Revenue has updated the Tax and Duty Manuals dealing with Irish Real Estate Funds (IREF) guidance notes and IREF declarations to include Pan-European Pension Product (PEPP) provisions introduced by Section 21 of Finance Act 2022. Amendments contained within Section 14 of Finance Act 2021 to effectively abolish Approved Minimum Retirement Funds (AMRFs), whereby they became Approved Retirement Funds (ARFs) as of 1 January 2022, are also referenced. In addition, IREF Declarations guidance has been further updated to request supporting documentation evidencing the equivalent nature of an entity where appropriate, to request additional baseline information where appropriate, and to remove detailed guidance regarding the transitional arrangements that were in place to assist with the introduction of the IREF declaration process, but which are now expired.

Readers are reminded that the Temporary Business Energy Support Scheme (TBESS), designed to help businesses with energy costs, ends today, 31 July 2023.  Under the scheme, announced in Budget 2023, €1.25 billion was set aside to help tax compliant trade and professional businesses cope with significant increases in their electricity and/or natural gas prices from September 2022 to 31 July 2023. Chartered Accountants Ireland advocated for several changes to the scheme throughout 2023, many of which were implemented.  Businesses have until 30 September 2023 to submit claims under the scheme. Furthermore, the Department of Finance has published an assessment of the TBESS.

Last week, the Minister for Finance, Michael McGrath T.D., launched a second Feedback Statement on the transposition of the EU Minimum Tax Directive (the Pillar Two Directive). With work progressing on the domestic transposition of the Pillar Two Directive, legislation is to be included in Finance Bill 2023. The feedback statement is open for consultation until 21 August 2023. The Institute, under the auspices of the CCAB-I, will respond to the consultation. Members can email any comments to tax@charteredaccountants.ie. As the OECD negotiations continue, the design process is constantly evolving. Earlier this month, the OECD released further Administrative Guidance on the GloBE rules covering a number of topics, including on items such as a Qualified Domestic Minimum Top-up Tax (QDMTT) Safe Harbour, a transitional undertaxed payments rule (UTPR) Safe Harbour for the jurisdiction where a multinational group is headquartered, general currency conversion rules, guidance on tax credits, substance based income exclusion and further guidance on a QDMTT. It is intended that the agreed guidance will help to provide tax certainty for businesses and mitigate administrative burden for both businesses and tax authorities. The OECD also issued a revised version of the GloBE Information Return (GIR). The GIR is a standardised return to be filed by entities within scope of the Pillar Two rules. Guidance is provided on the format and required content of the GIR, together with the circumstances when categories of information in the return will be disseminated between jurisdictions. As previously reported in March, the first feedback statement set out proposed approaches to key elements of the implementing legislation and the administration of the new rules. The second Feedback Statement contains draft approaches to further elements of the implementation legislation, including the proposed approach to a QDMTT, together with consultation questions on a range of technical and policy issues and an update on the Administrative Guidance package, in particular, the safe harbour provisions. Minister McGrath commented, ‘I am pleased to publish the second Feedback Statement on the Irish implementation of the EU Minimum Tax Directive. This is a further important step in our domestic process of transposition and marks Ireland’s continuing commitment to delivering on agreed international tax reforms. I welcome the constructive input of the business and advisory communities with the development of these complex new rules and would encourage their early engagement with this new Feedback Statement.’ Read the full press release here.

