Budget 2022
Budget 2022 includes measures which continue to support the economy after the fallout from COVID-19 while new measures are being introduced to address climate change.
EisnerAmper Ireland summarises key measures included in Budget 2022 across the following four areas:
- Employment & Personal Tax Measures;
- Corporate & Enterprise Measures;
- Indirect Taxes Measures; and
- Other Measures.
1. Employment & Personal Tax Measures
Income Tax, USC and PRSI
- The standard rate band for Income Tax is being increased by €1,500 in 2022 from €35,300 to €36,800 for a single person and from €44,300 to €45,800 for married couples / civil partners with one earner.
- The Personal Tax Credit, Employee Tax Credit and Earned Income Tax Credit have all been increased by €50 from €1,650 to €1,700.
- The Sea-going Naval Personnel Tax Credit which was introduced in 2020 has been extended until 31 December 2022.
- The reduced rate of USC for medical card holders and people aged 70 and above whose income is €60,000 or less has been extended for another year until 31 December 2022.
- Due to an increase in the National Minimum Wage from €10.20 to €10.50 per hour on 1 January 2022, the threshold for the 2% rate of USC has increased from €20,687 to €21,295. This is to prevent full-time workers on minimum wage from paying USC at the top rates.
- The weekly threshold for the higher rate of Employer’s PRSI has been increased from €398 to €410.
- The BIK exemption for battery electric vehicles will be extended to 2025 with a tapering effect on the vehicle value. This measure will take effect from 2023. For BIK purposes, the original market value of an electric vehicle will be reduced to €35,000 for 2023; €20,000 for 2024; and €10,000 for 2025.
Working from Home Deduction
- Taxpayers who work remotely will be allowed to claim an Income Tax deduction of 30% of the cost of heat, electricity and broadband incurred on days spent working from home.
Electricity Micro-generation
- Households who sell residual electricity that they generate back to the grid will be allowed a €200 tax disregard on their personal income.
Employment Wage Subsidy Scheme (“EWSS”)
- The EWSS will be extended until 30 April 2022 in a graduated form.
- There will be no change to EWSS for the months of October and November 2021.
- Businesses availing of the EWSS on the 31st of December 2021 can continue to be supported until the 30th of April 2022:
- from December 2021 to February 2022, the original two-rate structure of €151.50 and €203 will apply;
- for March and April 2022, a flat rate subsidy of €100 will be put in place.
- The reduced rate of Employers’ PRSI will not apply for March – April 2022.
- The scheme will close to new employers from 1 January 2022.
Taxation of International Flight Crew
- An amendment will be introduced in the Finance Bill to exclude non-resident flight crew from Irish Income Tax where certain conditions are satisfied. The details will be provided in Finance Bill 2021.
Pre-letting Rental Expenses
- The Finance Act 2017 introduced a provision which allowed a tax deduction against rental income for pre-letting expenses (expenditure that was incurred during the 12 months prior to being let after a vacant period). This provision was due to expire on 31 December 2021. Budget 2022 now extends the tax deductibility for pre-letting rental expenses to 31 December 2024.
2. Corporate & Enterprise Measures
New Corporation Tax credit for the digital gaming sector.
- Relief will be available as a refundable Corporation Tax credit at a rate of 32% on eligible expenditure (relating to the design and production of digital games) of up to a maximum limit of €25 million per project with a per project minimum spend requirement of €100,000.
Corporation Tax relief for certain start-up companies
- The relief will be amended to allow companies claim relief within their first five years of trading, an increase from the current three-year claim window.
Employment Investment Incentive (“EII”)
- The EII scheme is being extended to the end of 2024. Other provisions are being introduced with the aim to make the EII scheme more accessible – to open up the scheme to a wider range of funds and to make it easier for investors to redeem their capital without being subject to a penalty.
Headline Corporation Tax rate
- The Minister reiterated that agreement has been reached that the Irish headline Corporation Tax rate will increase to 15% (from 12.5%). However, the increased Corporation Tax rate will apply only to businesses with annual revenues exceeding €750m.
3. Indirect Taxes Measures
VAT
- The Minister has confirmed the reduced VAT rate of 9% for the hospitality sector will expire at end of August 2022 as previously suggested.
- The Minister also announced a change to the Farmers Flat Rate Scheme. There will be a decrease in the farmers’ flat rate addition from the current 5.6% to 5.5% in respect of 2022. The flat-rate scheme compensates un-registered farmers on an overall basis for VAT incurred on their farming inputs.
