In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service bulletin is also available. The House of Lords Sub-Committee on the Windsor Framework (“WF”) has opened a new inquiry which is examining strengthening Northern Ireland’s voice in the context of the WF and the Committee has also raised concerns about the future supply of veterinary medicines to Northern Ireland. HMRC has also issued a reminder that there are now just a few weeks until the 4 June deadline for making export declarations via the Customs Declarations Service (“CDS”) instead of CHIEF.  Future supply of veterinary medicines to Northern Ireland  The House of Lords Sub-Committee on the Windsor Framework has written to the Northern Ireland Office Minister raising serious concerns about the future supply of veterinary medicines to Northern Ireland.   The Committee recently concluded its inquiry into the potential consequences of the EU Veterinary Medicinal Products Regulation taking effect in Northern Ireland at the end of December 2025, when the grace period is due to end.   Witnesses who appeared in front of the Committee are concerned about the additional costs this would entail for producers and have provided evidence that this could affect the economic viability of supplying the small Northern Ireland market with estimates suggesting that over 30 percent of veterinary medicines could be discontinued for Northern Ireland under the rules.   The Committee is also highlighting the link between animal and human health. Serious concerns have been raised about the potential consequences for public health in Northern Ireland and on the island of Ireland if access to certain veterinary medicines is lost.   The Chair of the Sub-Committee, said, “We are stressing the need for a positive and swift outcome within what is a tight timescale complicated by upcoming elections in the EU and UK.”  Exports to move to CDS by 4 June  A reminder Press Release was published last week reminding businesses that by 4 June, all export declarations must be made via the CDS. Traders can register for CDS via GOV.UK. The 4 June deadline has been moved several times.   According to the Press Release, the CDS provides businesses with a more user-friendly, streamlined system with greater functionality. It has been running since 2018 for import declarations and more than 117 million customs declarations have already been submitted through CDS.  HMRC is working closely with the border industry and directly contacting all declarants and traders to urge them to access the available support now and transfer over to CDS.  Businesses with customs agents should ensure their agent is ready to use CDS. Those without a customs agent must prepare to make their own declarations using software that works with the system.  Miscellaneous updated guidance etc.   Recently updated guidance and publications relevant to EU exit are set out below:  Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service;  Authorised Consignee Temporary Storage (ACTS) location 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;  Maritime ports and wharves location codes for Data Element 5/23 of the Customs Declaration Service;  CDS Customs Clearance Request Completion Instructions for Inventory Exports;  Find payroll software that is recognised by HMRC; and  CDS Declaration Completion Instructions for Exports. 

The European Commission is seeking feedback on Directive 2011/16 EU on administrative cooperation in the field of direct taxation, or the Directive for Administrative Cooperation (DAC) as it is also known. The call for evidence is part of an overall evaluation of the DAC and is required under Article 27(1) of the DAC. The feedback window closes on 30 July 2024.

The Institute, under the auspices of the CCAB-I, has published its Pre-Budget 2025 Submission – Supporting and Sustaining our SME Sector. In this year’s submission, we focus on the constraints experienced by SMEs due to rising labour costs. We also highlight the deficits in housing supply and childcare places which, in addition to high personal tax rates, are making it increasingly difficult for people to live and work affordably in Ireland. We have identified the following four areas for budgetary focus: Support SMEs by exempting minimum wage workers from employers’ PRSI and simplifying tax legislation Increase the number of childcare places available and offer working parents a €1,000 tax credit to return to the workforce Introduce a 30 percent intermediate rate of income tax to retain and attract workers and help people live affordably Continue to stimulate and support the completion of new houses. The Irish Times also exclusively covered the launch of this year’s submission and you can read their story in full here.

