The Economic Crime (Transparency and Enforcement) Act 2022 created the Register of Overseas Entities (ROE). It requires overseas entities owning UK property to reveal their beneficial owners and to register their entities on a publicly available register.   Information must be verified before an overseas entity makes an application for registration, complies with the updating duty or makes an application for removal. The Register of Overseas Entities (Verification and Provision of Information ) Regulations 2022 (SI 2022/725) set out the details of the verification system. The drafting of the Verification Regulations means that there is a strict liability in place and the accountancy professional body supervisors are concerned that any firm acting as a verifier will face significant challenges and expose itself to significant risk, including possible criminal prosecution, regulatory sanction, and reputational damage. Firms should carefully consider whether they should provide this verification work. The work required for verification under the ROE is not the same as the risk-based approach to client due diligence under Money Laundering Regulations 2017 and firms should familiarise themselves with the differences. The Government has produced further Guidance to assist. The Accountancy AML Supervisors Group (AASG) published an AML Alert highlighting key risks associated with this work. The Institute has previously shared this AASG AML Alert on ROE-Verification work with the MLCPs and MLROs but would highlight again the risks associated with this verification work.

This Alert is produced by the UK National Economic Crime Centre (NECC) to highlight the high-risk behaviours and typologies associated with the Trust and Company Service Provider (TCSP) sector. Although this Alert is produced in conjunction with law enforcement and financial sector partners in the UK, many of the risk indicators will also be relevant in Ireland. We would encourage regulated businesses to read this Alert. Professional Standards also published its TCSP Thematic Review earlier in the year. This document summarised the responses to a detailed Questionnaire issued to a sample of firms based in Northern Ireland. The majority of firms only provide TCSP services such as company formation / registered office and only provide such services to existing clients alongside other ancillary accountancy services (e.g. statutory audit, tax and accounts preparation).

Readers may recall that during the pandemic the Irish government introduced temporary measures amending the Companies Act, 2014. The Companies (Miscellaneous Provisions) (Covid-19) Act 2020 and regulations made under that Act provided for special measures for example for virtual meetings, execution of documents and temporary increase in the thresholds at which a company would be deemed to be unable to pay its debts during what was known as the “interim period”. While it seems that virtual AGMs are likely to become a permanent legislative provision (see here for our recent news item), other temporary measures continue to be  unwound by the government. In the most recent legislation, the measure which increased to in excess of €50,000 the amount at which a company is deemed to be unable to pay its debts in the interim period is not renewed. Therefore, beginning 1 January 2024, a company is deemed to be unable to pay its debts under section 570 of the 2014 Act where indebted to a creditor in an amount exceeding €10,000 or indebted to two or more creditors in an amount exceeding €20,000. This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.

A new Technical Release has been published. TR 04 2023  Reporting on covenants This guidance assists firms to report in connection with financial covenants in loan agreements and other facilities and replaces M36 Firms' Reports and Duties to Lenders in Connection with Loans and other Facilities to Clients and Related Covenants, which was withdrawn in December 2023. Loan agreements often contain a number of covenants with which the borrower is expected to comply. Compliance with such covenants is intended to help assure the lender of the continuing security for the loan; borrowers are expected to provide periodic reports on their compliance, which may include a requirement for the borrower to provide the lender with certain reports prepared by their auditor. This Technical Release gives guidance to professional accountancy firms and practitioners in these situations. The TR can be accessed on the Institute's Technical Hub. 

Revenue has published a new Tax and Duty Manual to provide guidance for Payment Service Providers (PSPs) who have an EU Cross-Border Payments (CESOP) reporting obligation in Ireland. The manual includes: guidance on the registration process and procedures for resident and non-resident PSPs for the purpose of CESOP reporting in Ireland, an outline of the process for filing CESOP reports in Ireland, and an outline of the technical specifications required for filing CESOP reports in Ireland. The registration facility for CESOP filers will open in Ireland on 1 February 2024.