Vehicle Registration Tax (VRT)
- Budget 2022 introduced increases in the rates of VRT. From January 2022, the Minister said that a revised VRT table is being introduced. The 20 band table will remain with an increase in rates with a 1% increase for vehicles that fall between bands 9-12, a 2% increase for bands 13-15 and a 4% increase for bands 16-20.
Carbon Tax
- The Minister has confirmed that the Carbon Tax will increase by €7.50 from €33.50 to €41 per tonne of carbon dioxide emitted as flagged in the Finance Act 2020. The Finance Act 2020 provided for annual increments in the Carbon Tax of that amount every year out to 2030. This increase will be effective as of Budget night for auto fuels and 1 May 2022 for all other fuels.
Transfers of land to young trained farmers
- An extension to the Young Trained Farmer Stamp Duty relief was announced by the Minister. This measure means that full relief from Stamp Duty on the conveyance of farmland remains available to eligible young trained farmers to the end of 2022. In the context of this relief, the young trained farmer must be below the age of 35. This relief represents a 7.5% Stamp Duty saving.
4. Other Measures
Warehousing of Tax Liabilities
- Previously, company owners who had a material interest in their company were restricted from availing of the warehousing of debt provisions for employment income from that company. The provisions relating to warehousing of debt were introduced on account of COVID-19 and were effectively a deferral of certain tax liabilities.
- Budget 2022 now allows for such self-assessed income tax-payers who have that material interest in the company to warehouse Income Tax liabilities relating to the employment income from that company.
Help to Buy Scheme
- This scheme was due to cease on 31 December 2021. Budget 2022 now extends that relief to 31 December 2022 and provides that the enhanced relief will be available.
Accelerated Capital Allowances
- The Accelerated Capital Allowance scheme for Energy Efficient Equipment is being amended to exclude equipment directly operated by fossil fuels from qualifying for the scheme.
- The Accelerated Capital Allowance scheme for Gas Vehicles and Refuelling Equipment allows an accelerated deduction when businesses invest in vehicles powered by natural gas /biogas and related refuelling equipment. The scheme is being extended to the end of 2024 and is being amended to include hydrogen powered vehicles and refuelling equipment.
Anti-Tax Avoidance Measures
- Budget 2022 introduced a new rule in relation to interest limitation. This will limit deductible interest expenses to 30% of EBITDA for companies falling within the scope of the measure. Disallowed interest may be carried forward and may be deducted in future years if the company has sufficient interest capacity.
- Also introduced are new anti-reverse-hybrid rules. These rules may bring certain tax transparent entities (such as partnerships) within the scope of Irish tax where the entity is 50% or more owned/controlled by entities resident in a jurisdiction where a non-aligned tax treatment would cause a double non-taxation to occur.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, we design and deliver business & compliance solutions to make trade happen. This is what we do every day.
EisnerAmper Ireland’s Tax Department advises corporates, their people and principals operating in the technology, life sciences, real estate, structured finance, aircraft leasing and investment funds industries. To find out more, visit our Tax Services page.
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The content above is provided for general information purposes only and is not intended to provide, nor does it constitute, professional advice on any particular matter. If you would like more information or would like to discuss any of the topics raised above, please contact the author(s).
Budget 2021
With Budget 2021 announced earlier this week, EisnerAmper Ireland examines its effect on Irish-based businesses across the following four areas:
- Corporation Tax;
- Indirect Tax;
- Employment and Personal Tax; and
- Other Taxes.
1. Corporation Tax
– Corporation tax rate on trading profits
There has been no change to the 12.5% corporation tax rate applicable to the trading profits of a company.
The government has announced the extension to the accelerated capital allowances for energy savings plant and machinery to the end of 2023.
2. Indirect Tax
– VAT
The rate of VAT for the hospitality and tourism sector, currently 13.5%, will be reduced to 9% from 1 November 2020 until 31 December 2021.
The standard rate will revert from the current 21% to 23% from 1 March 2021 as outlined in the July Stimulus Plan.
The Flat rate of VAT for Farmers will increase from 5.4% to 5.6%.
– Other Indirect Tax considerations
The rate of carbon tax on fuel has increased from €26 to €33.50 per tonne of CO2. This has been applied to diesel and petrol as of midnight on 13 October 2020 which is approximately 2.5 cent a litre, with the increase to home heating oil being deferred until May 2021. This will increase by €7.50 per year until 2029 with a €6.50 increase in 2030 to bring the tax to €100 per tonne of CO2.
VRT reliefs for conventional and plug-in hybrid vehicles will finish at the end of 2020.
3. Employment and Personal Tax
– Income Tax, USC and PRSI
The Dependent Relative tax credit has increased by €175 to €245 and the Earned Income tax credit for Self Employed individuals has increased by €150 to €1,650 for 2021. The Sea-going Naval personnel Tax Credit has been extended until 31 December 2021 and increased from €1,270 to €1,500.
