Summary of Tax Position Post Enactment/Commencement of 2020 Bill
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Corporation Tax
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Tax measures where Status Quo is NOT maintained post 31 December 2020
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Double tax relief under Schedule 24 TCA 97
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Para 9I of Schedule 24 TCA
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Schedule 24 Paragraph 9I provides for an additional foreign tax credit (“AFTC”) to Irish companies in respect of dividends received from shares in EU tax resident companies. From 1 January 2021 AFTC will no longer be available in respect of dividends from UK-resident companies. Consideration may need to be given to the timing of dividends from such companies pre 31 December 2020 to maximise potential foreign tax credit relief.
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Double Tax Relief under Schedule 24 TCA 97
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Paras 9A, 9B, 9C and 9DA of Schedule 24 TCA
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The following Double Tax Relief measures will be restricted post 31 December 2020 where the claimant company is resident in the UK.
- Para 9A Unilateral Relief.
- Para 9B Dividends between related companies: Relief for Irish and Third Country Taxes.
- Para 9C Non-resident companies carrying on a trade in Ireland via a branch or agency.
- Para 9DA Unilateral Relief (branch profits).
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Section 110 Companies with specified property businesses
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S110(5A) TCA
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Section 110 companies which hold financial assets that are secured over Irish property may avail of a tax deduction for interest accrued on their profit participating debt finance, in certain limited circumstances only. One such circumstance is where the recipient is a company carrying on genuine economic activities which is formed, authorised or resident under the laws of a "Member State", being an EU or EEA jurisdiction. Irish securitisation vehicles for which this exception is relevant may not be able to continue to avail of a tax deduction in the same way as they currently can for interest on debt financing to UK-resident recipients post 31 December 2020.
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Exit Tax
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S627, S629 TCA
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To the extent that a company has transferred to the UK and already availed of the election to defer the payment of Exit Tax under S627(2), the tax so deferred may become due from 1 January 2021. Therefore, any such company will need to consider their position if paying Exit Tax by instalments.
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EU Directives
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S630/Part 21, S267G & S831 TCA
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Mergers Directive: The definition of a company in S630 TCA does not include UK companies. This impacts all sections in Ch 1 of Part 21 dealing with mergers and asset transfers concerning companies of different EU States. Sections 633 and 633D are likely the most used of these provisions. CGT relief will not be available in respect of transfers of Irish development land via S633 in the course of a reconstruction or amalgamation. Similarly, relief will not be available under S633D where a company is dissolved without going into liquidation and that event involves a UK incorporated company.
Interest and Royalties Directive: S267G transposes the Interest and Royalties Directive into Irish law. Companies currently relying on S267G for non-withholding may need to consider whether non-withholding is available under the Treaty or via an alternative domestic provision, as S267G will not be available when paying to UK incorporated companies post 31 December 2020. If relying on domestic provisions, it may be necessary to put declarations in place.
Parent-Subsidiary Directive: S831 transposes the Parent-Subsidiary Directive into Irish law. Companies currently relying on S831 for non-withholding on the payment of dividends may need to consider whether non-withholding is available under the Treaty or via an alternative domestic provision as S831 will not be available when paying to UK-incorporated companies post 31 December 2020. If relying on domestic provisions, it may be necessary to put declarations in place.
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Tax Measures where Status Quo is maintained in following areas post 31 December 2020
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Distributions
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S130(2B), S130(3) TCA
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Interest as a Distribution and Asset Transfers: The exclusion from distribution treatment for certain interest payments and certain asset transfers under S130(2B) and S130(3) to UK-resident companies can continue to apply post 31 Dec 2020.
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Charges on income
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S243 TCA
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Relief will remain available on non-yearly interest paid to UK banks, stock exchange members and discount houses post 31 Dec 2020.
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Group Payments & Group Relief
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S410, S411 TCA
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Definition of ‘relevant Member State’ for s410 and s411 purposes is extended to include the UK post 31 December 2020.
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Loans to Participators
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S486 TCA
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For S438(6) purposes companies resident in the UK will be treated the same as EU-resident companies post 31 Dec 2020.
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Start-up company exemption
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S486C TCA
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Status quo will remain post 31 December 2020 for companies incorporated in the UK.
