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Tax Facts
2017
The essential guide
to Irish tax
Index
Tax Facts 2017 - Introduction 1 Tax treaties 22 Income tax 34
Main personal tax credits and reliefs 34
Main tax allowances 35
Income tax exemption limits 35
Tax Facts 2017 - Editors page 2 Value added tax (VAT) 23 Income tax rates 35
General 23 Maternity Benefit 36
Accounting for VAT 23 Alimony/maintenance payments 36
Rates 24 Personal Insolvency 36
Business taxation 3 Exempt activities 24 Remittance basis of taxation (RBT) 36
Corporation tax 3 Property 24 Domicile levy 37
Corporation tax rates 3 Section 56 Authorisation (formerly Section 13A) 24 Special assignment relief programme (SARP) 37
Losses 3 Withdrawal of VAT credit for bills not paid within six months 25 Cross border workers 38
Branch income 3
Foreign earnings deduction (FED) 38
Company residence 3 Employment & Investment Incentive / Seed Capital Scheme 38
R&D credit 4
Research and Development (R&D) tax credit 39
Intellectual property tax deduction 5 Stamp duty 26 Relief for mortgage interest payments 39
Knowledge Development Box 6 Rates 26
Rent relief for private accommodation 40
Tax depreciation 7 Transfer/purchase of residential property 26
Rent a room scheme 40
Leasing 8 Transfer/purchase of other property 26
Rental income 40
Ireland as a holding company location 8 Exemptions and reliefs 27
Help to buy Incentive (HTB) 40
Closely held companies 9
Living City Initiative 41
Start-up companies 9
Employment of a carer 41
Corporate Tax administration 9
Relevant contracts tax (RCT) 28 Childminding relief 41
Wide scope of RCT 28 Self assessment - payment and returns 42
Operation of RCT 28
Transfer Pricing 12
Overview 12 Employee taxation 44
Transfer Pricing Compliance Review 12 Termination payments 44
Country-by-Country Reporting 12 Interest 30 Benefits-in-kind (BIKs) - general 45
Interest paid/payable 30 BIK on company cars - general rules 45
Loans to acquire Interest in a Partnership 30 BIK on preferential loans 45
Deposit interest retention tax (DIRT) 31
Financial services 14 DIRT & First Time Buyers 31
BIK on professional subscriptions 45
Banking and treasury 14 Travel and subsistence 46
Insurance 14 Motor travel rates 46
Exit tax 15 Subsistence rates - within Ireland 46
Aircraft leasing 15 Local Property Tax 32 Travel and subsistence expenses for Non-Executive Directors (NEDs) 46
Aviation Sector Capital allowances for aviation services 15 LPT Rates 32
Section 110 companies 15 Returns 33
Real Estate Investment Trusts (REIT) 16 Late Payment/Non-Compliance 33
Employee share schemes 47
Asset management 17 Unapproved employee share schemes 47
Global Information Reporting (FATCA & CRS) 18 Revenue approved employee share schemes 47
Islamic Finance 18 Employer reporting requirements 48
Tax treatment of loans from employee benefit schemes 48
Appendix 1 67
Pension schemes 52 Withholding tax on payments from Ireland 67
Pension contribution rules- for employers 52 Withholding tax on payments from Ireland (continued) 68
Pension contribution rules- for individuals, the earnings limits 52
Pension contribution rules- for individuals, the age related limits 52
Pension accumulation rules the lifetime pensions limit 52
Pension distribution rules occupational pension schemes Appendix 2 69
Withholding tax on payments to Ireland 69
the maximum pension allowed 53
Withholding tax on payments to Ireland (continued) 70
Pension distribution rules occupational pension schemes
the maximum lump sum allowed 53
Pension distribution rules- PRSA and personal pensions 53
Pension distribution rules Approved Retirement Funds (ARFs) 53
New access rules for Additional Voluntary Contributions (AVCs) 55
Local taxes 63
Carbon Tax 63
Introduction
Welcome
Introduction
Business taxation
This publication is a practical and easy-to-
Transfer Pricing follow guide to the Irish tax system. It
provides a summary of Irish tax rates as well
Financial Services as an outline of the main areas of Irish
Corporate - withholding taxes (WHT) taxation. A list of PwC contacts is provided
within each tax area and at the back of this
Tax treaties guide should you require more detailed advice
or assistance tailored to your specific needs.
Value added tax (VAT)
Stamp duty
Interest
PRSI
Pension schemes
Local taxes
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
Introduction
Welcome
Welcome to the latest edition of Tax Facts The Act also introduced a new type of fund, an
Business taxation which has been updated for amendments Irish Real Estate Fund (IREF), being a fund For more information
brought about by Finance Act 2016 which was where 25% or more of the market value of contact:
Transfer Pricing signed into law on 25 December 2016. assets is derived from Irish land or buildings.
Financial Services Subject to some reliefs and exceptions, 20%
From a personal tax perspective, the principle withholding tax must be operated by the fund
Corporate - withholding taxes (WHT) changes are in the form of a reduction in the on distributions of income.
Universal Social Charge (USC) rates. To assist
Tax treaties mobile employees, Special Assignee Relief From a residential property perspective, a
Programme (SARP) and the Foreign Earnings Help to Buy scheme has been introduced
Value added tax (VAT)
Deduction (FED), have both been extended to with the aim of assisting first-time buyers to
Stamp duty the end of 2020. There has also been a buy / self-build a new home by allowing for a
reduction in the minimum number of refund of income tax and DIRT paid in the
Relevant contracts tax (RCT) qualifying days required to be spent abroad to prior four tax years. The refund is available up
avail of the FED. to a maximum of 20,000, subject to certain
Interest Fiona Carney
criteria.
To encourage entrepreneurship, the special Senior Manager
Local Property Tax
Capital Gains Tax rate applying to individuals The Act also introduced measures to restore t: 353 (0)1 792 6095
Income tax on disposals of certain qualifying business full interest deductibility for landlords of e: fiona.carney@ie.pwc.com
assets has been further reduced from 20% to residential properties on a phased basis,
Employee taxation 10%. The rate remains subject to a lifetime starting in 2017. This deduction had
limit on qualifying disposals of 1 million. previously been restricted to 75% of the
Employee share schemes
interest paid.
PRSI Finance Act 2016 has also introduced new
provisions restricting the tax deductibility of
Universal Social Charge profit participating interest payable by
companies within the securitisation tax
Pension schemes regime (known as Section 110 companies) on
Capital gains tax certain loans and similar assets which derive
their value, or the greater part of their value, Fiona Carney
Capital acquisitions tax from Irish real estate. Senior Manager
Local taxes Tax Solutions Centre
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
Introduction
Welcome
2017
Tax Facts 2016 3
Business taxation
Index
Introduction
Welcome
Business taxation as Irish tax resident. To ensure alignment with Application of Finance Act 2014 R&D credit
the treatment of company residence in double provisions to Irish incorporated
Transfer Pricing tax agreements, there is one exception only to companies Irelands R&D tax credit is a very attractive
this incorporation rule. If, under the relief and provides an overall effective
Financial Services The Finance Act 2014 provisions outlined corporation tax deduction of 37.5% on certain
provisions of a double tax agreement, an Irish
above have effect from 1 January 2015 for R&D expenditure. The types of expenditure
Corporate - withholding taxes (WHT) incorporated company is regarded as tax
companies incorporated in Ireland on or after which can be subject to this credit include
resident in another territory, the company will
Tax treaties 1 January 2015. For companies incorporated both revenue and capital expenditure. R&D
not be regarded as Irish tax resident.
before that date, a transitional period applies, expenditure qualifies for a tax credit of 25% in
Value added tax (VAT) meaning that the provisions apply only from
Previously, there was also an exception where addition to the normal deduction for R&D
the company concerned or a related company the earlier of either: expenditure (12.5%).
Stamp duty
carries on a trade in Ireland and either (i) the
Relevant contracts tax (RCT) (a) 1 January 2021, or Historically the credit was designed to
company is ultimately controlled by persons
resident in the EU or another territory with incentivise incremental R&D expenditure,
Interest (b) the date, after 1 January 2015, of a change
whom Ireland has a double taxation with 2003 fixed as the base year. Where a
in ownership of the company in circumstances
agreement (treaty territory) or (ii) the company did not have R&D expenditure in
Local Property Tax where there is also a major change in the
company or a related company is quoted on a 2003 then the relief is calculated on the actual
nature or conduct of the business of the
Income tax recognised stock exchange. However, Finance qualifying expenditure incurred in the
company within the period which begins one
Act (No 2) 2013 introduced a measure to accounting period under review. This volume
Employee taxation year before the date of the change of
ensure that this exception would not apply if it based approach has been extended to all
ownership (or on 1 January 2015, whichever
resulted in an Irish incorporated company companies for accounting periods
Employee share schemes is later) and ends five years after that date.
being regarded as stateless in terms of its tax commencing after 1 January 2015.