Last week, the Institute, under the auspices of the CCAB-I, responded to the Department of Finance’s feedback statement on the Strawman proposal for a participation exemption for foreign dividends. The Institute has been calling on the Government to introduce legislation establishing a territorial basis of taxation in Ireland. The Strawman proposal is the next step in this process. While we welcome this step in the process, we continue to call on the Government for a similar feedback statement on a participation exemption for foreign branch profits. You can read our full response here. Below, we summarise our main points for consideration in advance of finalising the legislation: We recommend that there is no minimum ‘opt-in’ period. Where a company receives a distribution from an in-scope territory, then the default position should be that the distribution is exempt. The dividend exemption should apply to distributions received from companies located in any jurisdiction other than those on the EU list of non-cooperative jurisdictions for tax purposes. Ideally, we would prefer that there is no geographic limitation on the participation exemption. Alternatively, the exemption could be disapplied where the payor company is located in a no-tax/zero-tax jurisdiction or, where the jurisdictional tax rate is less than 9% (borrowing from the OECD Subject-to-Tax rule). We recommend that the reference to “voting rights” is removed. This should not be a condition of the foreign dividend exemption. A bona fide test is not required as it introduces an unnecessary layer of complexity. The existing anti-avoidance provisions in Irish tax law are sufficiently robust. The relief should be available for income distributions received on or after 1 January 2025, i.e. there should be no reference to accounting periods.

Revenue has confirmed that, as of 9 May 2024, almost 90 percent of the €1.65 billion debt warehoused at the beginning of April 2024 has either been paid in full, secured under phased payment arrangements (PPAs), or included within a PPA which is in the process of being finalised. The balance of warehoused debt not paid or included in a PPA is €200 million. Revenue has issued circa 11,700 demands to taxpayers with warehoused debts exceeding €500.  Revenue data confirms that 775 taxpayers (10 percent) have outstanding liabilities in excess of €50,000, amounting to €130 million, with a further 3,670 (30 percent) owing between €5,000 and €50,000. The remaining 60 percent (7,279) of taxpayers owe between €500 and €5,000. The demand notice outlines the tax(es) due by the taxpayer and requests they engage with Revenue to formulate a payment plan within seven days. Continued non-engagement will result in the issue of a final demand at the end of the seven-day period and the warehoused debt will immediately be subject to standard enforcement proceedings. Revenue has acknowledged the high level of engagement from businesses and their agents throughout the duration of the Debt Warehouse Scheme and, in particular, in the lead up to the 1 May 2024 deadline, and will continue working with businesses to finalise payment plan applications which are currently in progress.

Representatives from Revenue’s Collector General’s Division (CG), attended the Oireachtas Joint committee on Enterprise Trade and Employment to discuss the Small Companies Administrative Rescue Process (SCARP). Revenue re-iterated its commitment to being a constructive participant in SCARP, reflected by a dedicated team within CG for all SCARP related queries. Further information is available on data.oireachtas.ie.

Revenue has updated the Tax and Duty Manual which provides guidance on determining which instruments can be treated as equivalent to an Additional Tier 1 instrument. Under the CRD IV (Capital Requirements Directive and Capital Requirements Regulation) Tier 1 capital, the primary funding of a bank, is made up of two components, one of which is Additional Tier 1 (‘AT1’) capital. The CRD IV sets out the features that an AT1 capital instrument must possess. Section 845C TCA 1997 provides clarity on the tax treatment of AT1 capital instruments and other substantially similar or ‘equivalent’ instruments. This manual explains the implications of section 845C in relation to certain capital instruments.