The reduced rate of USC for medical card holders and people aged 70 and above whose income is €60,000 or less has been extended for another year, until 31 December 2021.
Due to an increase in the National Minimum Wage from €10.10 to €10.20 per hour on 01 January 2021, the threshold for the 2% rate of USC has increased from €20,484 to €20,687. This is to prevent full-time workers on minimum wage from paying USC at the top rates.
The weekly threshold for the higher rate of Employer’s PRSI has been increased from €394 to €398. The higher rate, which was expected to increase, remains at 11.05% for 2021.
Employee’s PRSI is unchanged.
– Benefit in Kind (BIK)
There was no change to the 0% BIK rate for employers providing electric cars or vans, which is due to remain in place until 31 December 2022.
– Tax Debt Warehousing
The tax debt warehousing scheme has been expanded to include Temporary Wage Subsidy Scheme repayments for employers. For self-employed taxpayers it has been extended to include the 2019 and 2020 preliminary tax liabilities.
4. Other Taxes
– Capital Acquisitions Tax (CAT)
No change was made to CAT rates in the Budget.
– Stamp Duty (SD)
The consanguinity relief, which reduces the rate of stamp duty on land transfer to children, has been extended by 3 years.
The farm consolidation relief, which allows farmers to pay 1% stamp duty when buying and selling land within 24 months in a bid to consolidate land parcels, has been extended by 2 years.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, we design and deliver business & compliance solutions to make trade happen. This is what we do every day.
EisnerAmper Ireland’s Tax Department provides support to the Firm’s Financial Services and International Business market groups. We advise corporates, their people and principals operating in the technology, life sciences, real estate, structured finance, aircraft leasing and investment funds industries. To find out more, visit our Tax Services page.
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The content above is provided for general information purposes only and is not intended to provide, nor does it constitute, professional advice on any particular matter.
R&D Tax Credits
Have you requested an expedited payment of excess R&D Tax Credits?
Revenue typically does not process refunds until after the CT1 filing date, even where the CT return is filed early. Therefore, if a company has a 31 December year end, the refund may not be processed until after 23 September of the following year. In essence, this can mean a company may not receive its R&D refund until November or December of the following year.
Revenue recently issued guidance which notes that due to the impact of Covid-19, Revenue will, subject to appropriate checks, issue R&D refunds earlier in order to assist with companies’ cashflow. Consequently, if a CT1 is filed early, Revenue may on request, process the R&D refund early which could lead to a company receiving an early refund. To learn more about the Revenue guidance click, here.
How EisnerAmper Ireland can help
If you are in a position to file your 2019 CT return early this year to avail of the expedited payment of the R&D refund, please contact our Tax specialists who would be delighted to assist.
At EisnerAmper Ireland, our dedicated team of Tax professionals possess the knowledge and experience required to provide technical guidance and specialist advice on this and all other corporation tax and VAT related matters. We tailor our offering to your needs, ensuring you receive the best advice at the appropriate time.
Learn more about our Tax Services here.
Authors
The content above is provided for general information purposes only and is not intended to provide, nor does it constitute, professional advice on any particular matter. If you would like more information or would like to discuss any of the topics raised above, please contact the author(s).
Budget 2020
With Budget 2020 announced earlier this week, EisnerAmper Ireland examines its effect on Irish-based businesses across the following four areas:
- Corporation Tax;
- Indirect Tax;
- Employment and Personal Tax; and
- Other Taxes.
1. Corporation Tax
– Corporation tax rate on trading profits
There has been no change to the 12.5% corporation tax rate applicable to the trading profits of a company.
– Research and Development (R&D) Credit
The R&D credit is being revised for small and micro companies to increase the R&D credit from 25% to 30% and to improve the current method of calculating the limit(s) on the payable credit. New legislation is also being introduced to allow small companies carrying out pre-trading R&D to avail of the credit before trading starts – however the R&D offset in these circumstances is confined to VAT and payroll tax liabilities only. The new rules for small and micro companies are both subject to State aid approval.
With regard to all R&D claimants, the existing limit on outsourcing to third level institutes of education will be increased from 5% to 15%.
– Anti-hybrid measures
Finance Bill 2019 will introduce new anti-hybrid rules which will apply to all corporate tax payers from 1 January 2020. The introduction of these new anti-hybrid rules forms part of Ireland’s promise to implement the Anti-Tax Avoidance Directive (ATAD) and the new rules will be ATAD compliant. The rationale behind the introduction of the anti-hybrid rules is to preclude arrangements that abuse variances in the tax treatment applied under the laws of multiple jurisdictions to generate a tax benefit.