PRSI residence by virtue of a mismatch between The previous corporate tax residence
The R&D credit can be used to generate a tax
Irelands and another countrys residence provisions outlined above therefore continue
Universal Social Charge refund through a carryback against prior year
rules. The measure provides that, where an to apply to companies incorporated before 1
profits. In addition, repayment for excess
Pension schemes Irish incorporated company is managed and January 2015 until 31 December 2020 at
credits is available over the course of a
controlled in an EU or treaty territory and latest.
Capital gains tax three-year cycle. Repayments are limited to
would not be regarded as tax-resident in any the greater of (a) the corporation tax payable
In the period to 31 December 2020, all groups
Capital acquisitions tax territory because (i) it is not managed and by the company in the preceding ten years or
will need to carefully monitor the corporate
controlled in Ireland, and (ii) it is not resident (b) the payroll tax liability for the period in
Local taxes tax residence position of Irish incorporated,
in that other territory because it is not which the relevant R&D expenditure is
non-resident companies which do not satisfy
incorporated in that territory, the company incurred and the prior year (subject to an
Customs and excise
Excise the sole exception contained within the
will be regarded as Irish tax-resident. This adjustment dependent upon previous claims).
Finance Act 2014 provisions. This includes,
Tax contacts measure has effect from 23 October 2013 for
for example, considering the impact of any
companies incorporated in Ireland on or after In addition, companies have the ability to
Appendix 1 Withholding tax on proposed M&A transactions involving both
payments from Ireland this date and from 1 January 2015 for account for the credit above the line in the
change in ownership and business changes/
Withholding tax on companies incorporated in Ireland before 23 Profit & Loss account, thereby reducing the
Appendix 2 payments to Ireland integration measures.
October 2013. unit cost of R&D, which is a key measurement
used when considering where to locate R&D
2017
Tax Facts 2016 4
Business taxation
Index
Introduction
Welcome
Business taxation projects. This is extremely helpful to Irish undoubtedly result in Revenue seeking to Tax deductions
deduction are available
is equivalent to thefor offset against
amortisation or
subsidiaries of multinational corporations in restrict certain
For morecosts that have typically been
information income generated
depreciation charge from exploiting
on the IP assets
IP included or
in the
Transfer Pricing
terms of being able to compete with lower cost claimedon btheR&D
expenditure is incurred.
tax credits as a resultAlternatively,
accounts. of the sale of goods or services,
a company can elect
Financial Services jurisdictions. contact: where
to the
claim use
tax of IP assets
deductions contributes
over 15 years,to
at the
a rate
Intellectual property tax value
of 7% of such
per goods
annum andor2%
services.
in the final year.
Corporate - withholding taxes (WHT) Outsourcing limits deduction
For all
The accounting
definition of IPperiods beginning
assets includes thebefore 1
Tax treaties The incentive is directed towards in-house Companies acquiring Intellectual Property January 2015,
acquisition thethe
of, or aggregate
licence todeduction
use: and
activities and as such there are outsourcing (IP) can avail of significant deductions on related interest expense which could be
Value added tax (VAT) limits for sub-contracted R&D costs. This limit certain capital expenditure. Tax depreciation patentsinand registered designs
claimed a given year could not exceed 80%
has been increased over the years to 15%. The is available for capital expenditure incurred of trademarks
the related IP profits ofnames
the company as
Stamp duty and brand
increase is particularly aimed at smaller on the acquisition of qualifying IP assets. The computed before such deductions. Finance
Relevant contracts tax (RCT) companies that do not have access
access to
to the
the deduction is equivalent
Stephen Merrimanto the amortisation or
Actknow-how
2014 provides for an increase in this cap
required R&D expertise
expertisein-house.
in-house.Further
Further depreciation
Partnercharge on the IP included in the from 80% names,
to 100%copyrights,
of those profits with effect
Interest domain service marks
legislative enhancement in respect of accounts. Alternatively,
t: 353 1 792 6505a company can elect forand
accounting periods
publishing titles beginning on or after 1
Local Property Tax externally provided workers and to claime:tax deductions over 15 years, at a rate
stephen.merriman@ie.pwc.com January 2015. Any excess deductions can be
collaborations that are under the control and of 7% per annum and 2% in the final year. authorisation to sell medicines, a product of
carried forward and offset against IP profits in
Income tax direction of the relevant R&D company would any design, formula, process or invention
succeeding years. This change will enable
be welcome (please see Revenue Guidelines The definition of IP assets includes the (and any rights derived from research into
Employee taxation many companies to claim the allowances and
below for further commentary). acquisition of,result
undoubtedly or theinlicence to use:
Revenue seeking to same)
related interest over a shorter period and will
restrict certain costs that have typically been
Employee share schemes patents also
serve toto
goodwill, simplify
the extentthe that
calculation of
it is directly
Revenue Guidelines claimed byand registered
companies to designs
date.
allowances.
attributable to qualifying assets
PRSI trademarks and brand names
The most recently published Irish Revenue
The range oftoqualifying
In addition the above intangible
change, theassets
list ofalso
Universal Social Charge R&D tax credit guidelines include a number of know-how
Planning tip!
includes applications for legal protection
specified intangible assets on which capital (for
positive comments. These updates include
Pension schemes domain
Ensure younames,
avail ofcopyrights, service
the cash refund marks
available example, applications for the grant
allowances may be claimed was extended byor
more detailed commentary on the type of
onand publishing
excess R&D taxtitles
credits. Claims must be registration
Finance Act of brands,
2014 trademarks,
to include patents,
customer lists
software development activities undertaken
Capital gains tax made within 12 months of the end of the copyrights etc).
acquired otherwise than directly or
that may potentially qualify for the credit and authorisation to sell medicines, a product of
period in which the expenditure is incurred. indirectly in connection with the transfer of a
Capital acquisitions tax provide that costs incurred related to any design, formula, process or invention Tax deductions are available for offset against
(and any rights derived from research into business as a going concern.
individual consultants may not be subject to income generated from exploiting IP assets or
Local taxes the outsourcing limits once certain conditions same) as a result of2014
the sale
Intellectual property tax Finance Act alsoofprovides
goods orthat
services,
no
have been satisfied. There is also confirmation goodwill, to the extent that it is directly where
balancing charge will arise where an to the
the use of IP assets contributes
Customs and excise
Excise
regarding the treatment of base year
deduction
attributable to qualifying assets value of such
intangible goods
asset or services.
on which allowances have
Tax contacts expenditure in change of ownership Companies acquiring Intellectual Property been claimed is sold on or after 23 October
situations. However companies should be The range
(IP) of qualifying
can avail intangible
of significant assets
deductions onalso For all accounting periods beginning before 1
Withholding tax on 2014 and the sale takes place more than five
Appendix 1 payments from Ireland aware that there is increased focus on the includescapital
certain applications for legal
expenditure. protection
Tax (for
depreciation January 2015, the aggregate deduction and
years after the beginning of the accounting
Withholding tax on documentation required to support a valid example,
is applications
available for the grant incurred
for capital expenditure or related interest expense which could be
Appendix 2 payments to Ireland period in which the asset was acquired. In the
claim and some new statements that will registration
on of brands,
the acquisition trademarks,
of qualifying patents,
IP assets. The claimed in a given year could not exceed 80%
case of a transfer to a connected company, the
copyrights etc). of the related IP profits of the company as
Introduction
Welcome
2017
Tax Facts 2016 6
Business taxation
Index
Introduction
Welcome
2017
Tax Facts 2016 7
Business taxation
Index
Introduction
Welcome
2017
Tax Facts 2016 8
Business taxation
Index
Introduction
Welcome
Introduction
Welcome
Business taxation (but no later than 21st day of the month) in period, companies
Large or (ii) 50% of the corporation tax corporation tax
tax,liability for its immediately
if its corporation tax liability
order to avoid the imposition of (i) a liability for its immediately preceding period preceding period
for that period (again
is less thanadjusted pro-rata
the relevant limit
Transfer Pricing The first instalment of preliminary tax is due
surcharge of up to 10% of the tax due (subject (adjusted pro-rata where the lengths of the where
set out the lengths
above, of the respective
its preliminary periodstax
corporation
six months from the start of the tax
Financial Services to a maximum surcharge of 63,485), (ii) a respective periods differ). differ). The balance
for the period is taken of as
taxNil.
is due when the
accounting period (but no later than the 21st
restriction of up to 50% of certain claims for corporation tax return is filed.
day
The of that month).
second instalment To avoid the imposition
of preliminary tax isof
Corporate - withholding taxes (WHT) relief including relief for trading losses arising Electronic Filing
interest
due 31 days before the end of the tax the
charges for late payment of tax, A special provision exists for start-up
in the same period (subject to a maximum
Tax treaties payment
accounting made must
period equal
(but at least
no later than(i)the
45% of
21st Where returns
companies. andaccounting
In the payments are made
period in which
restriction of 158,715).
the final corporation tax liability
day of that month). This payment must bringfor the electronically via the Irish Revenues
a company comes within the charge to Online
Irish
Value added tax (VAT) period, system (ROS), the above filing and payment
Irish Revenue introduced mandatory filing of the totalorpaid
(ii) up
50%to of
90% theofcorporation
the final tax corporation tax, if its corporation tax liability
financial statements in iXBRL format in 2012 liability
corporation tax liability for preceding
for its immediately the period.period deadlines are extended
for that period is less thanto the
the 23rd day of
relevant the
limit
Stamp duty
on a phased basis. The provisions applied (adjusted pro-rata where the lengths of the relevant month. In general, companies
set out above, its preliminary corporation tax have
Relevant contracts tax (RCT) initially to companies which are dealt with by The balance
respective of tax differ).
periods is due when the been required
for the totaken
period is pay and file electronically
as Nil.
the Revenue Large Cases Division. The second corporation tax return for the period is filed since 2011.
