Chartered Accountants Ireland has today launched its new guide to Foreign Direct Investment (FDI) in Ireland at an event in conjunction with IDA Ireland in Dublin.  Over 100 attendees gathered in Chartered Accountants House to hear from a panel of: Cróna Clohisey, Director of Public Affairs Chartered Accountants Ireland Feargal O'Rourke, Chair, IDA Ireland Barry Doyle, President Chartered Accountants Ireland Ireland faces greater competition as a location for global FDI than ever before as we move into 2025, with other countries enhancing their offering at pace. While Ireland’s FDI policy has stood the country in good stead for decades, a slowdown in growth of the global economy coupled with accelerated industrial policy interventions by competitor countries means Ireland’s inward investment model is now at a crucial inflection point. Commenting at the event, Cróna Clohisey, Director Public Affairs, Chartered Accountants Ireland said “Ireland’s record of attracting FDI has been the envy of other countries for decades and IDA Ireland has played a pivotal role. However, against a backdrop of heightened geopolitical uncertainty and intensifying global competition for inward investment, we cannot afford to be complacent about our offering. The significant deficits in the State’s crucial infrastructure, including housing, energy, water, childcare and nationwide public transport, need to be addressed with urgency if we are to remain fully competitive in the race for future FDI.” Barry Doyle, President, Chartered Accountants Ireland said “We are all familiar with the advantages that Ireland holds in attracting FDI - EU membership, strategic location, young talented workforce and a stable business environment. Our members also represent a key competitive advantage, with Chartered Accountants playing a central role in supporting FDI the length and breadth of the country. “Competition has never been greater for the flow of FDI around the world, and with a new US administration taking office in a matter of weeks, there is an increased chance of disruption to the traditional flow of FDI globally. However, investors with a long term, sustainable outlook will look beyond short-term protectionism. Ireland as a safe and stable environment will continue to benefit greatly from FDI and we as Chartered Accountants will be there to lead and support such investments.”

Increased global competition one of several challenges to FDI model Addressing infrastructural deficit critical to ensuring continued FDI growth Chartered Accountants Ireland launches FDI guide, highlighting critical role its members play in supporting investment   Ireland faces greater competition as a location for global Foreign Direct Investment (FDI) than ever before as we move into 2025, with other countries enhancing their offering at pace. While Ireland’s FDI policy has stood the country in good stead for decades, a slowdown in growth of the global economy coupled with accelerated industrial policy interventions by competitor countries means Ireland’s inward investment model is now at a crucial inflection point, according to Chartered Accountants Ireland.  The Institute, the largest professional body on the island of Ireland, representing over 38,400 members, has today launched its new guide to FDI in Ireland at an event in conjunction with IDA Ireland in Dublin.   Cróna Clohisey, Director Public Affairs, Chartered Accountants Ireland said  “Ireland’s record of attracting FDI has been the envy of other countries for decades and IDA Ireland has played a pivotal role. However, against a backdrop of heightened geopolitical uncertainty and intensifying global competition for inward investment, we cannot afford to be complacent about our offering. The significant deficits in the State’s crucial infrastructure, including housing, energy, water, childcare and nationwide public transport, need to be addressed with urgency if we are to remain fully competitive in the race for future FDI.” Barry Doyle, President, Chartered Accountants Ireland said  “We are all familiar with the advantages that Ireland holds in attracting FDI - EU membership, strategic location, young talented workforce and a stable business environment. Our members also represent a key competitive advantage, with Chartered Accountants playing a central role in supporting FDI the length and breadth of the country. “Competition has never been greater for the flow of FDI around the world, and with a new US administration taking office in a matter of weeks, there is an increased chance of disruption to the traditional flow of FDI globally. However, investors with a long term, sustainable outlook will look beyond short-term protectionism. Ireland as a safe and stable environment will continue to benefit greatly from FDI and we as Chartered Accountants will be there to lead and support such investments.”    

The transformation of tax administration will be the theme of the OECD Forum on Tax Administration Plenary 2024 event. The event will gather together Commissioners from advanced and emerging tax administrations and representatives from international organisations and regional tax administration bodies. It takes place later this week in Athens, Greece from 13 - 15 November 2024.