– Transfer Pricing (TP)
The Minister confirmed that updated TP legislation will be included in Finance Bill 2019. These updates will include the formal adoption of the OECD’s 2017 TP Guidelines into Irish domestic legislation and also the extension of transfer pricing rules to cover material capital transactions and cross-border non trading transactions. Subject to Ministerial Commencement Order, the new measures to be introduced will also expand the application of transfer pricing rules to SME’s.
2. Indirect Tax
– VAT
The only change to VAT was the reduction in the qualifying CO2 threshold for reclaims on commercial vehicles.
– Other Indirect Tax considerations
The rate of carbon tax on fuel has increased from €20 to €26 per tonne of CO2. This has been applied to diesel and petrol as of midnight on 8 October 2019, with the increase to home heating oil being deferred until May 2020.
A Nitrous Oxide tax will replace the 1% VRT surcharge on new diesel engine passenger vehicles registered from 1 January 2020.
VRT reliefs for conventional and plug-in hybrid vehicles has been extended until the end of 2020.
3. Employment and Personal Tax
– Income Tax, USC and PRSI
The Home Carer tax credit has increased by €100 to €1,600 and the Earned Income tax credit has increased by €150 to €1,500 for 2020. There was no other change to rate bands and credits.
The reduced rate of USC for medical card holders and people aged 70 and above whose income is €60,000 or less has been extended until 31 December 2020.
The rate of Employer’s PRSI will increase from 10.95% to 11.05% in 2020. Employee’s PRSI is unchanged.
– Benefit in Kind (BIK)
The 0% BIK rate for employers providing electric cars or vans has been extended to 31 December 2022.
– Special Assignee Relief Programme (SARP)
The SARP scheme has been extended until 31 December 2022.
– Key Employee Engagement Programme (KEEP)
Further amendments were announced to the KEEP scheme which was introduced in 2018. Under the new measures the scheme will also apply to:
- Group corporate structures;
- Part time employees; and
- Existing shares.
4. Other Taxes
– Capital Acquisitions Tax (CAT)
The tax-free Group A threshold for gifts or inheritances from a parent to child has increased by €15,000 to €335,000.
– Stamp Duty (SD)
The rate of SD with regard to non-residential property has increased by 1.5% to 7.5% with effect from 9 October 2019. However, the old 6% rate will apply to instruments executed on or before 31 December 2019, where a binding contract was entered into prior to 9 October 2019 and is accompanied by a statement certifying this.
– Dividend Withholding Tax (DWT)
The rate of DWT will increase by 5% to 25% with effect from 1 January 2020.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, we design and deliver business & compliance solutions to make trade happen. This is what we do every day.
EisnerAmper Ireland’s Tax Department provides support to the Firm’s Financial Services and International Business market groups. We advise corporates, their people and principals operating in the technology, life sciences, real estate, structured finance, aircraft leasing and investment funds industries. To find out more, visit our Tax Services page
Tax Services
Request a Callback from our Tax specialists now.
Authors
The content above is provided for general information purposes only and is not intended to provide, nor does it constitute, professional advice on any particular matter. If you would like more information or would like to discuss any of the topics raised above, please contact the author(s).
VAT On Food Supplements
General VAT Treatment Of Food
The VAT treatment of food and drink in Ireland can vary depending on what is being sold and how it is being supplied to the customer. The majority of food sold in shops and supermarkets is at zero rate, while the reduced rate (13.5%) applies to certain baked items including crackers, bagels, cakes and plain biscuits, and the standard rate (23%) applies to various items, examples of which include ice-cream, chocolate biscuits, sweets and crisps. Hot food and food provided in the course of catering is liable to VAT at the reduced rate while food supplements are treated separately for VAT purposes.
More information on the VAT treatment of food can be found on the Revenue website here.
What Are Considered Food Supplements For VAT Purposes?
For VAT purposes, food supplements are items for human consumption which are not ordinarily considered to be food and which are marketed to the consumer as dietary supplements.
VAT On Food Supplements – Current Issues
As these items are not considered food they are subject to VAT at the standard rate, however, in 2011 Revenue issued guidance (eBrief No. 70/11) to the effect that vitamins and minerals, in either tablet or liquid form, and fish oils for human consumption are subject to zero rate VAT.
VAT On Food Supplements – Upcoming Change
In December 2018, Revenue issued new guidance which confirmed the removal of the zero rate concession for vitamins, minerals and fish oils. As of January 2020, these items will be subject to the standard rate of VAT. Revenue also confirmed that as well as food supplements such as those defined above, the standard rate of VAT also applies to sports nutrition supplements, slimming aids, and liniments, ointments and rubs made from food ingredients.