Interest The
(thatsecond instalment
is, within nine monthsof preliminary
of the endtax is
of the
phase made filing mandatory for all taxpayers Electronic Filing
due 31 days before the end of the
tax accounting period, but no later than thetax Statute of limitations
Local Property Tax filing corporation tax returns on or after 1
Payment of in
tax accounting period
21st day of the (butinno
month laterthat
which thanperiod
the 21stof Where returns and payments are made
October 2014 respect of accounting periods A system of self-assessment and Irish Online
Revenue
Income tax day of that month).
nine months ends). This payment must bring electronically via the Irish Revenues
ending on ortax
Corporation after 31 December
payment 2013
dates are unless
different audits is in operation in Ireland. Irish Revenue
the total paid up to 90% of the final system (ROS), the above filing and payment
Employee taxation thelarge
for taxpayer
andmet specific
small iXBRL exemption
companies. may undertake an audit of a companys taxthe
corporation
Small companiestax liability for the period. deadlines are extended to the 23rd day of
criteria. It is intended that all remaining return within a period of four years from the
relevant month. In general, companies have
Employee share schemes A small company
corporation is a company
taxpayers whose in the
will be included Small
The companies
balance of taxare required
is due whento pay
the end of the accounting period in which the
been required to pay and file electronically
corporation tax liability in the preceding
final phase which will commence at a date year
to preliminary tax
corporation corporation
return fortax theinperiod
one instalment
is filed return2011.
is submitted.
PRSI since
was less than 200,000
be announced by Irish Revenue.(the relevant limit). only. is,
(that This is duenine
within 31 days before
months theend
of the endofofthe
the
This limit is adjusted pro-rata where the period (but
tax accounting period, no later
but no later than
than the
the
Universal Social Charge Statute of limitations
preceding
Paymentcorporation
of tax tax period was less month).in which that period of
21st day of the month
Pension schemes than one year in length. nine months ends). A system of self-assessment and Irish Revenue
Corporation tax payment dates are different
To avoid the imposition of interest charges for audits is in operation in Ireland. Irish Revenue
Capital gains tax for large
All and smallare
other companies companies.
large companies. late
Smallpayment of tax, the payment must equal
companies may undertake an audit of a companys tax
A small company is a company whose at least (i) 90% of the final corporation tax return within a period of four years from the
Capital acquisitions tax Small companies are required to pay
corporation tax liability in the preceding year liability for the period or (ii) 100% of the end of the accounting period in which the
Local taxes preliminary corporation tax in one instalment
corporation tax liability for its immediately return is submitted.
was lesscompanies
Large than 200,000 (the relevant limit).
only. This is
preceding due 31
period days adjusted
(again before the end of the
pro-rata
This limit is adjusted pro-rata where the
Customs and excise
Excise The first instalment of preliminary tax is due tax
where the lengths of the respective than
accounting period (but no later the
periods
preceding corporation tax period was less
six months from the start of the tax 21st day of the month).
differ). The balance of tax is due when the
Tax contacts than one year in length.
accounting period (but no later than the 21st corporation tax return is filed.
Withholding tax on day of that month). To avoid thecompanies.
imposition of To avoid the imposition of interest charges for
Appendix 1 payments from Ireland All other companies are large
interest charges for late payment of tax, the late
A payment
special of tax,exists
provision the payment must equal
for start-up
Withholding tax on at least (i) 90% of the final corporation
Appendix 2 payments to Ireland payment made must equal at least (i) 45% of companies. In the accounting period in tax
which
the final corporation tax liability for the liability
a company for comes
the period
withinor (ii)
the 100%
chargeoftothe
Irish
2017
Tax Facts 2016 10
Business taxation
Index
Introduction
Welcome
Business taxation
Tax treaties
Income tax
Employee taxation
PRSI
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 11
Transfer Pricing
Index
Introduction
Welcome
Introduction
Welcome
2017
Tax Facts 2016 13
Financial services
Index
Introduction
Welcome
2017
Tax Facts 2016 14
Financial services
Index
Introduction
Welcome
2017
Tax Facts 2016 15
Financial services
Index
Introduction
Welcome
Business taxation to access Irelands double tax treaty network. fully tax deductible against profits from such will generally be taxed at the passive
The Section 110 regime has been in existence transactions. income rate of 25%. Capital gains (e.g. on
Transfer Pricing
since the early 1990s and with appropriate the disposal of REIT shares) will be taxable
Financial Services planning effectively allows for corporation tax Real Estate Investment Trusts at the normal CGT rate (currently 33%).
neutral treatment, provided that certain (REIT)
Shareholders who are tax resident in
Shareholders
Corporate - withholding taxes (WHT) conditions are met. The regime is used by
The REIT is the internationally recognised countries that have a double taxation
international banks, asset managers, and
Tax treaties collective investment structure for holding agreement with Ireland can benefit from a
investment funds to facilitate securitisations,
commercial and/or residential property. lower dividend withholding tax rate if that
Value added tax (VAT) investment platforms, collateralised debt
Although the regimes differ somewhat from is provided for under the agreement.
obligations (CDOs), collateralised loan
country to country, the REIT typically takes Although rates vary depending on the
Stamp duty obligations (CLOs) and capital markets bond
the form of a listed company (or group) with a double taxation agreement, typically the
issuances and has recently been used for
Relevant contracts tax (RCT) diverse shareholding base. treaty rate would be less than 20% and this
leasing transactions including big ticket assets
would represent the final Irish tax liability
Interest such as aircraft and ships. The primary objectives of the REIT regime are of the foreign shareholder. Relief is not
to facilitate the attraction of foreign available at source and the tax would have
Local Property Tax The expansion of the range of investments in
investment capital to the Irish property to be reclaimed from Irish Revenue.
which a Section 110 company can invest is
Income tax market, to release bank financing from the
significant. In particular, the extension of the Certain exempt investors such as pension
Certain
property market for use by other sectors of the
Employee taxation Section 110 regime to include plant and funds and Irish regulated funds will not
economy and to provide investors with an
machinery has copper fastened Ireland as the suffer any withholding tax.
alternative lower-cost, lower-risk method for
Employee share schemes leading global centre of excellence for aircraft
property investment. For non-resident shareholders the REIT
financing transactions.
PRSI regime carries one particularly attractive
The tax regime applicable to the Irish REIT is
Finance Act 2016 introduced some changes feature. Capital gains generated by the REIT
Universal Social Charge relatively straightforward. While the normal
which restrict the tax deductibility of profit do not have to be distributed to shareholders
stamp duty rate (2%) applies to Irish property
Pension schemes participating interest payable by Section 110 and, if retained and reinvested by the REIT,
transfers into the REIT, the REIT itself is
companies on certain loans and similar assets will be reflected in its share price. The
exempt from tax on rental income and on any
Capital gains tax which derive their value, or the greater part of non-resident investor can then dispose of the
capital gains arising on property disposals.
their value, from Irish real estate. This change REIT shares free of Irish CGT. This would not
Capital acquisitions tax However distributions out of the REIT to
will apply in respect of profits earned on be available if the non-resident investor held
shareholders are liable to dividend
Local taxes affected transactions after 6 September 2016. the property directly. The disposal of the REIT
tax at
withholding tax at the
the rate
rate of
of 20%
20%subject
subjectto
toaa
From this date, Section 110 companies will shares would however be liable to stamp duty
exceptions and comments:
number of exceptions:
Customs and excise
Excise only be in a position to offset an arms length (at the rate of 1%) in the hands of the
interest expense against income and gains Irish resident shareholders are liable to tax
Irish purchaser.