The European Commission has welcomed the general approach announced by the Council regarding the Commission's proposals on VAT in the Digital Age. The new rules, intended to make the EU VAT system more business-friendly and more resilient to fraud, aim to address challenges arising from the platform economy and to level the playing field for all providers of short-term accommodation and transport services. The package introduces three key measures: Uniform real-time digital reporting for VAT purposes using e-invoicing for cross-border transactions, Platform operators in the passenger transport and short-term accommodation sectors will become responsible for collecting and remitting VAT to tax authorities, where the underlying supplier does not charge VAT, and     A single VAT registration system for businesses selling to consumers across the EU. The UK intends to consult on e-invoicing in early 2025.

Revenue has revised the Tax and Duty Manual which provides guidance on obligations to file a stamp duty return. The updated manual includes the full range of stamp duty reliefs and exemptions provided for in Chapter 1 of Part 7 of the SDCA 1999.   The guidance also makes reference to the new Tax and Duty Manual which lists miscellaneous Acts which contain stamp duty exemptions. 

Revenue has updated the Tax and Duty Manual which provides guidance on payments made without deduction of income tax to reflect the increase of 0.1 percent to all PRSI rates effective from 1 October 2024. 

The Parliamentary Budget Office has published a note explaining the EU State Aid Rules and how they operate in Ireland. State Aid refers to the use of financial resources, such as tax relief, provided on a selective basis by public bodies to businesses or industries in a way that gives them an unfair advantage or disrupts trade within the EU.   This publication provides a high-level overview of:  EU State Aid rules and their application in Ireland, De Minimis Aid, and The General Block Exemption Regulation (GBER).

Finance Bill 2024/25 was published last week on 7 November. Explanatory notes to the Bill were also published. The Bill’s first reading in the House of Commons took place last week; second reading has not yet been scheduled.

Revenue has responded to concerns raised at recent meetings of the TALC Indirect Taxes sub-committee regarding the interaction of VAT and Relevant Contracts Tax (RCT) in the context of certain property-related transactions.  The issue concerned the applicability of the VAT reverse charge on single contracts entered into between developers and Approved Housing bodies/Local Authorities which included both the sale of a site and the supply of building serves. In its response, Revenue addressed the various scenarios submitted subject to the caveat that the application of RCT to a contract will depend on the facts of each case and the contractual arrangements between the parties. The note concludes as follows: “In summary, as previously mentioned from a VAT perspective, in general, the supplier is responsible for accounting for the VAT. However, where RCT applies, the person accountable for VAT depends on the RCT position of each agreement. Essentially, the recipient of the supply acting as a principal contractor for construction operations must account for the VAT directly to Revenue as if they had made that supply (VAT reverse charge). Where a single contract includes the sale of land and the provision of construction operations to an [Approved Housing body/Local Authority], VAT on the sale of the land should be accounted for by the supplier. VAT on the construction operations should be accounted by the recipient under the reverse charge mechanism.”