Revenue has confirmed that it is in the process of developing guidance and will publish an updated Tax and Duty Manual (TDM) in the coming weeks, in relation to the tax treatment of GMS (General Medical Services) income of GPs. This follows repeated calls from practitioners for clarity, in advance of the upcoming tax return filing season, in relation to the tax treatment of GMS income of GPs in circumstances where GMS payments have been mandated to a medical practice by a GP that is an employee of, or partner in, the practice. In advance of that publication, and cognisant of the need for certainty as soon as possible, Revenue has provided us with the following note of the position that will be set out in the TDM: “At the most recent meetings of Main TALC and TALC Direct practitioners emphasised the need for clarity in relation the GP/GMS income matter in advance of the upcoming tax filing season. Revenue is in the process of developing guidance on this matter and will publish an updated TDM in the coming weeks. In advance of that, and taking on board the calls for certainty as soon as possible, this note provides a brief outline of the position that will be set out in the TDM. Further detail will be provided in the TDM. As has been acknowledged at both TALC fora, the PSWT credits issue is part of a wider issue arising from contractual arrangements involving GPs. As a matter of law, payments made to a GP under a GMS contract belong to the GP who has entered into that contract with the HSE. This is evident from the terms of a GMS contract and this interpretation was confirmed in a TAC determination in 2022 (01TACD2022). This position does not change because the payments are mandated to be paid to another person, such as a medical practice. There is no legal basis for Revenue to treat income belonging to an individual GP to be income of another person/ medical practice for tax purposes. Therefore, a GP who holds a GMS contract— is a chargeable person as regards income arising under the contract and should report that income under the self-assessment system, and is the specified person for the purposes of PSWT and, therefore, is the person who may, where the relevant criteria are met, claim a credit for PSWT deducted on a GMS payment. A credit may not be claimed by any other person, including a medical practice. Revenue understands that practices have developed whereby a GP may have mandated that GMS payments are paid to a medical practice in circumstances where— a) the GP is employed by the medical practice concerned and receives a salary from that practice, which is payable subject to PAYE, or b) the GP is a partner in the medical practice concerned and receives a share of the partnership profits. Revenue expects that, in relation to bona fide arrangements referred to in a) or b) above, for the tax year 2024 onwards, a GP who holds a GMS contract will, where they are not already doing so, account for tax payable in respect of their GMS income under the self-assessment system (i.e. the correct treatment outlined at 1) and 2) above is applied). This expectation, as regards the application of 1) and 2) above in relation to income arising from a GMS contract for the tax year 2024 onwards, does not apply in respect of arrangements that are not bona fide or which have been entered into for the purpose of securing a tax advantage. In respect of such arrangements, the treatment referred to at 1) and 2) above will be applied for all tax years. For the avoidance of doubt, in circumstances where a GP, who holds a GMS contract, has incorporated his or her medical practice, the treatment referred to at 1) and 2) above will be applied in respect of his or her GMS income for all tax years.”

Over the past number of months, we have been informing Tax News readers that employers will be required to report details of small benefits, travel and subsistence and remote working allowances paid to employees and directors from 1 January 2024. This new requirement was introduced in Finance Act 2022 and is set out in Section 897C TCA 1997.  Last week, Revenue updated its website to set out information on the new reporting requirements for employers. As previously reported, in Tax News, representatives from the Institute, under the auspices of the CCAB-I, attended the first meeting of the Tax Administration Liaison Committee (TALC) Enhanced Reporting Requirements Subgroup earlier this month to discuss the implementation of enhanced reporting requirements. At the subgroup meeting, and previously at Main TALC, our representatives raised their concerns around the practicality of real-time reporting as well as concerns with the additional costs for businesses associated with the new measures. The CCAB-I has suggested to Revenue that an annual return frequency is a more reasonable reporting time-frame given it would meet Revenue’s needs in terms of reporting non-taxable reimbursements but would place less burden on employers to comply. While it is accepted that employers already maintain records of the reportable benefits, feedback has informed us that integrating these records with a real-time filing requirement is a complex task. Earlier this month comments from Cróna Clohisey, Tax & Public Policy Lead, on the new Enhanced Reporting Requirements for Employers were covered in the Sunday Independent Business. The current edition of Accountancy Ireland’s Briefly newsletter explores the practical challenges employers need to address and outlines four key actions to prepare for this new initiative. CCAB-I will continue to liaise with Revenue on these requirements and will inform members via Tax News.

Representatives from the Institute, under the auspices of the CCAB-I, met with the Minister for Finance, Michael McGrath T.D and his team earlier this week to discuss CCAB-I’s pre-Budget 2024 submission. The need to simplify the tax system and reduce the administrative burden on businesses was discussed, as were the complexities experienced by small businesses, in particular, when availing of several of the business tax reliefs. The importance of long-term investment in critical infrastructure, not least housing, in order to maintain Ireland’s position as a competitive place to do businesses and also to retain and attract talent was also highlighted.  

Revenue has issued a warning of a scam SMS (text message) purporting to come from Revenue seeking personal information from taxpayers in connection with a tax refund or seeking debit/credit card details. The Revenue Commissioners never send emails or text messages requiring customers to send personal information via email, text or pop-up windows. Further information is available here.

Last week, we posted an update on the new R&D tax credit filing requirements, including the specified return. To the extent it was not clear how the new forms will apply, it was confirmed at the recent R&D Discussion Group that the new Specified Return will need to be completed and returned via MyEnquiries along with the Form CT1 2022 where: An acceleration of the second and third instalment is claimed in accordance with section 766(4D) or 766A(4C) TCA 1997 A R&D tax credit is claimed in accordance with section 766C TCA 1997 A R&D tax credit is claimed in accordance with 766D TCA 1997. As mentioned last week, the Form CT1 2023 is expected by 10 July and will include sections reflecting the updates to the R&D tax credit.