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R&D Tax Credit Relief
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S766 TCA
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R&D tax credit relief will continue to be available in respect of R&D carried on in the UK post 31 December 2020.
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Income Tax
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Tax measures where Status Quo is NOT maintained post 31 December 2020
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Deposit Interest Retention Tax (DIRT)
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S267 TCA
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EU-sourced interest will remain taxed at DIRT rates. DIRT rates will no longer automatically apply in the case of UK-sourced interest of individuals.
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Tax measures where Status Quo is maintained via 2020 Bill in following areas post 31 December 2020
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UK Government Securities
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S42 TCA
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Exemption from income tax for UK government securities will continue to remain available.
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Shares held in trust
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S128D TCA
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Abatement of charge to income for shares held in trust will continue to apply to entities incorporated in the UK.
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KEEP
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S128F TCA
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UK-incorporated and/or UK-resident companies will continue to be considered qualifying companies.
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Hepatitis C compensation
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S191 TCA
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Exemption for payments from UK compensation schemes will remain.
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Foster Care Payments
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S192B TCA
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Exemption for UK payments corresponding to equivalent Irish payments will remain.
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Student Grants
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S192F TCA
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Exemption for UK student support payments will remain.
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Artist Exemption
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S195 TCA
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UK residents to remain eligible.
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Overseas charities
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S208A/S208B TCA
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UK charities will remain eligible to seek to qualify for exemptions. Donations to UK charities remain potentially eligible for relief.
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Mortgage interest relief & TRS
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S244/S244A TCA
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Qualifying properties situated in the UK will continue to be eligible for the relief.
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Certain Health Insurance
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S470 TCA
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Certain Health Insurance Relief policies granted by UK-established insurers will continue to qualify for relief.
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Seafarer Allowance & Fisher Tax Credit
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S472B/S472BA TCA
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Seafarer allowance and Fisher Tax Credit will continue to be available for seafarers on UK registered ships.
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Relief for 3rd Level Fees
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S473A TCA
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Relief will continue to be available on fees for UK-based institutions.
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Relief on retirement of certain sportspersons
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S480A TCA
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Relief will continue to be available in respect of UK residents.
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EIIS
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S489/S490 TCA
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Relief continues to be available in respect of investments in companies incorporated in the UK.
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Pensions and Annuities
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S770/S772/S772A/S784/S784A/S785 TCA
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UK occupational pension schemes and UK providers of certain annuity products will continue to be able to obtain the requisite status for contributions/payments made and will remain capable of qualifying for tax relief.
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Overseas Pension Plans
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S787M TCA
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UK employees or self-employed individuals will continue to be able to obtain tax relief for contributions to pension plans with UK and EU (other than Ireland) pension providers.
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Allowances & Reliefs
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S1032 TCA
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British citizens will continue to be entitled to certain personal allowances, deductions and reliefs.
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Capital Gains Tax
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Tax Measures where the Status Quo is maintained via 2020 Bill in following areas post 31 December 2020
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Venture Fund Managers
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S541C TCA
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Investments made in the UK can continue to be taken into account in calculating the relief available under this provision.
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4–7-year CGT Exemption
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S604A TCA
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The relief will continue to be available in respect of UK situate land.
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Reconstruction or Amalgamation: Transfer of assets
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S615 TCA
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Relief under s615 will continue to be available to companies resident in the UK post 31 December 2020.
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Group definition
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S616 TCA
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Companies which are resident in the UK will generally continue to be regarded as being within a group of companies following the end of the transition period. Therefore, the provisions of S618 and S620 of TCA 1997 will continue to apply in the case of such companies. In addition, the amendment will ensure that an immediate tax charge under S625 of the Act will not arise solely as a result of the UK ceasing to be an EU Member State.
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Value Added Tax (VAT)
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Note: As the UK will no longer be a Member State, VAT on imports of goods to Ireland will generally apply. However certain changes are made in relation to Northern Ireland and other aspects of the VATCA (see below).
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Goods and Northern Ireland
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S2 amended, New S4A and New Sch 9 VATCA
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S2 is amended and a new S4A and Schedule 9 is introduced. The changes are aimed at ensuring that VATCA 2010 is consistent with the Northern Ireland Protocol by including Northern Ireland in the definition of Member States and the European Union where those references relate to transactions in goods but not with regard to transactions in services. This means the definition of "Member State" and "Community" in a VAT context will differ depending on the nature of the transaction under consideration.
