Revenue has published new guidance on the participation exemption for certain foreign distributions which was introduced by Finance Act 2024. The participation exemption applies where a relevant subsidiary makes a relevant distribution on or after 1 January 2025 to a parent company of the relevant subsidiary. The conditions which the parent company must satisfy to claim the exemption, including the required qualifying participation in a relevant subsidiary, are detailed in the guidance. The qualification requirements for a relevant subsidiary are also outlined. A qualifying distribution must be recognised as income in the hands of the recipient for the purposes of corporation tax and it must be made out of the profits or the assets of the relevant subsidiary. The exemption is supplemental to the existing “tax plus credit” approach. Companies must elect to claim the exemption with all qualifying distributions, in that accounting period, being exempt if an election is made. A claim for the exemption cannot be made on a per dividend/distribution or per subsidiary basis.

The Department of Finance and the Department of Public Expenditure and Reform have jointly published the Annual Progress Report 2025 which incorporates the Department of Finance’s spring forecast. The report is a European legal requirement which assesses progress on the implementation of the Government’s Medium-Term Fiscal and Structural Plan. It replaces the annual Stability Programme Updates and the annual National Reform Programme in the EU budgetary cycle. The report outlines that Modified Domestic Demand (MDD) is projected to expand by 2.5 percent in 2025 and 2.75 percent next year, both of which are downward revisions compared to the autumn forecasts. The projections are prepared on the assumption that transatlantic tariffs will not be introduced and forecast a general government surplus of €8.7 billion. In an alternative scenario, which incorporates the likely economic impacts of the tariffs that are now in place, projected MDD growth is lowered to just over 2 percent this year and 1.75 percent next year. The report notes that while the economy, in aggregate terms, is undoubtedly in a strong position at present, the near-term outlook for the Irish economy is clouded in considerable uncertainty. Uncertainty in terms of trade policy, financial and commodity market developments, geopolitics and macroeconomic policies are noted as the dominant features of Irish and global economies. Navigating the challenging external environment is identified as a key priority by this Government. Commenting on the publication, Minister for Finance, Paschal Donohoe said: “The more contested and fragmented world that is now taking shape represents a serious headwind for the Irish economy which has benefited so much from the rules-based, multilateral trade system. Given the elevated level of uncertainty, it is important to stress that our assessment published today is more akin to a scenario analysis; my officials will, of course, continue to monitor incoming data and developments and update numbers accordingly.”

In this week’s post EU exit corner, we bring you the latest guidance updates and publications relevant in the post EU exit environment. The most recent Trader Support Service bulletin is also available as is the latest Brexit and Beyond newsletter from the Northern Ireland Assembly EU Affairs team. The latest minutes and slides from the most recent meeting of the HMRC Northern Ireland Joint Customs Consultative Committee, which the Institute participates in, have been published. Miscellaneous guidance updates and publications Data Element 2/3: Documents and Other Reference Codes (National) of the Customs Declaration Service (CDS), Data Element 2/3: Document and Other Reference Codes: Licence Types — Imports and Exports of the Customs Declaration Service (CDS), Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service, External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service, Designated export place (DEP) codes for Data Element 5/23 of the Customs Declaration Service, Check if a business holds Authorised Economic Operator status, Claim back an import security deposit or guarantee, and Apply for Designated Export Place approval.

On 19 May 2025 the European Parliament’s HOUS Committee and FISC Subcommittee will host a joint public hearing on the impact of tax policies on the housing crisis in the EU. The public hearing will explore the link between taxation and affordability and how tax policies can shape access to housing in the EU. It will also consider how tax policies can contribute to rebalancing the housing market.

In this week’s miscellaneous updates, the latest Stakeholder Digest from HMRC confirms that it’s new Permanent Secretary and CEO has taken up his office and the expected reductions in HMRC’s interest rates have been announced after the Bank of England Monetary Policy Committee reduced the base rate last week from 4.5 percent to 4.25 percent. The first changes in four years have been made to HMRC’s CEST (check employment status for tax) tool and HMRC has updated their genuine communication guidance to add information about ongoing research into agent and professional standards which means that some tax agents may receive an email or phone call from HMRC inviting them to participate. The latest newsletter from the Federation of Small Businesses (FSB) says that the ‘taxi tax’ must be stopped and small business employers are invited to take part in FSB’s latest survey on the National Living Wage by 19 May. And finally, the Public Accounts Committee (PAC) has published a report on the cost of the tax system which not surprisingly concludes that the cost of administering taxes is increasing for HMRC and taxpayers. New HMRC Permanent Secretary and CEO After the retirement last month of Sir Jim Harra, John Paul (JP) Marks joined HMRC as its new First Permanent Secretary and Chief Executive. JP has been a civil servant for over two decades and previously served as Permanent Secretary of the Scottish Government for three years. In a You Tube video to mark the occasion, JP introduces himself and sets out his key priorities. CEST updated On 30 April 2025 HMRC updated this tool which is used to find out if a worker on a specific engagement should be classed as employed or self-employed for tax purposes. According to HMRC, CEST has been updated to simplify its language; useful links have also been added. The update also features a  new mutuality of obligation question (the obligation on the employer to provide work and the employee to accept the work) which is often key to many decisions at tax tribunal. HMRC has reaffirmed its ongoing commitment to the tool saying it will stand ‘behind the outcomes of this tool where it has been used correctly.’ Updated guidance is therefore expected to be published on how to answer the questions in the tool which have changed. PAC reports on cost of the tax system The House of Commons PAC report on the cost of the tax system concludes that the cost of administering taxes is increasing for HMRC and taxpayers and as a result calls for HMRC to “publish realistic plans to simplify the tax system and establish robust metrics for reporting the impact on its costs, and on taxpayers’ costs, in its annual reports”. The report also says that taxpayers’ trust in HMRC is falling and recommends that HMRC should work with taxpayers and their representatives to understand why this is the case and what it can do to quickly address the decline. HMRC should publish the concerns it has heard and the actions it is taking to address these, as a first step to improving trust.