Source: revenue.ie.
VAT On Food Supplements – Potential Impact of Upcoming Change?
With the vitamin and mineral market in Ireland currently worth circa €37 million annually (source: Statista), the overall increased cost of the new VAT measures to the Irish consumer will be approximately €8.5 million per year. This figure is set to rise, as the Irish vitamin and mineral market has an expected compound annual growth rate of 1%.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, our dedicated team of Tax professionals possess the knowledge and experience required to provide technical guidance and specialist advice on this and all other VAT and Indirect Tax related matters. We tailor our offering to your needs, ensuring you receive the best advice at the appropriate time.
Learn more about our outsourced Tax Services here.
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Latest News →Tips and Gratuities – Payroll Considerations and Legislation Changes
What Are Tips And Gratuities?
Tips and gratuities have been defined as ‘money exchanged from customer to service provider which is not legally required by the agreement for purchase of the service’ (Casey, 1998, as cited in LPC NO. 10, 2018). Generally speaking, they are relatively low value payments given by customers to workers in the service and hospitality industries in excess of the fee due for the transaction which has taken place. The frequency and value of such payments is entirely up to the customer.
Current Practices In Relation To Tips And Gratuities
Tips and gratuities are not specifically covered under the Payment of Wages Act 1991, however the Revenue Tax & Duty Manual Part 42-04-35A states that tips ‘paid to the employer and subsequently paid out to an employee should be included in pay for the income tax week or month in which they are paid out.’ This means that tips and gratuities paid to the employer and subsequently paid to the employee should be considered as pay for PAYE purposes and taxed accordingly, although the National Minimum Wage Act 2000 prevents employers from including these payments in the calculation of the National Minimum Wage. A service charge included as part of the bill should also be taxed as pay if it is paid out to an employee, but unlike tips, these payments can be included in the calculation of minimum wage.
From a wider taxation point of view, it’s worth pointing out that a service charge which is shown on the bill is subject to VAT at the reduced rate of 13.5%, however, tips and gratuities offered voluntarily by the customer are outside of the scope of VAT.
Tips And Gratuities – Current Issues
Currently there is no legislation which obliges employers to pass on any tips received by them to their staff, therefore a customer has no way of knowing if the tip they left was actually given to the intended recipient(s) and the worker has no protection if their employer chooses to keep some or all of the tips left by customers.
Proposed New Measures In Relation To Tips And Gratuities
Proposed new measures announced by the Minister for Employment Affairs and Social Protection, Regina Doherty TD, aimed at ensuring employees receive the tips due to them and providing protections for low paid workers, are expected to include the following:
- The Payment of Wages Act 1991 will be amended to ensure that tips and gratuities cannot be used to make up contractual rates of pay; and
- Employers will be obliged to clearly display their policy on how tips, gratuities and service charges are distributed.
Source: welfare.ie.
When Will The New Tips And Gratuities Measures Be Implemented?
It is currently unclear as to how soon the proposed measures will be introduced, however there was an announcement on 8 July 2019 which stated that the Government has given approval on a draft Heads of a Bill to amend the Payment of Wages Act 1991, which allows the Minister’s Department to draft the required legislation.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, our dedicated team of Tax professionals possess the knowledge and experience required to provide guidance and the intelligent solutions you need when either setting up, or running a business, in Ireland. We tailor our offering to your needs, ensuring you receive the best advice at the appropriate time.
Request a payroll quote or request a callback from our specialists now.
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The content above is provided for general information purposes only and is not intended to provide, nor does it constitute, professional advice on any particular matter.
Benefit in Kind (BIK) – Employer Overview
What Is BIK?
As a general rule, any benefit or perquisite, other than cash, which an employer provides for an employee would be considered a BIK once it has monetary value. It is the responsibility of the employer to calculate the value of the BIK and deduct the appropriate employment taxes via the PAYE system. Benefits given to an employee’s spouse or family members would also be considered BIK.
Taxation Of BIK
Tax must be deducted on the actual value of the benefits provided, unless the actual value is not known. In this case, tax must be deducted on the estimated value of the benefit.
The value of the benefit must be added to the employee’s pay as a notional pay element in the pay period in which the benefit was provided. PAYE, PRSI and USC are then deducted from the total value of the employee’s pay plus the BIK. This should then be reported to Revenue in a payroll submission either on or before the date the employee receives their net salary payment.
How Do You Calculate BIK?
Some BIKs have specific rules which must be followed in order to calculate the taxable value.