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Postponed accounting for VAT
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S53 amended, New S53A VATCA
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Postponed accounting for VAT for all importers registered for VAT in Ireland is being introduced. As a result, the status quo for VAT registered businesses trading with the UK can potentially effectively be maintained. Therefore, import VAT need not necessarily become payable at the point of import of goods into Ireland from the UK (and other non-EU countries). The practicalities concerning the actual import declarations and the consequential reporting obligations on VAT returns are being considered at the moment.
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Section 56 VAT Authorisations
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S56 VATCA
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Amendment to S56 makes participation in the scheme subject to a number of new conditions.
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Retail Export Scheme
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S58 VATCA
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VAT Retail Export Scheme is to be restricted in two ways. The value of qualifying goods must exceed €75 for third-country residents in order to qualify for the Scheme. UK citizens must show proof that VAT and customs and excise duties have been paid on importation of the goods into the UK.
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Stamp Duty
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Tax measures where the Status Quo is maintained via 2020 Bill in following areas post 31 December 2020
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Relief for Brokers
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S75 SDCA
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Relief will continue to be available for purchases made by UK-based intermediaries on behalf of their clients post 31 December 2020.
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Counterparty Relief
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S75A SDCA
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Purchases in a chain of transactions by UK-based counterparties will continue to be capable of being eligible for this relief post 31 December 2020.
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Reconstruction Relief
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S80 SDCA
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Reconstruction relief will continue to be capable of applying post 31 December 2020 where the reconstruction or amalgamation includes UK-incorporated companies merging with or acquiring Irish-incorporated companies.
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Demutualisation of assurance companies
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S80A SDCA
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Instruments issued by acquiring companies incorporated in the UK will continue to be capable of being covered by this exemption post 31 December 2020.
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Certain life assurance premiums
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S124B SDCA
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UK and Gibraltar-based assurers will be liable to the current 1% levy on life assurance premiums on their Irish business post 31 December 2020.
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Certain non-life insurance premiums
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S125 SDCA
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UK and Gibraltar-based insurers will be liable to the current 3% levy on certain non-life insurance premiums on their Irish business post 31 December 2020.
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Capital Acquisitions Tax
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Tax measures where the Status Quo is maintained via 2020 Bill in following areas post 31 December 2020
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Agricultural Property Relief
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S89 CATCA
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Agricultural property situated in the UK will continue to be taken into account in calculating the value of agricultural property owned by a farmer for the purposes of establishing entitlement to this relief.
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Anti-Avoidance
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Tax measures where the Status Quo is maintained via 2020 Bill in following areas post 31 December 2020
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Transfer of assets abroad/Non-resident trusts/Gains of non-resident companies
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S806/S579/S579A/S590 TCA
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The “genuine economic activities” carve-out can continue to apply to these provisions.
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Miscellaneous
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Tax measures where Status Quo is maintained via 2020 Bill in following areas post 31 December 2020
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Cross-Border Pension Schemes
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S790B TCA
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Irish pension schemes can continue to obtain tax exemption in respect of scheme income from contributions by a UK undertaking.
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Tax measures where Status Quo is NOT maintained post 31 December 2020
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Shipping Tonnage Tax
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S697H, S697A TCA
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Post 31 December 2020 UK-resident companies will no longer be considered a company resident in a Member State for the purposes of these provisions.
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Life Assurance
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S730D TCA
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Currently, Irish life assurance companies selling directly into the UK market and with UKresident policyholders are permitted to avail of the tax documentation exemption under S730D(2A) for Irish exit tax purposes. Post 31 December 2020, Irish exit tax may be required to be operated. As a result, it may be necessary for exit tax refund claims to be made under the UK-Ireland Double Tax Agreement.
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IREFs
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Part 27 TCA
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“Specified person” definition in S739K is not extended to include UK pension funds.
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Payments to non-resident artistes
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S529B TCA
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Currently, S529B facilitates payments to UK resident artistes (as EU residents) free of withholding tax. Post 31 December 2020 S529B will not apply to UK resident artistes.
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Relief for investment in films
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S481 TCA
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The definition of “producer company” will not include UK- resident companies post 31 December 2020.
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