The Minister for Finance Michael McGrath has launched an online public consultation seeking stakeholder views on the taxation of share-based remuneration in Ireland. The purpose of the consultation is to allow stakeholders to submit their views on the current operation of share-based remuneration in Ireland, its impact on economic activity and the potential impact of suggested changes to the regime, all the while ensuring Ireland continues to meet international best practice standards.   The responses to the public consultation will feed into the overall review of the taxation of share-based remuneration and the Irish share scheme environment which will be undertaken over the coming months. The review will also examine the recommendations from the Commission on Taxation and Welfare in relation to share-based remuneration.  The online consultation opened on 5 December 2023 and closes on 22 January 2024. The Institute, under the auspices of the CCAB-I, is responding to this consultation. Members wishing to provide input can email us.   Commenting on the launch, Minister McGrath stated:  “Today I am delighted to launch a public consultation on share-based remuneration. As I announced in my recent Budget speech this consultation will form part of a wider review that will be commenced shortly.  I believe that it is essential that this comprehensive review be undertaken to ensure that our policies around share-based remuneration continue to support Irish companies in attracting and retaining highly skilled and motivated employees, which in turn helps to ensure that Irish enterprises have the necessary tools to grow and expand, and consequently to support Ireland’s economic growth.  This consultation provides stakeholders the opportunity to share their views and experiences, and to ensure their voice is an integral part of the review process. I would strongly encourage all stakeholders to participate in the consultation process.” 

Revenue has updated the Tax and Duty Manual that provides guidance for the Small Benefit Exemption. The updated manual provides additional information and examples regarding the Finance Act 2022 changes to this measure. Finance Act 2022 extends the small benefit exemption to up to two non-cash benefits totalling €1,000.   The updated guidance provides a link to the guidance material on Enhanced Employer Reporting (ERR) obligations, which (subject to Ministerial Commencement Order) require mandatory reporting to Revenue of the small benefit exemption from 1 January 2024 by employers.   

Last week the Institute, under the auspices of the CCAB-I, wrote to the Minister for Finance to ask for a delay to the implementation of Enhanced Reporting Requirements (ERR) for employers to enable businesses to prepare for this significant change. Employers have only recently been provided with limited guidance on the matter. The Frequently Asked Questions (FAQs) document was  published just last week. We also re-iterated member’s concerns over the need to report payments to Revenue on or before the time they are made stating that the administrative burden created by real-time reporting is disproportionate to the value of the information garnered, in particular for smaller businesses.   At the time of writing, the order to commence the legislation from 1 January 2024 has not been signed by Minister McGrath. We will continue to engage with Revenue on this matter and update members via Tax News. 

The OECD Forum on Tax and Crime (FTC) met in Rome recently to consider how to enhance international cooperation in disrupting tax crimes and illicit flows of money. Those in attendance stressed the OECD’s role and noted certain key areas to prioritise. These include increasing knowledge sharing and pooling, developing new mechanisms for systematic real-time information sharing, continuing to strengthen capacity building, and leveraging new technology and approaches to address vulnerabilities.

Due to the rise in energy prices following the instigation of Russia’s war against Ukraine, governments responded by reducing excise in 2022. This has led to significant decreases in tax revenues across the OECD. According to the latest OECD report, Revenue Statistics 2023, tax revenues decreased in 21 of the 36 OECD countries.

The European Commission recently met with the Norwegian government to discuss proposed amendments to the EU-Norway agreement on administrative cooperation, recovery assistance and combating fraud in the area of VAT. The updates reflect changes to the EU VAT regime introduced in 2018 and aims to provide Member States with new tools when dealing with Norway to enable better cooperation.

In Irish news, we bring an update from the recent meeting of the Tax Administration Liaison Committee Collections subcommittee and Revenue publishes updated guidance on the small benefit exemption for the purposes of enhanced reporting requirements. In UK news, the Autumn Finance Bill 2023 has been published and in this week’s miscellaneous updates, read about the DIY housebuilder’s scheme going digital. In International news, the European Commission has published a report on the energy solidarity contribution.  Ireland Read the update from the recent meeting of the Tax Administration Liaison Committee Collections subcommittee. Revenue publishes updated guidance on the small benefit exemption for the purposes of enhanced reporting requirements. UK The Autumn Finance Bill 2023 has been published. Read about the DIY housebuilder’s scheme going digital. International The European Commission has published a report on the energy solidarity contribution. 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.          