Tax contacts
from such transactions. Transactions entered on REIT distributions at their normal tax
Withholding tax on into by Section 110 companies unrelated to Three REITs currently exist and speculation is
Appendix 1 payments from Ireland rates. Thus Irish resident individuals will
Irish real estate will not be affected by the that more REITs may be listed where investors
Withholding tax on generally be taxed at marginal rates with
Appendix 2 new rules and consequently profit look to restructure investments into Irish Real
payments to Ireland credit being allowed for the 20%
participating interest should continue to be Estate Funds (IREFs). Further tax changes
withholding tax rate, while Irish corporates
2017
Tax Facts 2016 16
Financial services
Index
Introduction
Welcome
Business taxation will be required if the Irish REIT is to become with regards to the the UCITS
UCITS Management
Management securities or property, stamp duty may apply
an attractive structure for holding Passport, Irish
Company Passport, Finance Act 2015
legislation confirms on such securities or property).
Transfer Pricing
international property but we understand that confirms
that that the appointment
the appointment of an IrishofAIFMan Irish
to
this feature is to be actively worked on and AIFM to non-Irish
manage manage non-IrishAIFs will AIFs will not
not bring such bring Most services received by Irish funds should
Financial Services
modifications may be expected in future such non-Irish
non-Irish AIFs within
AIFs within the charge
the charge to Irishtotax.
Irish be exempt from Irish VAT, including
Corporate - withholding taxes (WHT) Finance Acts. tax. investment management services. Where VAT
Irish fund management companies and service is suffered, recovery is possible where the
Tax treaties Irish fund(e.g.
providers management companies and
fund administrators) are fund holds a percentage of non-EU
Asset management
service to
subject providers (e.g. fundtax
Irish corporation administrators)
at 12.5% on investments or has non-EU investors. To the
Value added tax (VAT) Ireland has a favourable tax regime which has are subject
their trading toprof
Irishts.corporation tax at 12.5% extent that Irish funds are in receipt of taxable
contributed to establishing it as a tried and on their trading profits. reverse charge services from abroad, they
Stamp duty
trusted domicile of choice for investment Irish domiciled investment funds are exempt must register and self-account for Irish VAT.
Relevant contracts tax (RCT) funds. In 2016, fund assets administered in Irish domiciled
from Irish tax oninvestment
their income funds
andare exempt
gains.
Ireland amounted to 3.86 trillion, with from Irish tax
Investment fundson their income and
are required gains. a
to operate The Irish funds industry continues to work
Interest assets in Irish funds accounting for Investment funds
withholding are required
tax, known as exit to operate
tax, on a with the Irish government and Irish Central
Local Property Tax approximately 1.9 trillion. Ireland is the withholding
payments tax, known
to taxable Irishas exit tax, investors
individual on Bank to explore and progress the development
largest centre for administration of hedge payments
at the rate toof taxable
41% onIrish individual
distributions and investors
gains of new and existing products that will
Income tax fund assets (over 40% of global hedge fund at the
(on rate of 41%
realisation on distributions
of fund investment)and andgains
at the enhance Irelands competitiveness on the
assets are administered in Ireland). (on realisation
rate of fund investment)
of 25% on payments (chargeable and at the
events) international stage.
Employee taxation rate
to of 25%
Irish on payments
corporate investors. (chargeable
The holding events)
of
Ireland was among the first countries to adapt to Irishatcorporate
shares the end of investors.
an eight Theyearholding
period (andof Irish Real Estate Funds
Employee share schemes
its legislation for the tax-efficient shares at the endeight
each subsequent of anyeareightanniversary)
year period will (and
implementation of the UCITS IV regime. Finance Act 2016 introduced a new type of
PRSI each subsequent
constitute a deemed eight year anniversary)
disposal on which exit willtax
Irelands tax rules also permit fund, an Irish Real Estate Fund (IREF). A
constitute
may arise in a deemed
respect of disposal
taxableon which
Irish exit
investors.
Universal Social Charge redomiciliations, mergers and reconstructions fund will be considered an IREF where 25%
tax may arise
Non-Irish in respect
resident of taxable
and exempt IrishIrish
resident
of investment funds without giving rise to or more of the market value of its assets are
Pension schemes investors.
investors are Non-Irish resident
not subject and
to exit taxexempt
on Irish Irish
adverse Irish tax consequences for funds of derived from Irish land or buildings.
resident
investment investors are not subject
funds provided relevant to exit tax on
their investors. Consideration of whether a fund constitutes
Capital gains tax Irish investment
declarations are infunds
place.provided relevant
an IREF will, in the context of an umbrella
declarations are in place.
Capital acquisitions tax Ireland was also one of the first jurisdictions Dividends and interest received by Irish funds scheme, be determined on an individual sub
to set out a detailed approach to the Dividends and interest
from Irish equity and bond received by Irishshould
investments funds fund basis.
Local taxes implementation of Alternative Investment from
not beIrish equity
subject and withholding
to Irish bond investments taxes. In
Fund Managers Directive (AIFMD). It, among Where a fund is categorised as an IREF, 20%
Customs and excise
Excise should
addition, notnobeIrish
subject
stamp to Irish
duty withholding
is payable on the
other things, provides for the appointment of withholding tax must be operated by the fund
taxes. In addition,
issue, transfer, no Irish or
repurchase stamp duty is or
redemption
Tax contacts alternative investment fund managers on distributions of income. No tax applies in
payable
shares inon antheIrishissue, transfer,fund,
investment repurchase
(where or a
(AIFMs) located in one jurisdiction to manage respect of gains on redemption except where
Withholding tax on redemption or shares in an
subscription/redemption Irish investment
is satisf ed by the in
Appendix 1 payments from Ireland alternative investment funds (AIFs) outside of those gains are derived from undistributed
fund,
specie(where
transfera of subscription/redemption
Irish is
Withholding tax on their home jurisdiction. Similar to the income or real estate disposed of within 5
Appendix 2 satisfied by the in specie transfer of Irish
payments to Ireland
legislative amendments introduced previously years of acquisition. Gains derived from
property held for at least 5 years are
2017
Tax Facts 2016 17
Financial services
Index
Introduction
Welcome
Business taxation specifically excluded from the scope of the exchanging information. The Irish institution must carry out appropriate due
withholding tax, unless the fund is classified regulations implementing CRS were signed on diligence on both pre-existing and new
Transfer Pricing
as a personal portfolio IREF (PPIREF). 22 December 2015 by the Minister of Finance financial accounts, including obtaining
Financial Services Broadly, PPIREFs are funds where a unit and CRS came into effect in Ireland on 1 self-certifications from new account holders
holder or a person connected with the unit January 2016. The first filings will be due by upon opening the account.
Corporate - withholding taxes (WHT) holder has the ability to influence the 30 June 2017 in respect of the 2016 reporting
selection of some or all of the IREF assets. period. CRS will operate alongside the requirement
Tax treaties for financial institutions to report details of
Provision is made for various reliefs, The OECD leveraged the US Foreign Account certain US persons under FATCA. In relation
Value added tax (VAT)
exceptions and refunds including for Irish Tax Compliance Act (FATCA) to design CRS to FATCA, the first filing deadline occurred in
Stamp duty pension schemes, Irish regulated funds and and as such CRS is broadly similar to the Ireland on 31 July 2015 for the 2014 reporting
life assurance funds and their EEA FATCA requirements, albeit with numerous period. Similar to CRS, the FATCA filing
Relevant contracts tax (RCT) counterparts where subject to equivalent alterations. It will result in a significantly deadline for the 2016 reporting period is 30
supervision and regulation. higher number of reportable persons due to June 2017.
Interest
the increased instances of potentially in-scope
Local Property Tax The amendment will apply to accounting accounts and the inclusion of multiple Islamic finance
periods beginning on or after 1 January 2017. jurisdictions to which accounts (of tax
Income tax Irish tax law facilitates most Islamic finance
residents of such jurisdictions) must be
All other Irish funds, falling outside of this transactions, including ijara (leasing), takaful
Employee taxation reported.
new categorisation, will not be impacted by (insurance), re-takaful (reinsurance),
the proposed legislative changes. The financial institutions covered by the murabaha and diminishing musharaka (credit
Employee share schemes
standard include custodial institutions, arrangements), mudaraba and wakala
PRSI Global Information Reporting depository institutions, investment entities (deposit arrangements) and sukuk. While
(FATCA & CRS) and specified insurance companies. The there is no specific reference in the legislation
Universal Social Charge to Islamic finance, rather the reference is to
The OECD released the Common Reporting financial information to be reported with
respect to reportable accounts includes Specified Financial Transactions, overall, the
Pension schemes Standard (CRS) in February 2014 which
interest, dividends, account balance or value, premise of the legislation in Ireland is to
seeks to establish a new Global Standard for
Capital gains tax income from certain insurance products, sales ensure that Islamic finance transactions are
the Automatic Exchange of Information
proceeds from financial assets and other treated in the same favourable manner as
between Governments with regard to certain
Capital acquisitions tax conventional financing transactions. The
details of financial account holders with income generated with respect to assets held
in the account or payments made with respect legislation also facilitates the favourable
Local taxes financial institutions. It entails the annual
to the account. Reportable accounts include taxation (and tax impact) of UCITS
sharing of certain account holder information
Customs and excise
Excise accounts held by individuals and entities management companies. The UCITS structure
from the country of the source of the payment
(which includes certain companies, trusts and is one of the most commonly used structures
Tax contacts to the tax authorities in the account holders
foundations), and the standard includes a for many different types of Islamic funds, such
country of residence.