A critical marker of Ireland’s future economic success will be supporting our SME sector by reducing the cost and complexity of doing business. This is according to the Consultative Committee of Accountancy Bodies- Ireland (CCAB-I), the umbrella group which represents some 40,000 professional accountants, as it published its Pre-Budget 2025 submission today. The paper entitled ‘Supporting and Sustaining our SME sector’ highlights the constraints experienced by SMEs as a result of increasing labour costs and also states that a lack of supply of housing and childcare places, in addition to high personal tax rates, are making it increasingly difficult for people to live and work affordably in Ireland.     The submission identifies four key areas for budgetary focus:   Support SMEs by exempting minimum wage workers from employers’ PRSI and simplifying tax legislation  Increase the number of childcare places available and offer working parents a €1,000 tax credit to return to the workforce Introduce a 30% intermediate rate of income tax to retain and attract workers and help people live affordably  Continue to stimulate and support the completion of new houses.  Commenting, Director of Public Affairs, Cróna Clohisey said  “The lead into Budget 2025 comes at a time of increased financial pressure for businesses operating in Ireland as well as clear deficits in infrastructure. Small businesses, which includes many family businesses, are being constrained by rising costs and, for many, labour costs now make up a considerable proportion of business expenditure. That is why we are asking the government to exempt minimum wage workers from Employers’ PRSI, this would save businesses labour costs of between 8.8 and 11.05%.”  The CCAB-I also believes that Ireland’s tax code has become increasingly complex in recent years and is calling for simplification of the tax rules to support businesses, enable them to grow and also ensure that Ireland remains competitive on an international stage.     Ms Clohisey continues  “For SMEs, the message we are receiving is that simplifying the tax code both legislatively and administratively, must be a priority. 70% of people working in the business economy in Ireland are employed by SMEs. The Government must move tax policy in a direction which supports the indigenous Irish economy by encouraging innovation and supporting entrepreneurs and reducing the cost and complexity of doing business.”  Childcare  In terms of childcare, the submission includes measures to improve the supply of childcare places for pre-school children. To address the impact of working parents leaving the workforce following the birth of their children on the labour supply, the CCAB-I is calling for the introduction of a €1,000 tax credit for working parents to encourage them to return to the workforce.  Ms Clohisey continues  “We know from research among our members that some working parents are unable to participate fully in the economy due to difficulties in obtaining and affording a place in a childcare setting. As a result, almost half of those surveyed have reduced their working hours to meet childcare responsibilities. We are asking that the government plans for adequate capacity in the sector by analysing local needs and ensuring adequate funding for the sector. For parents, the cost of childcare or lack of availability should not act as a disincentive to return to work. We are proposing as a starting point a €1,000 annual tax credit for working parents who return to or remain in the workforce until the child reaches primary school going age." Reforming the income tax system Ireland’s 40% tax rate is high in comparison to other competitor countries and the CCAB-I believes that introducing a third rate of income tax of 30% would make the system more equitable. It would also enhance Ireland’s attractiveness as a place to work, particularly among younger workers.   Ms Clohisey continues “Workers in Ireland pay income tax at a rate of 40% once they earn €42,000. This entry point is below the average wage and is significantly lower than most countries across the UK and Europe where incidentally having more than two tax rates is extremely common.   “Speaking on behalf of a mobile profession where most are in the early stages of their careers and are planning their futures, introducing an intermediate 30% rate would make the system more attractive and more equitable, lessening the tax burden on workers and putting more money in their pockets. The government needs to take immediate action to address the inequities that clearly exist within the system.”  Housing  In terms of housing, the submission also proposes: Extending the Help-to-Buy Scheme by two years to 31 December 2027 Abolish vacant homes tax Increase the rent-a-room relief from €14,000 to €20,000 and removing the cliff-edge Abolishing the non-resident landlord withholding tax system. ENDS  Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies – Ireland (CCAB-I). Read the submission in full here.  