The Institute, under the auspices of the CCAB-I, made representations on behalf of members at last week’s meeting of the TALC Collection subcommittee. Among the issues discussed, Revenue provided updates on the implementation of the Enhanced Reporting Requirements for employers, the Debt Warehousing Scheme and the vacant homes tax. Revenue also reminded the group of the costs to which the VAT flat rate farmer scheme applies. Revenue is aware of an issue in the Statement of Net Liabilities process and will be contacting the affected taxpayers.  Enhanced Reporting Requirements for Employers (EER)   Despite the CCAB-I's concerns over the introduction of ERR, Revenue has advised us that the requirements will enter force from 1 January 2024. In the meantime, Revenue intends to go live with the reporting portal in the second week in December. In the meantime, Revenue will continue to hold information webinars up to 14 December 2023 on the new  requirements for employers for agents and employers.   Revenue issued e-Brief 254/23 this morning referencing an update to Revenue’s guidance on the small gift exemption, which include examples of how ERR will apply.   A recent snap poll of our members last week has indicated that 60 percent of organisations are not ready for the Enhanced Reporting Requirements. As the 1 January 2024 deadline approaches, we continue to meet with Revenue to discuss implementation and guidance. We will continue to keep members updated via Chartered Accountants Tax News.   Debt Warehousing Scheme   Revenue reported that the total debt warehoused in the scheme was €1.8 billion consisting of over 57,000 businesses, 67 percent of which owe less than €5,000 each. Over 5,500 businesses owe a combined €1.5 billion, each owing in excess of €50,000. Revenue is continuing its telephone outreach campaign contacting businesses owing in excess of €50,000.   The Debt Warehousing Scheme is currently in Period 3, running from 1 January 2023 to 1 May 2024, with interest accruing at 3 percent per annum on the unpaid debt. The 3 percent interest charge will be incorporated into the phased payment arrangement (PPA) for its duration. Where there is no PPA, the interest will be charged retrospectively.   Taxpayers have until 1 May 2024 to agree a PPA with Revenue and are reminded that they can make interim payments during this period, and also request for the offset of any refunds owing against the balance of tax warehoused.   To assist taxpayers and their agents in quantifying the PPA instalments and interest payments, Revenue is providing a PPA calculator on its website. Revenue is encouraging taxpayers to engage now in the PPA process as there is flexibility in terms of payment terms, amounts and downpayments. In addition, payment breaks can be arranged once the PPA has been commenced. A nominal downpayment amount of 0.1 percent of tax and interest can be input using the online application system to commence the process of engagement and negotiation with the caseworker.   Revenue has prepared a number of ‘How to” videos in relation to the PPA process which are now available on the Revenue website (link to videos).   Vacant Homes Tax  Revenue provided current statistics on the Vacant Homes Tax (VHT) that was due to be reported on by 7 November 2023. Of the 50,000 properties reported to Revenue, only 5,000 properties were declared vacant. Revenue wishes to remind property owners that there is only an obligation to file a VHT return where the property is vacant.  Of the 5,000 declared to be vacant, 2,000 properties have been claimed to be exempt VHT. The VHT liability on the remaining 3,000 properties is due for payment by 1 January 2024.  Earlier in the year, Revenue wrote to owners of some 25,000 properties to advise them of the actions they needed to take, where the data available to Revenue indicated that the recipient may have a liability to Vacant Homes Tax (VHT). Revenue received responses from 45 percent of this cohort. Revenue intends to review the non-responders after the due date for payment of VHT, 1 January 2024.  Statement of Net Liabilities  Revenue is aware of some 1,000 instances in the Statement of Net Liabilities process where an offset of 2022 Income Tax refund against 2023 Preliminary Tax was selected but the refund issued, resulting in an underpayment of 2023 preliminary tax. Revenue will be contacting the affected taxpayers.  VAT Flat Rate Farmers Scheme  Farmers who are not registered for VAT are not, in the normal course, entitled to credit for, or repayment of, VAT incurred by them on their business inputs. However, a flat-rate farmer, who would not otherwise be entitled to reclaim VAT on costs incurred for the purpose of their farming business, can reclaim VAT on certain costs in accordance with Value-Added Tax (Refund of Tax) (Flat-rate farmers) Order 2012. Revenue wishes to remind farmers, and their agents, that VAT reclaimable is that VAT paid in relation to costs incurred only on:  (a) the construction, extension, alteration or reconstruction of that part of the building or structure which was designed solely for the purposes of a farming business and has actually been put to use in such a business carried on by him or her,  (b) the fencing, drainage or reclamation of any land which has actually been put to use in such a business carried on by him or her, or  (c) the construction, erection or installation of qualifying equipment for the purpose of micro-generation of electricity for use solely or mainly in his or her farming business.  It is to be noted that outlay for other purposes, such as on the acquisition of milk bulk tanks, feed bins, milking parlour equipment, automatic scrappers and automatic calf feeders do not come within the scope of this refund order. 

Revenue has updated the VAT Tax and Duty Manual on the VAT treatment of portfolio management services has been updated to provide further guidance s in line with the judgement in the Court of Justice of the European Union (CJEU) Deutsche Bank case (C-44/11).  

Revenue has updated the Tax and Duty Manual regarding the payment and receipt of interest and royalties without deduction of tax. The guidance has been updated:  in respect of the application of interest withholding tax to interest paid to Irish partnerships and foreign tax transparent entities (section 5.3), and  refers to the European Stability Mechanism (ESM) and the ESM acting through a subsidiary body or sub-entity (section 8).  In addition, instructions on how to report availing of the practice in section 9 for Form CT1 2021 and Form 11 2021 have been deleted. 

Revenue has updated the Tax and Duty Manual regarding the appointment of experts to assist in the audit of the Research & Development (R&D) Corporation Tax Credit. The manual has been updated:  to reflect the start date of the new independent expert panel on 8 August 2023,  to reflect an increase in the fee to be paid to the independent experts to €1,000,  miscellaneous minor revisions to the text and updates to references.  Each year Revenue establishes a panel of experts who may be called upon to assist with reviews of claims for either the R&D Tax Credit or R&D Corporation Tax Credit.  

The time limit for making a claim under the Temporary Business Energy Support Scheme (TBESS) expired on 30 September 2023. Revenue has published preliminary statistics which provide breakdowns of TBESS approved claims and payments by economic sector, employment size, trade and county. In total, 25,132 businesses made TBESS claims, receiving direct payments and tax liability offsets to the value of €150.5 million. Revenue has also published the list of businesses that received payments under the TBESS.