Withholding tax on requirement to look through passive entities as retail Islamic equity funds, Shariah-
Appendix 1 payments from Ireland
Currently, close to 100 jurisdictions have to report on the relevant controlling persons. compliant money market funds, Shariah-
Withholding tax on
Appendix 2 payments to Ireland committed to implementing CRS and In addition to reporting the financial compliant exchange traded funds (ETFs), etc.
2017
Tax Facts 2016 18
Financial services
Index
Introduction
Welcome
Business taxation This demonstrates the Irish governments by extending to this form of financing the
desire to enhance the attractiveness of Ireland relieving provisions that currently apply to
Transfer Pricing
as a location for Islamic finance transactions conventional financing
Financial Services by extending to this form of financing the
relieving provisions that currently apply to
Corporate - withholding taxes (WHT) conventional financing
Contact us:
Tax treaties
Stamp duty
Interest
John OLeary Yvonne Thompson Brian Leonard
Local Property Tax Partner Partner Partner
Financial Services Financial Services Financial Services
Income tax
t: 353 1 792 8659 t: 353 1 792 7147 t: 353 1 7926179
Employee taxation e: john.oleary@ie.pwc.com e: yvonne.thompson@ie.pwc.com e: brian.a.leonard@ie.pwc.com
PRSI
Pension schemes
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 19
Corporate - withholding taxes (WHT)
Index
Introduction
Welcome
Business taxation Dividend WHT applies at 20% to dividends Finance (or 75% subsidiaries of such Irish tax group are generally not subject to
and other distributions made by Irish resident companies). WHT.
Transfer Pricing
companies. However, an exemption may be
Non-resident companies which are wholly
Non-resident
Financial Services available where the recipient of the dividend/ Royalties WHT
owned by two or more companies the
distribution is either an Irish resident
principal class of shares of each of which is Royalties, other than patent royalties, are
Corporate - withholding taxes (WHT) company which holds a 51% or greater
traded on a recognised stock exchange in a generally not subject to WHT under domestic
the company
shareholding in the company or or aa non-
non-
Tax treaties treaty country or another EU member state law. Patent royalty payments and certain
resident company eligible for the EU Parent-
Parent-
or on any other stock exchange approved by other annual payments are subject to WHT at
Value added tax (VAT) Subsidiary Directive (which in Ireland
the Minister for Finance. 20%. Patent royalty payments made by
requires a 5% or greater shareholding).
companies to companies resident in another
Stamp duty Individuals who are resident in a treaty
Individuals
Exemptions from dividend WHT are also EU member state or in a treaty country are
country or another EU member state.
Relevant contracts tax (RCT) available where the recipient of the generally not subject to WHT. The EU Interest
distribution falls into one of the categories Certain pension funds, retirement funds,
Certain and Royalties Directive may also provide an
Interest sports bodies, collective investment funds exemption from WHT for payments between
listed below and makes an appropriate
Local Property Tax declaration to the company paying the and employee share ownership trusts. associated companies.
distribution in advance of the distribution. A company which makes a dividend/
Income tax This declaration is self-assessed and valid for WHT on capital gains
distribution is required, within 14 days
Employee taxation up to six years: following the end of the month in which the Where any of the following
following assets
assetsisisdisposed
disposed
distribution is made, to make a return to Irish of, the person by whom or through whom the the
Employee share schemes Irish resident companies (as above, a
Irish
Revenue containing details of the recipient of consideration is
is paid
paid (i.e.
(i.e. the
the purchaser)
purchaser)must
must
declaration is not required for Irish resident
the distribution, the amount of the deduct capital gains
gains WHT
WHT at at aa rate
rate of
of 15%
15%
PRSI companies which hold a 51% or greater
distribution and the amount of any WHT from the payment:
payment:
shareholding in the company).
Universal Social Charge required to be withheld. The return must be
Non-resident companies which are resident
Non-resident accompanied by payment of the tax withheld. land
1. land oror minerals
minerals inin Irelandororexploration
Ireland exploration
Pension schemes in a treaty country or in another EU member rights
rights inin the
the Irish
Irish continentalshelf,
continental shelf,
2017
Tax Facts 2016 20
Corporate - withholding taxes (WHT)
Index
Introduction
Welcome
2017
Tax Facts 2016 21
Tax treaties
Index
Introduction
Welcome
Business taxation Companies that are resident in Ireland may avail of the benefits of Irelands tax treaty network. These tax treaties secure a reduction or, in some
cases, a total elimination of withholding tax on dividends, royalties and interest. See Appendix 1 and Appendix 2 for details of withholding tax
Transfer Pricing
on payments both to and from Ireland. Ireland has concluded, or is in the process of concluding, tax treaties with the following countries:
Financial Services
Treaties in force as at 1/1/2017
Corporate - withholding taxes (WHT)
Albania Czech Republic Italy Netherlands Slovenia
Tax treaties
Armenia Denmark Japan New Zealand South Africa
Value added tax (VAT) Australia Egypt Korea (Republic of) Norway Spain
Austria Estonia Kuwait Pakistan Sweden
Stamp duty
Bahrain Ethiopia Latvia Panama Switzerland
Relevant contracts tax (RCT) Belarus Finland Lithuania Poland Thailand
Interest Belgium France Luxembourg Portugal Turkey
Bosnia Herzegovina Georgia Macedonia Qatar Ukraine
Local Property Tax
Botswana Germany Malaysia Romania United Arab Emirates
Income tax Bulgaria Greece Malta Russia United Kingdom
Employee taxation Canada Hong Kong Mexico Saudi Arabia United States
Chile Hungary Moldova Serbia Uzbekistan
Employee share schemes
China Iceland Montenegro Singapore Vietnam
PRSI Croatia India Morocco Slovak Republic Zambia
Pension schemes
Contact us:
Capital gains tax
Local taxes
Tax contacts
Denis Harrington, Partner
Withholding tax on International Structuring
Appendix 1 payments from Ireland
Withholding tax on
t: 353 1 792 8629
Appendix 2 payments to Ireland e: denis.harrington@ie.pwc.com
2017
Tax Facts 2016 22
Value added tax (VAT)
Index
Introduction
Welcome
Business taxation General registration thresholds unless the trader has a Planning tip!
fixed place of business in Ireland. Foreign
Transfer Pricing VAT is a transaction based tax and is If you primarily supply goods or services to
making distance
traders making distancesales
sales(being
(beingthe
the
chargeable on the supply of goods or services persons who are not registered for VAT or
Financial Services supply goods from another
abroad to EUunregistered
Member State
in Ireland for consideration by an accountable if your turnover is less than 2 million you
persons)
to to Ireland
unregistered are obliged
persons) to register
to Ireland for
are obliged
person other than in the course or furtherance may be eligible to account for VAT on a cash
Corporate - withholding taxes (WHT) Irish
to VAT iffor
register theIrish
value
VATof if
these sales exceeds
the value of these
of an exempted activity. VAT is also receipts basis rather than on the basis of
35,000
sales in a calendar
exceeds 35,000 year. Alternatively,
in a calendar year.
Tax treaties chargeable on goods imported from outside invoiced sales.
they can elect they
Alternatively, to register should
can elect they soshould
to register wish.
the EU, on intra-Community acquisitions of they so wish.
Value added tax (VAT)
goods and on the purchase of specified Taxable persons (persons engaging in
Stamp duty services from suppliers outside of Ireland. businesspersons
Taxable for VAT(persons
purposes) in receipt
engaging inof
Please note that while VAT is governed by EU certain services
business for VATfrom abroad
purposes) inwhich
receiptare
of
Relevant contracts tax (RCT) legislation, there are key differences in the deemedservices
certain to be supplied in Ireland
from abroad which (known
are as
VAT rules applied between the 28 Member reverse charge
deemed services)
to be supplied inmust register
Ireland (knownfor as
Irish
Interest
States of the EU as each Member State is VAT andcharge
reverse account for Irishmust
services) VATregister
on the value of
for Irish
Local Property Tax required to impose the EU VAT legislation by thoseand
VAT services
account(where appropriate).
for Irish VAT on theTheyvalueare
of
way of its own domestic legislation. also obliged
those servicesto(where
registerappropriate).
for VAT if they make
They are
Income tax intra-Community
also acquisitions
obliged to register for VATof goods
if they which
make
Certain persons carrying on business in exceed 41,000 inacquisitions
intra-Community a 12 monthof period.
goods which
Employee taxation Ireland whose annual turnover does not exceed 41,000 in a 12 month period.
