparency, fairness and simplicity. The consultation document provides examples of areas where the UK government believes these may not be fully met and seeks views and evidence on the case for and against reform to these and other areas. The closing date for submissions is 31 January 2019.

Read about the review

International News

Digital Taxation Forum Prague 2019

Next month, the Digital Taxation Forum in the Czech Republic is holding a conference on the taxation of the digital economy and associated impacts on both entrepreneurs and tax administrations. The conference is in Prague on 22 February. Details on this event are available below.

Read more

Faroe Islands and Greenland join the Inclusive Framework on BEPS

The OECD announced that the Faroe Islands and Greenland have joined the Inclusive Framework on BEPS, bringing the total number of jurisdictions that have joined to 127.

View the list of members