Ireland has reduced its standard rate of VAT from 23 percent to 21 percent from September 1, 2020, with the reduction to be in place until February 28, 2021.
Commenting on the move, Finance Minister Paschal Donohoe explained that: “This temporary reduction in the standard rate of VAT cuts across a wide range of economic activity and as such there is a broad range of the types of businesses and traders who will benefit. Discretion in relation to the setting of prices charged will remain that of relevant businesses. However, it will help consumer confidence, benefit consumers, and generate economic activity if it was passed on to the final consumer.”
However, Ireland is not the only country making moves in the area recently, with Turkey having temporarily lowered the rate of VAT on the supply of education and training services. Under the … Read More »
Apple and the Irish Government have been successful in overturning a European Commission decision that two tax rulings granted to the company by the Irish Government were unlawful.
Following an in-depth state aid investigation launched in June 2014, the European Commission concluded that the tax rulings (issued in 1991 and in 2007) “substantially and artificially lowered the tax paid by Apple in Ireland since 1991.” Apple was required to pay back taxes into an escrow account set up by the Irish Government, along with interest, pending the outcome of the Government and Apple’s appeal.
The European Commission had argued that Ireland’s endorsement of Apple’s Irish tax arrangements had enabled Apple to pay less tax than competing companies would be able to pay – that it had granted it a “selective tax advantage”, and that the tax rulings issued by Ireland endorsed an … Read More »
Ireland’s Revenue department revealed that it would give employers additional time to comply with Temporary Wage Subsidy Scheme compliance checks where they are encountering difficulties responding within the current five day timeframe, according to an announcement from Chartered Accountants Ireland.
Ireland’s COVID-19 wage subsidy scheme has been in place since March 26, 2020, and will be administered by the Irish Revenue until August 31, 2020.
Employers who have received subsidy payments under the TWSS are required to provide documentary evidence to establish that they meet the eligibility criteria, that employees are receiving the correct amount of subsidy, and that the subsidy amount is being correctly identified in employee payslips.
However, in a letter to Chartered Accountants Ireland, Revenue explained that employers experiencing difficulties in preparing information in response to letters issued under the TWSS compliance program can contact Revenue and request additional time.
For … Read More »
The Irish Revenue has issued guidance on the tax treatment of the supply of emergency accommodation and the donations of gifts of goods or meals supplied in response to the COVID-19 crisis, outlining the application of the Capital Goods Scheme (CGS) to emergency accommodation. The CGS is a mechanism for regulating the amount of VAT reclaimed over the VAT-life, and aims to ensure that the VAT reclaimed reflects the use to which the property is put over its VAT-life.
Revenue said that, as a concessionary treatment, it will not apply the CGS “big swing” adjustment in cases where the change in the proportion of deductible use is a consequence of a capital good being diverted for use as emergency accommodation.
The guidance also explained the VAT treatment of donations of gifts of goods and meals. Generally, where a business donates goods free … Read More »
As the UK gears up to begin the process of leaving the European Union at the end of the month (the implications of which are still, to be honest, as clear as mud in terms of trade and tax matters), near neighbor Ireland has been keeping busy with its own affairs ahead of the Republic’s planned election, to be held in February.
The election is set to take place on February 8, with Prime Minister Leo Varadkar explaining that this date provides a window to ensure a new government is in place ahead of the next European Council meeting in March.
In a recent speech, Varadkar revealed that the next step in the Brexit process, which is likely to especially impact the Republic due to its location and close relationship with the UK, will be to negotiate a free trade agreement between … Read More »
In Ireland, on September 11, the Irish Finance Department revealed that given the lack of clarity regarding the timing and format that the UK’s exit will take, and with the Budget just four weeks away, the Government has decided to formulate the Budget on the basis of a disorderly Brexit.
The Irish authorities have reported that they are committed to a budgetary package of EUR2.8bn, EUR2.1bn of which has been pre-committed to spending measures. This leaves about EUR700m for tax-side measures.
The Department said that the Government is taking a “twin-track” approach to the Budget. This involves funding services and making progress on particular policy areas and supporting sectors and regions most exposed to Brexit-related disruption.
Finance Minister Paschal Donohoe explained that: “A no-deal Brexit will have profound implications for Ireland on all levels. These include macroeconomic, trade, and sectoral challenges, both immediately … Read More »
A report compiled by Irish business association, Ibec, has argued that Ireland may be affected significantly by the OECD’s proposals to modify how taxing rights are allocated among countries.
The OECD is developing new digital tax rules that would be presented for adoption internationally at the end of 2020, which will focus on two central pillars.
First, the OECD will review existing rules that divide up among jurisdictions the right to tax the income of multinational enterprises, including traditional transfer pricing rules and the arm’s length principle. It will look at how these can be modified to take into account the changes that digitalization has brought to the world economy. This will require a re-examination of the so-called “nexus” rules – namely how to determine the connection a business has with a given jurisdiction – and the rules that govern how much … Read More »
Ireland’s Small Firms Association recently argued that better supporting SMEs through the tax system would mitigate the country’s over-reliance on revenues linked to foreign direct investment.
According to SFA, Ireland’s competitiveness is under threat. It therefore argued that the Government needs to take steps to “de-risk our economy from over-reliance on FDI and seize an important opportunity to future-proof our economic model.” It said that the Budget needs to provide certainty to small businesses.
One of SFA’s priorities is a reduction in capital gains tax (CGT). It recommended a reduction in CGT to 20 percent across the board (pointing out that, at 33 percent, Ireland’s CGT rate is one of the highest among developed economies), in order to make investing in a business in Ireland more attractive. It also argued for an increase in the lifetime limit for gains under the CGT … Read More »
The Irish Government recently announced plans to quadruple the carbon tax rate by 2030, as part of a major new package of policies aimed at combating climate change.
According to the Government’s new Climate Action Plan, “taxation policy can play a central role in incentivizing the behavioral change necessary to reduce greenhouse gas emissions.” The Plan commits the Government “to having in place a taxation framework, which plays its full part in exerting, along with other available policy levers, the necessary leverage to reduce our emissions.”
The carbon tax is currently charged at EUR20 per ton of CO2 equivalent. The charge is paid by the importer or the extractor on the content of fossil fuels. The rate has not changed since 2014.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look
In early June, the European Union recommended that Ireland broaden its tax base and take further steps to crack down on aggressive tax planning. The EU said that Ireland’s public finances have improved, but suggested that the risks of revenue volatility remain and that the revenue base could be made more resilient. According to the EU, “limiting the scope and number of tax expenditures and broadening the tax base would improve revenue stability in the face of economic volatility.” The Union recommended that Ireland should “continue to address features of the tax system that may facilitate aggressive tax planning, and focus in particular on outbound payments.”
Then, hot on the heels of the EU grumblings, not for the first time, the Irish Fiscal Advisory Council warned the Government about funding spending increases or tax relief with high corporate tax receipts. According … Read More »