Employee share schemes exceed the following thresholds are not Accounting for VAT
required to register for and charge Irish VAT: Accounting for VAT
PRSI 75,000 for goods and 37,500 for services. Persons obliged to register for VAT must
However, they can elect to register should submit
Personsperiodic
obliged to VAT returns,
register forgenerally
VAT must
Universal Social Charge they so wish. bi-monthly;
submit periodichowever in certain
VAT returns, cases
generally
(typically
bi-monthly; low turnover
however in thresholds),
certain casesmonthly,
Pension schemes
The State, or any public body, is also regarded four monthly,
(typically bi-annual
low VAT payment or annual returns
liability) monthly,
Capital gains tax as an accountable person for VAT purposes in may be submitted.
four monthly, Someor
bi-annual accountable
annual returns persons
respect of certain activities carried out on a may be
elect to account
submitted. for their
Some VAT liability
accountable personson
Capital acquisitions tax more than negligible scale, or in the
maybasis
electof
tocash received
account in aVAT
for their taxable period
liability on
circumstances where by not treating the State rather than
the basis on the
of cash basis ofininvoiced
received a taxablesales (see
period
Local taxes
or public body as an accountable person a planning
rather thantipon
below for more
the basis information)
of invoiced sales (see
Customs and excise
Excise significant distortion of competition would which should
planning resultfor
tip below in more
cash-flow advantages.
information)
arise. which should result in cash-f ow advantages.
Tax contacts
Foreign traders supplying certain taxable
Withholding tax on
Appendix 1 payments from Ireland services in Ireland, or selling goods from
Withholding tax on stocks held or acquired in Ireland, are
Appendix 2 payments to Ireland
generally obliged to register for Irish VAT.
Foreign traders do not benefit from the
2017
Tax Facts 2016 23
Value added tax (VAT)
Index
Introduction
Welcome
2017
Tax Facts 2016 24
Value added tax (VAT)
Index
Introduction
Welcome
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 25
Stamp duty
Index
Introduction
Welcome
2017
Tax Facts 2016 26
Stamp duty
Index
Introduction
Welcome
2017
Tax Facts 2016 27
Relevant contracts tax (RCT)
Index
Introduction
Welcome
2017
Tax Facts 2016 28
Relevant contracts tax (RCT)
Index
Introduction
Welcome
Business taxation 2. P
ayment Notification Stage: Principals
must notify Revenue in advance of making Contact us:
Transfer Pricing
a payment to a subcontractor of their
Financial Services intention to make the payment and the
gross amount of that payment.
Corporate - withholding taxes (WHT)
3. D
eduction Notification Stage: Revenue
Tax treaties will respond with the rate of RCT which
should be withheld from that payment.
Value added tax (VAT)
Principals should then provide each
Stamp duty subcontractor with a copy of the Deduction Emer OSullivan
Authorisation issued by Revenue. Director
Relevant contracts tax (RCT)
t: 353 1 792 6695
eduction Summary Stage: Revenue will
4. D
Interest e: emer.osullivan@ie.pwc.com
issue a Deduction Summary online at the
Local Property Tax end of the return period, listing all
payments which have been notified to
Income tax them. Principals are responsible for
reviewing the Deduction Summary to
Employee taxation ensure it is correct, and arranging payment
Employee share schemes of the RCT due on or before the due date.
Local taxes
2017
Tax Facts 2016 29
Interest
Index
Introduction
Welcome
2017
Tax Facts 2016 30
Interest
Index
Introduction
Welcome
Business taxation Deposit interest retention tax DIRT & First Time Buyers
Transfer Pricing
(DIRT) First time buyers are entitled to a refund of
From 1 January 2014, the rate of DIRT on DIRT in respect of interest earned on savings
Financial Services
41%.The
deposit interest is 41%. Withrate of DIRT
effect from has
1 to be used either to buy or build a dwelling.
Corporate - withholding taxes (WHT) been standardised
January so that
2017, the rate the rate
of DIRT hasof 41%
dropped The refund applies to DIRT deducted from
applies
to to both
39% with annual or more
a Government frequent to
commitment interest paid on savings up to a maximum of
Tax treaties payments
reduce the(previously
rate to 33%subject
over thetonext
a 33% DIRT
four tax 20% of the purchase price or the completion
rate) and also less frequent payments
years. value. The relief applies in respect of
Value added tax (VAT)
(previously subject to a 36% DIRT rate). purchases or builds completed and suitable for
Stamp duty Exemptions and repayments occupation between 14 October 2014 and 31
Exemptions and repayments December 2017.
The following can apply to have DIRT repaid
Relevant contracts tax (RCT)
The
or tofollowing caninterest
have deposit apply topaid
havetoDIRT
themrepaid
Interest or to have
without thedeposit interest
deduction paid to them
of DIRT: Planning tip!
without the deduction of DIRT:
Local Property Tax individuals or their spouses or civil partner Unlike other investment income, EU deposit
aged 65 or over
individuals whospouses
or their are not or
liable
civiltopartner
income interest is not liable to the Universal Social
Income tax tax
aged 65 or over who are not liable to income Charge. However, a higher 40% income
Contact us:
Employee taxation tax
incapacitated individuals tax rate will apply if the income is not
declared on a tax return by the due date.
incapacitated
non-residents individuals
Employee share schemes
non-residents
charities
PRSI
charities
companies that are liable to corporation tax
Universal Social Charge
companies that are liable to corporation tax
Pension schemes
Sean Walsh
Capital gains tax Senior Manager
Capital acquisitions tax t: 353 1 792 6543
e: sean.walsh@ie.pwc.com
Local taxes
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 31
Local Property Tax
Index
Introduction
Welcome
Business taxation Local Property Tax payable in respect of building or structure (or part of a building) LPT Rates
residential properties operates through a which is used as, or is suitable for use as, a
Transfer Pricing The LPT rate is 0.18% for properties up to a
system of self-assessment. The following dwelling and includes any shed, outhouse,
persons are liable to pay LPT: garage or other building or structure and market value of 1 million. Above 100,000
Financial Services
includes grounds of up to one acre. there is a system of market value bands of
Corporate - withholding taxes (WHT) Owners
Owners of Irish residential property, 50,000 up to 1 million and the tax liability
regardless of whether they live in Ireland or 2016, an
For 2017, an LPT
LPT liability
liability will
will arise
arise where
where aa will be calculated by applying the tax rate to
Tax treaties not. person owns a residential property in the the mid-point of the band. LPT on residential
2015. LPT will be based
State on 1 November 2016. properties valued at over 1 million will be
Value added tax (VAT) Local
Local authorities or social housing
on the market value of a residential property charged at 0.18% on the first 1 million and
organisations that own and provide social
Stamp duty 2013 for the
on the valuation date, i.e. 1 May 2013. 0.25% on the excess over 1 million.
housing.
four year period until 2016.
Relevant contracts tax (RCT) Lessees
Lessees who hold long-term leases of 2016, some
For 2017, some local
local authorities
authorities have
have reduced
reduced
residential property (for 20 years or more). rate resulting
their LPT rate. in six different
The reductions LPT3%
range from
Interest rates.
to 15%.The reductions
Revenue willrange
make from 1.5% to
the changes
Holders
Holders of a life-interest in a residential 15%. Revenue will make the changes
automatically.
Local Property Tax property. automatically.
Income tax Persons
Persons with a long-term right of residence LPT rate Local authority
(for life or for 20 years or more) that entitles reduced by
Employee taxation
them to exclude any other person from the 3% Longford
Employee share schemes property.
15% Dublin City, Dun Laoghaire/
PRSI Landlords
Landlords where the property is rented Rathdown, Fingal, South
under a short-term lease (for less than 20 Dublin
Universal Social Charge years).
For 2017, some local authorities have
Pension schemes Personal
Personal representatives for a deceased increased their LPT. The reductions range
owner (e.g. executor/administrator of an from 5% to 10%. Revenue will make the
Capital gains tax estate). changes automatically
Capital acquisitions tax Trustees,
Trustees, where a property is held in a trust.
LPT rate Local authority
Local taxes Where
Where none of the above categories of liable
reduced by
person applies, the person who occupies the
Customs and excise
Excise property on a rent-free basis and without 5% Wexford
challenge to that occupation.