Over the next five years, the Government is expanding HMRC’s capacity with the objective of closing the tax gap and bringing in an additional £6.5 billion per year by 2029/30. A range of announcements featured in this area including anti-avoidance legislation, and a commitment to overhaul HMRC’s IT systems and improve debt management by ensuring tax debt is settled faster. However, no information was provided on any specific additional investment to improve HMRC’s phone and post services. And finally, the expected consultation on e-invoicing will not be launched until early 2025. Investment in HMRC The HMRC settlement provides total funding of £6.7 billion in 2025/26. According to the Budget publications, the increased funding, together with the Exchequer Secretary to the Treasury becoming Chair of HMRC’s Board, marks a step change in the Government’s efforts to “close the tax gap, improve service levels, and modernise and reform HMRC”. Plans also continue to transform HMRC into a “digital‑first organisation”, with a Digital Transformation Roadmap to be published in Spring 2025. 180 new counter-fraud staff will be used to target increasing HMRC’s capability to better tackle fraud and error in child benefit and tax-free childcare via an expected gross saving of £95 million by 2029/30. As announced in July, £1.4 billion will be invested over the next five years to recruit an additional 5,000 HMRC compliance staff in order to raise £2.7 billion per year in additional revenue by 2029/30. The first 200 are set to join this month. £262 million will be invested over the same period to fund 1,800 HMRC debt management staff, with the aim of raising £2 billion per year in additional revenue by 2029/30. £154 million will be invested to modernise HMRC’s debt management case system and a £12 million investment will be used to acquire further credit reference agency data to enable HMRC to better target their debt collection activities. £16 million is to be invested to modernise HMRC’s app to allow income tax self-assessment taxpayers to make voluntary advance payments in instalments. The Government also confirmed that the use of payroll software to report and pay tax on benefits in kind (payrolling of BIKs) will become mandatory as previously announced. This will take place in phases, from April 2026 and will apply to income tax and Class 1A National Insurance Contributions. Tax agents £36 million is being invested in order to modernise HMRC’s tax adviser registration services from April 2026 and tax advisers who interact with HMRC on behalf of clients will need to be registered with HMRC. This will be legislated for in a future Finance Bill. From 6 April 2025, tax advisers will be required to provide an advanced electronic signature when making specified income tax repayment claims on behalf of clients. A consultation will also be published in early 2025 on options to enhance HMRC’s powers and sanctions to take swifter and stronger action against tax advisers who facilitate non-compliance. Umbrella company market To tackle “the significant levels of tax avoidance and fraud in the umbrella company market”, recruitment agencies will become responsible for accounting for PAYE on payments made to workers that are supplied via umbrella companies. Where there is no agency, this responsibility will fall to the end client business. This will take effect from April 2026. A policy paper was published alongside the Budget providing further information on this measure. Late payment interest rates on unpaid tax From 6 April 2025, the late payment interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5 percent points so that it will be set at 4 percent above base rate. Should the current Bank of England base rate remain unchanged between now and then, the interest rate will therefore increase from 7.25 percent to 8.75 percent. Digital reporting for Individual Savings Account managers This will be mandatory from 6 April 2027; hence draft legislation will be published for a technical consultation in 2025. Car ownership schemes Draft legislation will be published to deal with loopholes in car ownership arrangements. This aims to target arrangements through which an employer/third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period. This will take effect from 6 April 2026. Charity compliance Legislation will be introduced to ensure that only the intended tax relief is given to charities. These changes will take effect from April 2026 to give charities time to adjust to the new rules. Liquidations of limited liability partnerships The way capital gains are taxed when a limited liability partnership is liquidated, and assets are disposed of to a contributing member or person connected to them, changed from 30 October 2024 and will be legislated for in Finance Bill 2024/25. Close company loans to participators The Government will ensure that shareholders cannot extract funds untaxed from close companies by legislating to remove opportunities to side-step the anti-avoidance rules attached to the loans to participators regime. This change applies from 30 October 2024. Reducing tax-free overseas transfers of tax relieved UK pensions The Government removed the exclusion from the overseas transfer charge for transfers to qualifying recognised overseas pension schemes in the European Economic Area or Gibraltar from 30 October 2024 to address the risk of individuals receiving double tax-free allowances. Rogue company directors Collaboration between HMRC, Companies House, and the Insolvency Service will be increased to tackle those using contrived corporate insolvencies and dissolutions, often referred to as “phoenixism”, to evade tax. Deterring tax fraud and rewards for informants HMRC’s counter-fraud capability will be expanded to address “high value and high harm tax” and its scheme for rewarding informants will be strengthened in order to encourage reporting of high value tax fraud and avoidance. Tackling promoters of marketed tax avoidance A consultation will be published in early 2025 on a package of measures to tackle promoters of marketed tax avoidance. Offshore tax compliance The Government committed additional resources to scale up compliance activity in order to tackle serious offshore non-compliance such as fraud by wealthy taxpayers and intermediaries, corporates they control and other connected entities. Simplification of taxation of offshore interest A consultation has been launched to tackle challenges arising from the mismatch of information on offshore interest being provided on a calendar year basis rather than a UK tax year basis. The consultation is seeking views on options to address this mismatch, including changes to the rules so that individuals are taxed on the non-UK interest arising in the year ended 31 December that ends in the tax year. Cryptoasset Reporting Framework and amendments to the Common Reporting Standard A summary of responses to the consultation on the implementation of the Cryptoasset Reporting Framework (CARF) and amendments to Common Reporting Standard was published. This includes a decision to extend the CARF’s reporting requirements to UK users. This will be legislated for in Finance Bill 2024/25, although draft regulations to implement the revised rules have already been published for consultation. Employee ownership trusts and employee benefit trusts A package of reforms to the taxation of employee ownership trusts and employee benefit trusts were introduced to prevent opportunities for abuse and ensure that the regimes remain focused on encouraging employee ownership and rewarding employees. These changes took effect from 30 October 2024. Hidden economy: expanding tax conditionality to new sectors and consultation on HMRC correction powers A consultation has been published on whether to make the renewal of further public sector licences conditional on applicants demonstrating they are appropriately registered for tax. The Government has also published a consultation on reforming HMRC’s correction powers, exploring changes to HMRC’s existing powers and processes, and a potential new power to require taxpayers to correct mistakes themselves. A response to the call for evidence on HMRC powers, penalties, and safeguards has also been published. Making better use of third-party data The Government will publish a consultation in early 2025 on modernising how HMRC acquires and uses third-party data. Requirements for European Economic Area overseas pension schemes The Government will bring in line the conditions of overseas pension schemes (OPS) and recognised overseas pension schemes (ROPS) established in the EEA with OPS and ROPS established in the rest of the world from 6 April 2025. UK resident pension scheme administrators The Government will require scheme administrators of registered pension schemes to be UK resident from 6 April 2026.  