The Economic and Financial Affairs Council (ECOFIN) will meet on 13 May 2025. At the meeting, the group will be invited to reach a general approach on the directive on VAT rules for distance sales of imported goods and import VAT. The draft directive seeks to improve the collection of VAT on imported goods by making suppliers liable for the VAT paid on import.

HMRC has contacted us to advise that as of 6 May, Unique Taxpayer References (UTRs) are no longer being provided when requested by either agents or taxpayers over the phone. This change is being made for security reasons.   HMRC has asked us to remind taxpayers that they can source this information from the top of the home page of their Personal Tax Account (PTA). If they do not have a PTA, they can find their UTR at the top of any Self-Assessment letter HMRC may have sent. If neither of these methods is available, HMRC will instead send this to them by post after they have successfully answered a series of security questions.   Agents that call on behalf of their client will also be advised of where the client’s UTR can be found. If it’s not possible to retrieve the UTR from one of those sources, then HMRC will issue a letter direct to the agent’s client. This can take up to two weeks to arrive.    

That’s according to the Institute’s Northern Ireland Tax Committee chaired by Janette Burns. The Committee responded last week to the UK Government’s consultation ‘Electronic invoicing: promoting e-invoicing across UK businesses and the public sector’. A series of recommendations featured in the submission including the need to ensure that businesses in Northern Ireland (NI) are not subject to different standards compared to the rest of the UK. Any UK e-invoicing regime should be decentralised and should also be aligned with what is ultimately agreed at EU-level in respect of the Digital Reporting Requirement (DRR) aspect of the VAT in the Digital Age (ViDA) package. The submission also considers the impact on smaller businesses and recommends that grants/tax incentives be introduced to encourage and help fund voluntary uptake. In summary, the key recommendations are as follows: An appropriate lead-in time and extensive testing by and consultation with various stakeholders will be essential in order to successfully implement a UK wide e-invoicing policy, This should begin by encouraging a voluntary approach, in particular for small and micro businesses, by educating taxpayers on the advantages cited in the consultation and by providing grant incentives/tax reliefs to encourage and help fund uptake, Mandatory e-invoicing and real-time reporting should only be introduced in a phased format based on the size of the business, The Government should establish a dedicated e-invoicing support team, A review should be undertaken of the UK’s VAT regime to identify opportunities for simplification ahead of introducing any e-invoicing policy in the UK, Any UK wide e-invoicing system will need to consider the potential impact in the NI context in order to avoid adding further complexity or different standards for different regions within the UK, The UK’s e-invoicing regime should be decentralised and should be aligned with what is ultimately agreed at EU-level in respect of the DRR aspect of ViDA, and Continued open, transparent and broad consultation will be needed with stakeholders to resolve and identify challenges/issues on the journey to a UK wide e-invoicing policy.

The OECD has published its consolidated commentary on Pillar Two. This consolidated commentary incorporates agreed administrative guidance which was released by the Inclusive Framework from March 2022 to March 2025. It also includes guidance on the interpretation and application of the GloBE rules.

In Irish news this week, Revenue has published its Annual Report for 2024 and the rescheduled commencement date for auto-enrolment has been announced. In UK news, last week’s Spring tax update announced a range of measures including a one year delay to mandatory payrolling of benefits-in-kind and HMRC has announced the closure of a range of online forums. In International news, the OECD has published its annual report of taxes paid on wages in OECD countries. Ireland 1. Revenue has released its Annual Report for 2024 together with relevant research and statistical papers.  2. The new start date for auto-enrolment has been confirmed as 1 January 2026. UK 3. Read about the tax announcements in last week’s Spring 2025 tax update including the one year delay to April 2027 for mandatory payrolling of benefits in kind. 4. HMRC has announced the closure of its agent and taxpayer online forums. International 5. The OECD has published its annual report of taxes levied on wages in member countries. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s EU exit corner here.  

Revenue has updated the its guidance on Section 31D - Cancellation schemes of arrangement to reflect the increase provided by Finance Act 2024 in the Stamp Duty rates relating to the acquisition of residential property.

Revenue has updated its guidance on investment undertakings to confirm that a refund of tax is available where the income arises or is derived from the investment of a relevant payment by a relevant woman as defined in section 2 of Cervical Check Tribunal Act 2019. The manual has also been updated to include reference to the guidance on the Tax Treatment of CervicalCheck Payments.