Tax contacts 15% Galway, Limerick City and
The liable person in respect of the property is County
Withholding tax on
Appendix 1 payments from Ireland responsible for completing and submitting the
Appendix 2 Withholding tax on Return and paying the tax due. For LPT
payments to Ireland
purposes, residential property means any
2017
Tax Facts 2016 32
Local Property Tax
Index
Introduction
Welcome
2017
Tax Facts 2016 33
Income tax
Index
Introduction
Welcome
Value added tax (VAT) Widowed person or surviving civil partner bereaved in the year 3,300 3,300
Relevant contracts tax (RCT) Widowed parent or surviving civil partner with dependent child -
a. with effect from 1 January 2014, available
first year after bereavement b 5,250 5,250 for the principal carer of the child only
Interest Incapacitated child 3,300 3,300 b. reducing credit available for subsequent
Local Property Tax years
Married couple or civil partnership - home carer c 1,100 1,000
c. full credit is available where the carers
Income tax Blind persons tax credit: income is 7,200 or less. A reduced tax
Single, married or in a civil partnership (one blind) 1,650 1,650 a. with effect from 1 January 2014, available
credit applies where income is over
Employee taxation for the principal carer of the child only
7,200 and no more than 9,400.
Married or in a civil partnership (both blind) 3,300 3,300
b. reducing credit available for subsequent
Employee share schemes d. the relief is restricted to the first 1,000
years
Dependent relative 70 70 per adult insured and the first 500 per
PRSI Age tax credit c. whereinsured
child carers income exceeds 7,200,
the tax credit is reduced by one half of
- Single, widowed or surviving civil partner 245 245 e. the maximum limit on qualifying fees is
Universal Social Charge the excess
- Married or in a civil partnership 490 490 7,000 per person per course. The first
2017
Tax Facts 2016 34
Income tax
Index
Introduction
Welcome
Business taxation Main tax allowances e is in place to 2020. The high earners restriction Income tax exemption limits
on the EII is not in place for a period of three years where the subscription for eligible a. There is an increase of 575 for each of the first two qualifying children and 830 for each
Transfer Pricing shares is made after 15 October 2013 subsequent child.
a. Allowances at marginal
The Film Tax Relief rate to 2020. The scheme has
Scheme is extended 2017 2016
been reformed and Persons aged 65 and over 2017 2016
Financial Services
has moved to a film corporation tax credit model with effect from 1 January
2015. Film
relief is aspecified relief for the purpose of the high income earners restriction; see Income tax rates
Corporate - withholding taxes (WHT) Employment andon
page 40 for details Investment scheme
how this restriction may(EII) 150,000
affect the relief 150,000 a. Single, widowed
ailable for or surviving
the principal carer of the civil partner
child only
a
18,000 18,000
- maximum qualifying investment per
b. annum
the applicable
a percentage rate is based on age; see page 51 Pension schemes for Married or in a civil partnership a 36,000 36,000
Tax treaties details
Value added tax (VAT) Pension contributions a. There is an increase of 575 for each of the first two qualifying children and 830 for each
c. the applicable percentage rate is based on age; see page 51 Pension schemes for
subsequent child.
details
Stamp duty Retirement annuity contracts
- maximum % of net relevant earnings b 15%-40% 15%-40%
Relevant contracts tax (RCT) Income tax rates
Occupational pensions
Interest - maximum % of earnings limit b 15%-40% 15%-40%
2017 2016
Local Property Tax Permanent health benefit schemes
- maximum % of statutory income 10% 10% 20% 40% 20% 40%
Income tax
a. The EII scheme is in place to 2020.Finance (No. 2) Act 2013 provided for the removal of Single, widowed or
Employee taxation the EII, relating to investments in qualifying companies from 15 October 2013 to 31 surviving civil partner: 33,800 balance 33,800 balance
December 2016, from the list of specified reliefs caught by the High Earners no dependent children
Employee share schemes Restriction. Finance Act 2016 extended the exclusion of the EII from the High Earners
Restriction for subscriptions of eligible shares made on or after 1 January 2017. Single a, widowed or
PRSI surviving civil partner: 37,800 balance 37,800 balance
b. the applicable percentage rate is based on age; see page 52 Pension schemes for
details
dependent children
Universal Social Charge
Married couple or civil
42,800 balance 42,800 balance
Pension schemes partnership: one income
2017
Tax Facts 2016 35
Income tax
Index
Introduction
Welcome
Business taxation Maternity Benefit Secondly, the transfer of assets to a personal in respect ofin
individuals foreign
respectinvestment
of foreignincomeinvestment(e.g.
insolvency practitioner will is notnot
liable to capital
be liable to rental) and foreign source employment
income (e.g. rental) and foreign source income
Transfer Pricing With effect
Since 1 Julyfrom
2013,1 maternity
July 2013,benefit,
maternity
adoptive relating to overseas
gains tax.
capital However,
gains the practitioner
tax. However, will be
the practitioner employment incomeduties.
relatingRBT toisoverseas
not available
benefit, adoptive
benefit and healthbenefit and health
and safety benefitand
aresafety liablebetoliable
will capital
to gains
capitaltax on the
gains taxsubsequent
on the in relation to earnings from a foreign
duties. RBT is not available in relation to
Financial Services employment exercised in Ireland. Such earnings
benefit
treated are treatedincome
as taxable as taxable
andincome and
taxed under disposal of the
subsequent asset.of the asset.
disposal earnings from a foreign employment
taxed under
Schedule E asSchedule E as employment
employment income. They are liable to PAYE, subject to certain exclusions.
Corporate - withholding taxes (WHT) exercised
income. They remain
remain exempt exempt
from PRSI andfrom PRSI and
Universal Thirdly, any benefit arising from the write-off Where RBTinapplies,
Ireland.theSuch earnings
amount are liable
of foreign
to PAYE,taxable
income subjectintoIreland
certain exclusions.
is limited to theWhere
Tax treaties Universal Social
Social Charge Charge (USC).
(USC). or reduction of debt under a Debt Relief RBT applies,
amount remittedthe to
amount
Ireland.ofWhere
foreign anincome
individual
Notice, Debt Settlement Arrangement or taxable to
subject in RBT
Ireland is limited
transfers foreignto the amount
source income
Value added tax (VAT)
Alimony/maintenance
Alimony/Maintenance Personal Insolvency Arrangement willis notnot
a gift
be (or property
remitted bought using
to Ireland. Where that
anincome)
individual to their
Stamp duty payments
Payments orgift
a inheritance for CAT
or inheritance forpurposes.
CAT purposes. spouse
subject toor RBT
civil partner
transfersand that income
foreign sourceor
payments under
In general, for payments under legally
legally property
income (or property bought usingremittance
is remitted to Ireland, the that
Relevant contracts tax (RCT) a Debt
Finally, any Settlement
Debt Settlement Arrangement
Arrangement or or will be deemed
enforceable maintenance agreements, income income income) to theirtospouse
have been made
or civil by theand
partner
Personal Insolvency Arrangement will provides individual.
Interest tax is not deducted at source andand the
the payer
payer that income or property is remitted to Ireland,
for payment
provide of current
for payment of tax liabilities
current of the
tax liabilities
payments in
deducts the payments in computing
computing total
total the remittance
Capital will be
gains arising ondeemed to have
the disposal been
of non-Irish
Local Property Tax debtor
of and forand
the debtor thefor
payment of any of
the payment taxany tax
The payments
income for the tax year. The payments are are made by
assets bythe individual.
non-Irish domiciled individuals are
liabilities of the personal insolvency
assessed for income taxtax purposes
purposesas asthe
the liable to Irish capital gains tax only to the extent
Income tax practitioner during the course of such Capital
Payments for
recipients income. Payments for the
the benefit
benefit ofof that the gains
gain isarising ontothe
remitted disposal of
Ireland.
arrangements. non-Irish assets by non-Irish domiciled
Employee taxation without deduction
a child are made without deduction of of tax
taxatat
The table below
individuals summarises
are liable to Irishthe position.
capital gains tax
income of
source and do not reduce the total income of Remittance basis
Basis of taxation
Taxation
Employee share schemes purposes.Separated/
the payer for income tax purposes. Separated/ only to the extent that the gain is remitted to
(RBT) Ireland.
PRSI civilpartners
divorced spouses and civil partnersare aretreated
treated
for for tax purposes
tax purposes as singleas single persons.
persons. RBT provides
provides favourable
favourabletaxation
taxationtreatment
treatmentfor
Irish tax resident, non-Irish domiciled individuals The table below summarises the position:
Universal Social Charge for Irish tax resident, non-Irish domiciled
Personal Insolvency
Pension schemes
A number of changes to the the law
law were
were made
made in in Resident, non-Irish domiciled Income/gains
Capital gains tax taxable in Ireland
2013 in order to facilitate the personal
personal Domicile levy return and pay the appropriate levy by 31
legislation that
insolvency legislation introduced in 2012. in
was introduced Irish source income October following the year end. yes
Capital acquisitions tax A domicile levy of up to 200,000 applies to
2012.