– Example 1: How To Calculate BIK On A Company Car
The taxable value (known as the cash equivalent) is based on a percentage of the Original Market Value (OMV) of the car, less any discount received when the car was purchased*. The percentage is dependent upon the number of business kilometres driven by the employee each year, as shown in the following table:
| Kilometres Driven | (% of OMV) |
| 24,000 and below | 30% |
| 24,001 to 32,000 | 24% |
| 32,001 to 40,000 | 18% |
| 40,001 to 48,000 | 12% |
| 48,001 and over | 6% |
(Source: revenue.ie)
Journeys to and from an employee’s normal place of work are not considered business travel.
Employees who work, on average, at least 20 hours per week, whose business kilometres are between 8,000 and 20,000 km per year and who spend at least 70% of their time away from their normal place of work can avail of a 20% reduction on their cash equivalent value.
– Example 2: How To Calculate BIK On Health Insurance
If you purchase health insurance on behalf of an employee this would be considered a taxable BIK. Although the amount paid by the employer to the insurer is the net cost of the policy, the value of the BIK for the employee is based on the gross cost. The employee gets tax relief by submitting a claim for a Medical Insurance Relief tax credit via their Revenue account at the end of the tax year.
Recent BIK Updates
Before PAYE modernisation, corrections to estimated BIK values could be made at any point in the tax year up to the filing of the annual P35 return. Since 1 January 2019, when the actual value of a benefit becomes known after BIK has been calculated on an estimated amount, the correction must be made in the next available pay period.
BIK vs Non-Taxable Benefits
Although in general all benefits are taxable, there are some exceptions to this rule. The following non-exhaustive list showcases some of the items which can be provided tax-free, provided certain conditions are met:
- Expenses – Expenses must be incurred wholly, exclusively, and necessarily in the performance of the employee’s duties and must be vouched with receipts.
- Long Service Awards – The award must be a ‘Tangible Article’, i.e. not cash. The cost to the employer must be less than €50 per year of service and the period of service must be over 20 years. The employee must not have received a similar award within the previous 5 years.
- Relocation Expenses – Only expenses which are a direct result of the change of residence can be repaid tax-free. More information on Relocation Expenses can be found here.
- Travel Passes – The travel pass must be issued by a public or private operator who holds a valid licence.
- Bicycles & Equipment – The cost cannot exceed €1,000 and goods must be purchased from a registered supplier.
- Phones & Computers – Mobile phones, landlines, internet connections and computer equipment can be provided when primarily for business use.
The information above is for guidance purposes only. Tax advice should always be sought before providing benefits and reimbursements to employees without deducting employment taxes.
How EisnerAmper Ireland Can Help
The taxation of employee benefits can be challenging, particularly for non-resident employers and new businesses, although with continuously evolving legislation all employers should review their practices regularly.
At EisnerAmper Ireland, our dedicated team of payroll professionals and tax advisors are on hand to offer accurate guidance and advice on the taxation of benefits, as well as providing support and payroll processing services to both new startups and established businesses.
Learn more about our Outsourced Payroll Services here.
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*Discounts of more than 10% must be approved by Revenue.
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The content above is provided for general information purposes only and is not intended to provide, nor does it constitute, professional advice on any particular matter.
Distance Sales – Key EU VAT Rules and Regulation Update
What Are Distance Sales?
Distance sales relate to goods sold from a business to a customer without a face to face interaction. For example, goods purchased by an individual either online, over the telephone or via mail order would be considered a distance sale.
"However digitised goods, that is goods for downloading by the customer via the internet are considered to be services within the meaning of Section 33(5)(k) of the VAT Consolidation Act 2010 for VAT purposes.”
- Source: revenue.ie.
When a distance sales transaction occurs between a business in one EU Member State and a private individual customer in another EU Member State, specific VAT rules apply.
Distance Sales Of Goods – VAT Rules
For the distance sales of goods between Member States, VAT must be accounted for in the Member State of the supplier, unless the distance sales threshold in the Member State of the customer has been exceeded. If the annual value of a supplier’s sales to customers in any Member State is in excess of that State’s threshold, the supplier must register for VAT in the customer’s Member State. However, the supplier has the option of registering for VAT in the customer’s Member State regardless of whether the threshold in that State has been exceeded.
Distance Sales of Goods Thresholds
Distance sales of goods thresholds vary from State to State. While there are a number of exceptions, the majority of EU Member States have a distance sales threshold of either €35,000 or €100,000.
The latest list of distance sales thresholds for each Member State can be found here.