Large energy users have a crucial role to play in embedding greater resilience in Ireland’s energy system. David Cashman explains why Following recent geopolitical developments and the subsequent supply chain disruption to energy resources here in Ireland, ensuring the security of supply is paramount. With one of the highest ratios of energy import dependency in the EU, Ireland is more exposed than other countries to sudden shocks and disruption. As a result, embedding increased resilience in our energy system is a priority, as set out in the Government’s Energy Security in Ireland to 2030 strategy. Large energy users (LEUs), such as data centres, have a vital role to play in driving this resilience. Electricity demand is projected to grow significantly in the years ahead, and LEUs account for a sizeable portion of this. With an annual usage of over 500,000 kWh, EirGrid estimates that, by 2031, LEUs will account for 28 percent of total energy demand. While the growing number of LEUs represents strong economic activity, it does mean that a small number of these large consumers will be key to ensuring the security of supply. The question then becomes: how can this security be maintained without the cost of increased emissions? The electricity system must continue to be balanced – accounting for increasingly tight capacity margins, as highlighted in the annual Generation Capacity Statement – while LEUs must play their part in delivering on emissions reduction targets. With the number of system alerts forecast to increase – coupled with delays in connecting new generation capacity (due to planning permission, environmental impacts, and supply chain constraints) – LEUs must look to introduce interim measures now that, while ensuring security of supply, do not increase emissions. Legislative and regulatory landscape Climate Action Plan 2024 builds on initiatives mandated in the 2023 plan, including the introduction of incentives to drive low-carbon consumption and increase LEU flexibility in demand. Following Climate Action Plan 2023, the Commission for Regulation of Utilities (CRU) published an initial view of a demand-side strategy – the National Energy Demand Strategy (NEDS) – for consultation. This proposes a range of initiatives and builds on the ambition set out in the Energy Security in Ireland to 2030 strategy which highlights how LEUs “can lead and contribute to this transition by…shifting energy demand away from peak times or at times of system stress and moving demand to times of high renewable generation”. A core tenet of NEDS is a review of LEUs’ connection policy, with the associated consultation closing in late February. This review will inform the development of a new pathway for LEUs to connect to the electricity and gas systems, which will minimise carbon emission increases while accounting for system capacity. This review is very much in line with the Government Statement on the Role of Data Centres in Ireland’s Enterprise Strategy, which sets out how new data centre sites will account for the additional demands placed on energy infrastructure, demonstrating a clear pathway to decarbonised services. Five key measures There are five measures LEUs can adopt now to support Ireland’s decarbonisation plans whilst ensuring security of supply: 1. Decarbonising behind-the-meter generation Implementation of cost-effective alternatives to carbon-intensive backup generation, including: Matching gas with domestic green gas certificates; and Transitioning sites’ backup generators to renewables-based, biodegradable fuels, such as hydrotreated vegetable oil. 2. Investing in behind-the-meter storage Investment in on-site, behind-the-meter storage means LEUs can utilise stored energy at peak times and times of system stress. This ensures high network charges – those associated with electricity imported from the grid – are minimised, while LEUs can ‘sell’ stored energy back to the grid (thus creating an additional revenue stream and return on behind-the-meter storage investment). 3. Unlocking flexibility in load At times of security of supply events, disruption to business-as-usual operations can lead to an increase in emissions. This can be minimised by unlocking flexibility in load: Flexible load: Reducing reliance on the electricity system by using behind-the-meter generation and/or storage to meet electricity demand. Flexible load times: Rescheduling server load processing to a time when system congestion is lower, or renewables are more abundant on the system. Flexible load locations: Relocating server load processing from one data centre to another if there is lower demand – or higher renewables outputs – in the alternative location(s). 4. Adopting Corporate Power Purchase Agreements (CPPAs) Arrangements whereby a company procures renewable electricity directly through a contractual agreement with a renewables-based generator are known as CPPAs. These are an attractive option for LEUs as they mitigate the impacts of energy price volatility whilst also reducing electricity-related emissions. 5. Implementing enhanced emissions and energy usage reporting The new Corporate Sustainability Reporting Directive – coupled with broader ESG scrutiny – places additional demands on companies regarding the disclosure of climate and environmental data. With mandatory requirements set to be introduced, LEUs should now begin to increase transparency and reporting on emissions and energy usage, starting with materiality/gap and ESG maturity assessments. Building future resilience Rising electricity demand and a dependency on energy imports mean there is an urgent need to embed increased resilience in our energy system. LEUs have a crucial role to play in driving this national resilience. This cannot come at the cost of increased emissions, however. Adoption of interim measures that will ensure security of supply without increasing emissions means LEUs are in line with broader legislative and regulatory proposals and are also building future resilience. David Cashman is Director of Power and Utilities at EY