Revenue has published a new Tax and Duty Manual – Requests for Transfer Pricing Documentation, which documents Revenue’s operational policy for requesting transfer pricing documentation as part of its risk appraisal process. According to the detail of the TDM, this process seeks to ensure that a consistent approach is applied to all transfer pricing documentation requests and that such requests appropriately fit within Revenue’s Compliance Intervention Framework.

Revenue has updated the Tax and Duty Manual which provides guidance to taxpayers who wish to continue to rely on an opinion or confirmation issued by Revenue in the period 1 January and 31 December 2018, in respect of a transaction, period or part of a period, on or after 1 January 2024. Application for renewal or extension of such an opinion or confirmation is required to be made by a taxpayer on or before 29 March 2024.

Revenue has updated the Tax and Duty Manual which provides guidance on the Charities VAT Compensation Scheme. The updated guidance reflects the increase to the annual capped amount available to be paid out of the Charities VAT Compensation Scheme fund. With effect from January 2024, the annual fund is set at €10 million.

Revenue has published a new Tax and Duty Manual to provide guidance on the income tax exemption of certain profits from the microgeneration of electricity by an individual at their sole or main residence. Section 216D TCA 1997 provides for an exemption from income tax, USC and PRSI for certain profits arising to a qualifying individual from the microgeneration of electricity. For tax years 2022, 2023 and 2024 the exempt amount is €200, a qualifying individual is not required to declare such profits in an income tax return, any amount in excess of the exempt limit is required to be declared as income. Finance Bill (No. 2) 2023 includes a proposal to amend section 216D TCA 1997 by increasing the amount of profits exempt from income tax, from €200 to €400 per year and extending the scheme by one year to the end of 2025. In this regard, the manual will be updated following enactment of the Bill.

A reminder to readers that Finance Bill (No.2) 2023 introduced an amendment to the collection and reporting requirements for taxes related to share options. The taxation of a gain realised on the exercise, assignment or release of share options no longer falls under individual self-assessment. Instead, taxes must be accounting for through the payroll system.  This means that employers will be responsible for collecting income tax, USC and PRSI from employees on share option gains and remitting those taxes to Revenue as part of the payroll process. This treatment will apply to gains realised on or after 1 January 2024.

From 1 January 2024, the upper age limit for exemption from PRSI is being raised from 66 to 70 years for employees, their employers and the self-employed. From that date, all employees and self-employed persons aged between 66 and 70, and born after 1 January 1958, will continue to be liable for PRSI until they have been awarded the State Pension (Contributory). For those who have already reached age 66 by 1 January 2024, their PRSI position will be unaffected by the changes. In conjunction with these changes, from 1 January 2024, an individual will be able to draw their State Pension (Contributory) between ages 66 and 70, providing them with an opportunity to improve their contribution record at date of drawdown. Further information is available here.

The Institute, under the auspices of the CCAB-I, has responded to the public consultation on the roadmap for the introduction of a participation exemption to Irish corporation tax. This consultation focuses primarily on the dividend participation exemption. The key message remains that the CCAB-I supports the introduction of a participation exemption for both foreign dividends and foreign branch profits. The main points from our response are: In recent years, measures introduced under the EU Anti-Tax Avoidance Directive (ATAD), OECD’s Base Erosion and Profit Shifting (BEPS) initiative, and the EU Minimum Tax Directive are aligned with a territorial system of taxation (of which a participation exemption for dividends is one part). We recommend careful consideration of the method of relief, i.e. whether the optimum relief is by way of an exemption (similar to section 129 Taxes Consolidation Act (“TCA”) 1997) or as a deduction from total profits. Our initial sense is that a deduction will be preferable when considered in light of the EU Minimum Taxation Directive and the Interest Limitation Rule. We recommend that the relief is drafted to provide broad optionality. Ideally, we recommend that taxpayers can opt to apply the rules on a distribution-by-distribution basis. We recommend that the exemption should apply by default with the option to claim double taxation relief on a distribution-by-distribution basis. We strongly support the formation of a committee under the umbrella of the Main Tax Administration Liaison Committee (TALC). In the context of the implementation of the EU Minimum Taxation Directive, the TALC BEPS Sub-Committee has proven the benefit for all stakeholders in addressing technical, legal, accounting and commercial uncertainties.