Distance Sales Of Services
Prior to 2019, the distance sales of services, such as digital downloads, telecommunications and broadcasting services, were always subject to VAT in the Member State of the customer.
To prevent suppliers from having to register for VAT in multiple Member States, the EU introduced the MOSS (Mini One Stop Shop) scheme, which allows suppliers to report the VAT due in any Member State via a quarterly online declaration in their home State. Additionally, the VAT invoicing rules for the supplier’s Member State apply when the supplier uses the MOSS system.
Since 1 January 2019, distance sales of services between a supplier and customers in different EU Member States that do not exceed €10,000 in a calendar year are now subject to VAT in the supplier’s Member State. However, the supplier has the option of registering for VAT in the customer’s Member State regardless of whether the €10,000 limit has been exceeded.
Distance Sales Reporting Obligations
Suppliers should report the value of their distance sales to and from Ireland using the relevant Intrastat box on their Irish VAT return.
VAT which is not reported under the MOSS system must be calculated, reported and paid to the tax authorities in the relevant Member States according to each State’s VAT regulations.
Distance Sales Regulation Update
From 1 January 2021, the MOSS system for reporting VAT due in a customer’s Member State will be extended (and renamed OSS) to include the distance sales of goods as well as services. The €10,000 threshold for reporting VAT to a supplier’s Member State will apply, as will the supplier’s Member State invoicing rules. This will significantly reduce the administrative burden associated with the distance sales of goods which should translate into real savings in terms of costs and time.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland our team of dedicated tax specialists are on hand to help you negotiate the evolving landscape of cross-border tax legislation. Contact our Tax team for expert advice on these and other changes to the distance sales tax rules which may be of benefit to your organisation.
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Latest News →What Is Permanent Establishment?
The Irish Revenue* defines permanent establishment as “a fixed place of business through which the business of an enterprise is wholly or partly carried on” and includes it as an article in double taxation treaties which follow the Organisation for Economic Co-operation and Development (OECD) model tax treaty.
As the text of individual double taxation treaties can vary, the relevant article of the appropriate treaty should always be consulted when making a permanent establishment determination.
What Are The Consequences Of Permanent Establishment?
If an enterprise from outside of Ireland is deemed to have permanent establishment in the state, then Irish Revenue has the right to tax the profits of that enterprise.
The taxes which can apply, depending on the circumstances, are:
- Income Tax;
- Corporation Tax; and
- Capital Gains Tax.
Do I Have Permanent Establishment?
Determining permanent establishment is not always straightforward, although article 5 of the OECD model lists the following as indicators of permanent establishment:
- A place of management;
- A branch;
- An office;
- A factory;
- A workshop; and
- A mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
This list is not exhaustive, and even without a physical presence such as those listed above, it is still possible for a business to have permanent establishment, particularly when the business has an agent in Ireland acting on its behalf to conclude contracts.
How EisnerAmper Ireland Can Help
To make a definitive determination we would recommend consulting EAI’s specialist Corporate Tax team for expert advice.
Contact our Tax Team
*Article 5 of Revenue’s Commentary on Irish tax treaties
Latest News →Employee Relocation Tax Relief – Moving to Ireland
Removal and Relocation Expenses Overview for Employers
Workforce Global Mobility is an increasingly common consideration for businesses that operate in multiple jurisdictions and can result in significant increases to staffing costs, over and above the standard payroll and employment tax considerations. Hiring staff from overseas is also increasingly common, which can create challenges for the employer. Covering the costs associated with relocation is standard practice when transferring employees to Ireland. However, there are various tax implications that must be taken into account at the planning stage to minimise potential liabilities.
Revenue’s Tax and Duty Manual Part 05-02-03, Removal and Relocation Expenses, notes:
"The taxation of certain removal and relocation expenses should be relaxed in genuine cases of employees having to incur expenses to move to a new employment location, where the payment made by the employer towards the expenses results in no net overall benefit to the employee." Source: revenue.ie.
Tax-Free Employee Subsistence Expenses
As is the case with all expense reimbursements, Revenue require payments to be matched with receipted expenditure, with the exception of temporary subsistence allowances. Employers are permitted to pay a temporary subsistence allowance to employees while they are looking for accommodation in their new location. The amount allowable is based on 10 nights at the Civil Service Rates (up to €147 per night).
It is important to note that the amount reimbursed cannot be greater than the cost borne by the employee.
Employee Relocation Tax Relief Conditions
According to Revenue, the following are the conditions that must be satisfied to allow removal and relocation expenses to be paid tax-free:
- there are actual removal and relocation expenses; - the expenses are for a reasonable amount; - the payment of the expenses is properly controlled; and - moving house is necessary. Source: revenue.ie.