CPPA use has risen sharply in Ireland in the last two years against a backdrop of price volatility and an increasing focus on the role corporates must play in reaching net zero, writes Robert Costello A Corporate Power Purchase Agreement (CPPAs) is a long-term contract under which a corporate (offtaker) agrees to buy some or all of its electricity directly from a renewable energy generator.  There are two main types of CPPAs in Ireland: Financial (virtual) CPPA – this agreement acts as a financial hedge that enables the corporation to support renewable energy projects and secure a stable energy price without physically trading power. Physical CPPA – the corporate receives physical delivery of electricity from the generator, generally through the grid. Benefits of CPPAs The State’s climate action plan aims to reduce emissions by 51 percent by 2030 and deliver 80 percent renewable electricity by 2030. It includes a target of 15 percent of electricity demand to be delivered by CPPAs. CPPAs offer an alternative route to market for generators who were excluded from the Renewable Electricity Support Scheme (RESS), were unsuccessful in RESS or for whom the terms and conditions are not commercially viable. The long-term stable income that comes with a CPPA with a financially strong counterparty gives generators the financial certainty they need to secure debt funding to build new projects.  Meanwhile, corporates benefit due to: Budget certainty, particularly given volatile market prices; Delivering additionality – the renewable energy project would not have been built without the corporate's involvement (via the CPPA); and Guarantees of origin (GOs). Key commercial considerations When negotiating a CPPA, corporates must consider that CPPAs are typically long-term contracts (about 15 years), although some short-term contracts (less than five years) have been agreed in the Irish market in the past year. The offtakers forecast energy needs to determine the size of the asset with which it can contract for some or all of the output. There are four types of contract: pay-as-produced; shaped; baseload; and pay-as-consumed. Pay-as-produced contracts are the least risky for developers (as generation is not fully predictable). Other forms of contract need a significant premium from the offtaker as the generator is taking the volume risk. CPPAs can be fixed-priced, variable or a combination of both. Fixed pricing increases cash flow certainty for both parties, helping with budgeting, project financing and protecting margins. However, it can expose offtakers if there are significant wholesale market price declines, as they are locked in at higher prices. Fostering growth CPPAs present a pathway to achieving Ireland’s ambitious climate action goals. By facilitating direct transactions between corporations and renewable energy generators, CPPAs not only contribute to decarbonisation efforts but also foster economic stability and growth. However, navigating the complexities of CPPAs requires careful consideration of key commercial factors. From contract duration to pricing mechanisms, each element demands strategic planning to mitigate risks and maximise benefits for all stakeholders. In essence, CPPAs represent more than just contractual agreements; they embody a collaborative approach towards a greener, more sustainable future. By harnessing the collective power of corporates and renewable energy generators, Ireland can accelerate its journey to a low-carbon economy while fostering innovation and resilience in the energy sector. Robert Costello is a Partner with PwC

Irish support for EU membership remains strong despite concerns about the direction it is taking and declining trust in political institutions, writes Noelle O Connell Despite a slight decline of four percent from 2023, the overwhelming majority of people in Ireland (84%) and Northern Ireland (76%) believe Ireland should remain a member of the European Union, according to the EU Poll 2024 from European Movement Ireland. While support for EU membership remains strong, however, the 2024 results indicate a notable decline in both jurisdictions on the question of whether or not the EU is moving in the right direction – down from 58 percent in 2023 to 49 percent this year. Voter concerns Ireland’s continuing support for EU membership is welcome at a pivotal time for Europe. This year’s less favourable findings on several key issues are of concern, however, and serve as a timely reminder of the continual need for public engagement, dialogue and communication on EU affairs. It also highlights the need for the EU to listen to voters’ concerns. Areas of low satisfaction with the EU’s performance include its response to issues such as migration, the war in Ukraine and the Israel-Gaza conflict. Forty-six percent of respondents in Ireland and 44 percent in Northern Ireland ranked the EU’s performance on the issue of migration as its weakest. The timing of this survey coincides with the debate on the new EU Migration and Asylum Pact. The EU’s performance on trade and business continues to score well among respondents at 46 percent in Ireland and 55 percent in Northern Ireland. This underlines the positive public perception of the Single Market and its benefit to the economies in the North and south. Political popularity Of concern in this year’s poll is the growing lack of trust in political institutions in Ireland and Northern Ireland, which could reflect a wider global trend of increasing polarisation in public and political discourse. When asked which of the institutions they trusted most, 34 percent chose the Irish Government and 26 percent the EU. A significant majority (40 percent) stated none of the above. In Northern Ireland, trust in the EU came in at 28 percent, while trust in the Irish Government ranked higher than the UK Government at 24 percent compared to just eight percent, with the Northern Ireland Executive being included this year for the first time. Thirty-one percent said they did not trust any of the institutions listed. Expanding the EU This year marks the 20th anniversary of the biggest ever enlargement of the European Union when ten countries became members under the Irish presidency in 2004. We welcome the consistently strong support across the island of Ireland for EU enlargement, with 57 percent in favour of more countries joining the Union. Noelle O Connell is CEO of European Movement Ireland 