The October Exchequer figures show that tax revenues of €76.3 billion were €9.9 billion, or 14.9 percent ahead of the same period last year. More than half of the increase was driven by corporation tax receipts of €21.4 billion, which are €5.6 billion, or 35.9 percent, ahead of last year. October corporation tax receipts include one-off receipts arising from the ruling of the Court of Justice of the European Union (CJEU) in the Apple State-aid case last September.  Reflecting the continued strength in the labour market, income tax receipts for the year-to-October of €27.6 billion are up €1.9 billion, or 7.3 percent, ahead of the same period last year. On a cumulative basis, VAT receipts of €18.3 billion are up €1.3 billion, or 7.7 per cent, on the same period last year reflecting solid consumer spending growth.  An Exchequer surplus of €1.3 billion was recorded to the end of October. This was an improvement of €2.1 billion on the same period last year.  In addition, the Parliamentary Budget Office has released a new data visualisation, Fiscal Monitor October 2024. This visualisation provides a high level analysis of spending and tax revenue trends to the end of October 2024.  Commenting on the figures, the Minister for Finance Jack Chambers said:  “The October tax performance shows steady growth across most revenue streams, with the exception of corporation tax, which is distorted by the receipt of the first tranche of receipts arising from the CJEU ruling of September 10th.  As I said on Budget Day, it is essential that we do not use this once-off revenue to fund day-to-day spending commitments. The Departments of Finance and Public Expenditure, NDP Delivery and Reform, are progressing the development of the framework for the allocation of windfall revenues, which is expected to be brought to Government in the first quarter of next year.  More generally, we must continue to pursue a budgetary strategy that is carefully balanced between addressing the pressures of today and ensuring fiscal sustainability over the longer term. Last month, Government made the first transfer from the Exchequer to the new Future Ireland Fund, setting aside a portion of the windfall tax receipts to help us prepare for future challenges. By the end of next year, there will be some €16 billion in the two new investment funds.” 

A range of measures featured in this area including the announcement that the 100 percent first year allowance (FYA) for qualifying expenditure on certain green assets, including plant or machinery for electric vehicle charge points, will be extended, a recommendation of the Institute in its pre-budget submission. Green FYA The Government will extend for a further year the 100 percent FYA for qualifying expenditure on zero-emission cars and the 100 percent FYA for qualifying expenditure on plant or machinery for electric vehicle charge points to 31 March 2026 for corporation tax and 5 April 2026 for income tax. Leased assets and full expensing Extending full expensing to assets bought for leasing or hiring will be explored when fiscal conditions allow. What qualifies for capital allowances HMRC will continue to work with stakeholders to improve and clarify guidance on areas of uncertainty within the capital allowances system. Tax treatment of predevelopment costs A consultation will be launched in the coming months that explores the tax treatment of predevelopment costs.