What Relocation Expenses Can Be Claimed Back?
There is no definitive list of the expenses which can be claimed back tax-free, so it is the responsibility of the employer to ensure that any payments meet the prescribed conditions, however, some of the more common items include:
- Costs associated with moving house, such as auctioneer’s fees, solicitor’s fees & stamp duty; and
- Costs associated with movement of furniture, including storage, transportation, insurance & cleaning.
Travelling expenses may also be included, along with up to three months of vouched rent in temporary accommodation (both rent and temporary subsistence cannot be paid).
What Relocation Expenses Cannot Be Claimed Back?
Payments towards the cost of purchasing or building a house cannot be paid tax-free, and similarly, amounts paid towards either loans or bridging loan interest would also be considered taxable pay.
Records Needed for Employee Relocation Tax Relief
As previously noted, all relocation payments (other than temporary subsistence) must be matched with receipted expenditure, so any relevant receipts, invoices, statements and proofs of purchase must be kept by the employer. All such records must be retained for a period of six years from the tax year-end to which the records refer.
Related payroll insights article: SARP For Employers.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the knowledge and experience required to assist employers seeking the most beneficial solutions to their global mobility problems. From planning to execution, we can provide expert advice and insight every step of the way.
Learn more about our outsourced payroll services here.
Request a payroll quote or request a callback from our specialists now.
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Latest News →SARP for Employers
What is SARP relief?
SARP (Special Assignee Relief Programme) is an Income Tax relief available to certain individuals who have been assigned by a relevant employer to work in Ireland, either for that employer or an associated company of that employer. The relief can be claimed for five consecutive tax years and is currently available to qualifying employees arriving in the years up to, and including, 2020. The aim of SARP relief is to encourage multinational employers to redeploy talented employees into key positions within Ireland.
SARP conditions of qualification – what employers need to know
SARP can be claimed by employees who meet the following criteria:
- The employee must have worked for their relevant employer outside of Ireland for the six months immediately prior to being employed here;
- They must be contracted to work in Ireland for a minimum period of 12 months from the date they are first assigned here;
- They must not have been tax resident in Ireland for the five years immediately prior to being assigned here;
- They must be tax resident in Ireland for all of the years in which they claim SARP relief; and
- Their basic salary must be a minimum of €75,000 per year.
It is important to note that employees who avail of SARP cannot claim any of the following:
- Foreign Earnings Deduction;
- Cross Border Relief; and
- Research & Development Relief.
SARP for employers – how to calculate SARP
Under SARP relief, 30% of all income* over a threshold of €75,000 is exempt from income tax. For example; an employee who is paid €175,000 will not pay income tax on €30,000 of that income (€175,000 – €75,000 x 30%). The marginal rate of income tax is 40%, so the value of the relief in this instance would be €12,000.
- The exemption can be spread proportionately across the year, so the threshold for a monthly paid employee is €6,250 per month.
- Expense reimbursements and any amounts contributed into pension schemes cannot be included in the calculations for SARP.
- The exemption is limited to income tax only, so USC and PRSI should be deducted as normal.
The cost of one return trip for the employee and his or her family to their home country can be claimed tax free from their employer, as well as up to €5,000 per child for Irish school fees.
SARP application – how to claim SARP
The employer must apply for SARP relief by completing a Form SARP 1A and submitting it to Revenue within 90 days of the employee’s arrival in the country. If more than one employee is claiming SARP, the employer must submit a separate Form SARP 1A for each employee.
Employer / employee SARP reporting
Employers are obliged to file a SARP Employer Return, containing the pay and tax details for each SARP employee, to Revenue by 23 February following the year end in which SARP was claimed.
SARP employees are considered ‘chargeable persons for self-assessment’ by Revenue, which means they must file a Form 11 (Income Tax Return) to Revenue by 31 October following the year in which SARP was claimed.
How EisnerAmper Ireland can help
At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the knowledge and experience required to assist employers claiming SARP relief for their staff. From the initial application process and the monthly calculations, right through to the filing of the employer return, we can provide expert advice and insight every step of the way.
Our income tax specialists are also on hand should your employees require any advice and assistance with their income tax filing obligations. Learn more about our outsourced payroll services here.
Request a Quote
Request a payroll quote or request a callback from our specialists now.
* From 1 January 2019 the government plan to introduce a ceiling of €1 million on eligible income.
Latest News →Tax Insights Series – Welcome
Welcome to EisnerAmper Ireland’s Tax Insights Series. Here, our tax specialists will provide insights into upcoming industry developments along with tax tips and resources to help you ensure that your company is compliant with appropriate tax obligations.
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