Self-compassion is the ability to treat yourself with the same care and kindness as you would a good friend who was going through a difficult and stressful time. 'Unlike self-criticism, which asks if you're good enough, self-compassion asks what's good for you, what do you need?' Kristin Neff Showing compassion to others When we are compassionate to others, we have an intention to be with them through the difficulties they are experiencing and to alleviate their suffering and stress in some way. This can often be very different to the way we treat ourselves through the challenges of life. How often have we provided support for someone we care about and yet end up criticising ourselves endlessly for our various perceived inadequacies or shortcomings. Many of us have been taught to put others first. But neglecting ourselves in order to do this isn't an effective or sustainable long term strategy without considering what we need to keep emotionally well. Maintaining the inner capacity to be there for our family, friends and colleagues is reliant on looking after ourselves well. Self-compassion means you are understanding and kind to yourself when confronted with personal failings and mistakes – after all, whoever said you were supposed to be perfect? Why we need to be compassionate towards ourselves Feeling stressed and being hard on ourselves is very common, especially in a culture which is increasingly performance and target focused. Loneliness and isolation are also increasing in our ever digitally focused world. If you are finding it difficult to manage the many challenges, threats and distractions of our modern world, you are not alone. With current figures of one in four people developing a mental health difficulty in any given year and the rising levels of distress within young people, many people are struggling to align life with their deeper values and needs. A self-critical and unkind stance towards yourself when you are going through testing times will only serve to activate the fight or flight stress response, clouding the minds ability to remain calm. Some people may feel reluctant to develop self-compassion as they might feel the notion is self-indulgent or self-pitying. But developing the ability and strength to face and manage our difficulties, without isolating ourselves from others and becoming absorbed in our own pain is the essence of courageous living. Being able to attend to your own difficulties and challenges wisely will enable you to have the spare emotional capacity to engage with others and life in a more helpful way. According to Kristin Neff there are three key elements to compassion: Self-kindness An ability to relate to ourselves with warmth and kindness. Common humanity The appreciation that we all suffer at times and you are not alone in these feelings. Mindful awareness The ability to view our difficulties in a balanced perspective so that we can keep engaging in life. How to develop emotional resilience There has been much interest in the effects of developing compassion within ourselves from a scientific perspective. Research has shown that people who score high on self-compassion: Cope better with adversities Take more personal initiative and responsibility Are less fearful of making mistakes and being rejected Are more emotionally intelligent, happier and more optimistic Take better care of themselves physically and emotionally The good news is that our compassionate self can be developed and enhanced through training and practice so that we become more attuned to supporting ourselves through the difficulties of life rather than sabotaging ourselves and making situations more unmanageable than they need to be. How to be kinder and more compassionate to yourself Be aware of your internal voice Becoming aware of how we talk to ourselves, the tone of voice we use and language we use gives us the opportunity to move from harshness to supportive tendencies. Noticing the good Being able to notice and celebrate moments of the day and our good qualities is an essential part of managing and balancing difficult times. Each day ask yourself: When have I been at my best today for someone else? What has been my best moment of today? Give yourself encouragement It is more effective to become your own internal ally and support system rather than your own harshest critic. Written by: Kirsty Lilley Kirsty has delivered mindfulness and self-compassion courses to a wide variety of workplaces during her career and is also a trained psychotherapist and coach. She has worked at a strategic level within organisations developing wellbeing policies and been responsible for developing training courses on improving mental health and wellbeing. Kirsty is committed to an integrated and compassionate approach when helping others to fulfil their potential. Article reproduced with the kind permission of CABA, the organisation providing lifelong support to ICAEW members, ACA students and their close family around the world.