The Minister for Finance, Michael McGrath TD, has published an analysis by his department entitled Future-proofing the Public Finances – the Next Steps. A key recommendation in the analysis is the establishment of a long-term public savings vehicle to ensure that windfall corporation tax receipts are not used to fund permanent expenditure increases or tax reductions. Secondly, such a fund could contribute to meeting budgetary pressures in the future. The report also notes that, under almost all of scenarios simulated, the drawdowns from such a long-term public savings vehicle would still not be sufficient to cover the full increase in ageing-related costs expected by 2030. Therefore further reforms to the pension system – including increases to the rate of PRSI – will be required. Commenting on the scoping paper, Minister McGrath said: “The analysis published by my department today highlights some of the vulnerabilities the public finances face from both revenue and expenditure perspectives. On the revenue side, while the headline budgetary accounts look to be in very good shape, this is largely the result of corporation tax receipts, which have increased more than five-fold in the past decade. My department estimates that around half of these receipts could be potentially transitory in nature. Looking ahead, Government is also aware of the major expenditure challenges on the horizon. Shifting demographics and adapting to the climate and digital transitions will impose large costs on the public finances. While the Irish demographic picture is currently favourable, developments in the coming decades will mean that we will be spending significantly more just to maintain the current level of service, all because of an ageing population. The paper my department published today outlines some of the options available to Government to help to mitigate against these risks to the public finances. Taking into account this analysis, it is my intention to bring forward proposals for a long-term savings vehicle which will be used to pre-fund part of the future costs of structural change. The paper also discusses different approaches to using the windfall receipts including for a new long-term savings vehicle, and using a portion to pay down debt and for additional, targeted capital investment. I was pleased to brief cabinet on this paper yesterday. Subject to government approval, setting up such a long-term savings vehicle will require primary legislation.” Further information is available on gov.ie.

The Minister for Finance, Michael McGrath TD, has welcomed European Commission approval of the enhancements to the Temporary Business Energy Support Scheme (TBESS) announced in Finance Bill 2023.The approval has been received under the State Aid Temporary Crisis and Transition Framework (TCTF). The enhancements announced in the Finance Bill (and which were called for by the Institute) include: Extending the scheme to 31 May 2023, with the option to further extend the scheme by Ministerial Order to not later than 31 July 2023, Reducing, with effect from 1 September 2022, the energy cost threshold for qualification for the scheme from a 50 percent increase in electricity or gas costs to a 30 percent increase, and Increasing, from 1 March 2023, the level of relief from 40 percent to 50 percent of eligible costs. The time limit for making claims under the scheme has also been extended. The enhancements are in addition to amendments made in February 2023 to increase the monthly limit to €15,000 per qualifying business in relation to a trade or profession, subject to an overall cap of €45,000 in cases where a business is carried on from more than one location. These changes took effect from 1 March 2023. Commenting, Minister McGrath said: “I am pleased to note that the European Commission has approved the enhancements to TBESS brought forward in Finance Bill 2023. These changes, in particular the lower entry threshold for the scheme, which is backdated to September 2022, will ensure that additional businesses can benefit from this vital support and I encourage businesses who have not already done so to register for and submit claims under the scheme.” As of 20 April, 28,035 businesses have registered for the scheme. Revenue has approved 35,613 claims to the value of €77.6 million.

Revenue has updated the TBESS guidelines to reflect the enhancements introduced in Finance Bill 2023. A qualifying business can submit claims on Revenue’s Online Service (ROS) for the March and April 2023 claim periods from Monday 17 April 2023. From the week commencing 24 April 2023, Revenue will begin reassessing claims already submitted for the period from 1 September 2022 to 28 February 2023 based on the revised 30 percent energy costs threshold. This means that it will not be necessary for a business to revise claims already submitted for these periods. Once claims have been reassessed, the business will receive a notification to their ROS inbox confirming the reassessment has occurred after which the payment due to the business will be processed. The updated TBESS guidelines also contain deemed reference unit prices for the May 2022 reference period, as provided by the Sustainable Energy Authority of Ireland (based on data provided by suppliers and the Commission for Regulation of Utilities). Further information is available in eBrief no. 096/23.

Revenue has published a new Tax and Duty Manual providing guidance on the operation of the digital games tax credit, as provided for in section 481A TCA 1997 and the Digital Games Regulations 2022. The aim of the measure is to provide an incentive to digital games developers to produce digital games that contribute to the promotion and expression of Irish and European culture. The relief is a corporation tax credit and it may be claimed by digital games development companies.    The relief is available from 22 November 2022 in respect of certain expenditure incurred by digital games development companies on the development of eligible digital games provided certain conditions are met.