Firstly, the transfer of property under a Debt individuals who are Irish
Foreign employment domiciled
Irish workdays yes
Local taxes Special assignment relief
Settlement
Firstly, Arrangement
the transfer or a Personal
of property under a Debt irrespective of their tax residence position and
Foreign employment non-Irish workdays programme (SARP) only if remitted
Excise
Customs and excise Insolvency Arrangement or
Settlement to a Personal
person to be whether or not they hold Irish citizenship.
held in trustArrangement
Insolvency for the benefit to of creditors
a person (i.e.
to be held Liability
Foreign to the levy depends
investment income (egon rental
the level of
income) A special expatriate assignment relief
only if remitted
Tax contacts personal
in insolvency
trust for the benefit practitioner)
of creditors will
(i.e. not worldwide income and the value of Irish- programme applies to certain employees
Irish capital gains assigned to Ireland to work for a period ofyesat
Withholding tax on trigger a clawback
personal insolvencyofpractitioner)
capital allowances
does not and, located property.
Appendix 1 payments from Ireland least one year. The relief was first introduced
where rental
trigger income
a clawback arises in
of capital respect ofand,
allowances the Foreign capital gains only if remitted
Withholding tax on The domicile levy must be paid on a self- in 2009. A new enhanced scheme was
Appendix 2 payments to Ireland property
where while
rental it is held
income by in
arises therespect
practitioner,
of the
assessment basis and any Irish income tax introduced for individuals arriving in Ireland
the debtor
property will it
while remain
is heldliable
by thetopractitioner,
income tax in
paid will be allowed as a credit against the from 2012. Further amendments were
respect
the of that
debtor rental
remains income.
liable to income tax in
levy. Individuals liable to the levy must file a introduced to this enhanced scheme with
respect of that rental income.
2017
Tax Facts 2016 36
Income tax
Index
Introduction
Welcome
2017
Tax Facts 2016 37
Income tax
Index
Introduction
Welcome
2017
Tax Facts 2016 38
Income tax
Index
Introduction
Welcome
2017
Tax Facts 2016 39
Income tax
Index
Introduction
Welcome
Business taxation Non-first time buyers The relief does not apply where the letting is phased
Any basis,
reliefs notstarting
used inin 2017. For 2017,
a particular the
tax year
55 or over Other
between connected parties. interest
are deduction
carried forward. has
Inincreased
the case offrom 75% to
married
Transfer Pricing For qualifying non-first time buyers tax relief
80% andorthe
couples deductible
civil partners,amount will increase
each spouse/civil
is available on the first 3,000 in interest paid
Financial Services Rental income by 5% every
partner year thereafter
is treated separatelyso thatcalculating
when for 2021
each year (single person). The rate of tax relief
Single 80 the 100%
this interest
restriction. Asdeduction
such, eachwill be restored
spouse or civil
is 15%. Net profit arising from a rental property is 40
Corporate - withholding taxes (WHT) for qualifying
partner residential
can benefit lettings.
from the threshold of
taxed at an individuals marginal
Married/widowed 160rate of tax.
80
Civil partnership/ 125,000. Individuals subject to these
Tax treaties Purchasers of properties between Deductions in arriving at net profit include In general, aarenetobliged
rental loss can be pay
offset
surviving civil partnerfees, maintenance, restrictions to file and via the
2004 and 2008: rates, management
Value added tax (VAT) Irish Revenues On-line system (ROS).or
against profit from another property
insurance, certain legal and accountancy fees, carried forward against future rental profits.
The rate of mortgage interest relief will be Rentand A tear
Room Scheme
wear on furniture and fittings and Foreign rental losses can be offset against
Stamp duty increased to 30% for buyers who took out
repairs. from
Income A deduction is also
the letting, as allowed
residentialfor foreign rental income only.
their first mortgage between 2004 and 2008.
Relevant contracts tax (RCT) interest on moneyofborrowed
accommodation, a room infor the purchase
a persons
The ceilings for tax relieved mortgage interest of, or repair
principal to, the
private property.
residence is In the case
exempt of tax
from a Help To Buy Incentive (HTB)
Interest rented the
residential property, interest relief is
2016 are as follows:
payments for 2017 where gross annual rental income, with
restricted The HTB Incentive was introduced in Finance
Local Property Tax effect fromto175% and the
January tenancy
2017, must bethan
is not greater
registered with the Private Residential Act 2016 with the aim of assisting first-time
First time Other 14,000 (previously 12,000).
Income tax buyers Tenancy Board (PRTB). However, Finance Act buyers in attaining the deposit required to
Rent relief for private
years 1-7 The relief
2015 does not
introduced apply where
measures the letting
whereby a 100%is buy/self-build a new home by allowing for a
Employee taxation accommodation between connected parties.
interest deduction can be claimed for certain refund of income tax and DIRT paid in the
qualifying residential lettings. prior four tax years. The refund is available up
Employee share schemes InSingle
relation to new tenancies,10,000 3,000
relief for rent
Married/widowed 20,000
paid is no longer available. For individuals 6,000
Rental Income to a maximum of 20,000, subject to certain
PRSI Civil partnership/ In general, a net rental loss can be offset criteria. In order to claim the refund, the
who were paying rent in respect of a tenancy Net profit arising from a rental property
surviving civil partner against profit from another property or is first-time buyer must not have bought a
Universal Social Charge on 7 December 2010, relief is still available taxed at an individuals marginal rate of tax.
carried forward against future rental profits. property previously (either individually or
but will be abolished by 2018. Relief is given Deductions in arriving at net profit include
Foreign rental losses can be offset against jointly) and, where more than one individual
Pension schemes by way of a tax credit at 20% on the actual rates, management fees, maintenance,
foreign rental income only. is involved, all parties must be first-time
rent paid.
Rent The maximum
Relief credit available for
for Private insurance, certain legal and accountancy fees,
Capital gains tax buyers.
2016 is as
Accommodation follows: wear and tear onof
Restriction furniture
certain andtax
fittings and
reliefs
Capital acquisitions tax repairs.
for high earners The incentive applies to a first-time buyer who
In relation to new tenancies, relief for rent buys/self-builds a new residential property
Local taxes paid is no longer available. For individuals A deduction
Certain is alsoavailable
tax reliefs allowed for interest
to high on
income between 19 July 2016 and 31 December 2019.
Rent
who were a room scheme
paying rent in respect of a tenancy money borrowed
earners for the
are restricted. purchaserestriction
A tapering of, or repair
The first-time buyer must then live in the
Customs and excise
Excise on to, the property. In thewith
caseincome
of a rented
Income from the letting, as is
7 December 2010, relief still available
residential applies to individuals in excess of property for five years from the date the
but residential(before
property, interest relief is
Tax contacts accommodation, of a room in aRelief
will be abolished by 2018. is given
persons 125,000 claiming the specified tax property is habitable.
by way of a tax credit at 20% on the actual restricted
reliefs) andtospecified
75% andreliefs
the tenancy
for themust
year be
Withholding tax on
principal private residence is exempt from tax
Appendix 1 rent paid. registered with the Residential
This resultsTenancy
in an Board
payments from Ireland where the The
grossmaximum creditincome
annual rental available
withfor exceeding 80,000. To make a claim, the individual must supply
2017 is as follows: (RTB). However,
effective Finance
rate of income Act
tax of2016
32% introduced
where the Revenue with information regarding the
Appendix 2 Withholding tax on effect from 1 January 2015 is not greater than
payments to Ireland measures to
maximum restore full
restriction interest deductibility
applies. property and mortgage online, and their tax
12,000 (previously 10,000).
for landlords of residential properties on a
2017
Tax Facts 2016 40
Income tax
Index
Introduction
Welcome
Business taxation affairs must be in order for each of the four qualifying locations
Residential Propertywill be in Limerick City, commercial
5,000) property
for the located
first six years, in and a special
10% in the
tax years prior to making the claim. Waterford City, Cork, Galway, Dublin and regeneration
seventh year. area. The relief is provided in the
Transfer Pricing The Living City Initiative is a relief for
Kilkenny, but the exact detail of the qualifying form of capital allowances for expenditure
owner-occupiers and landlords in relation to The reliefon is intended to include regeneration
Financial Services Home Renovation Incentive areas has yet to be announced. incurred the conversion or refurbishment
expenditure incurred on the conversion or works on any residential buildings built prior
(HRI) of a qualifying property. The capital
refurbishment
The relief takesofthe
certain
form residential
of a deduction from to 1915 and now includes single-storey
Corporate - withholding taxes (WHT) allowances are available at a rate of 15% per
The HRI was introduced in Finance Act 2013 properties located in defined for
the individuals total income special
the year in buildings. It is 1
subject to a10%system of 7). A
annum (years 6) and (year
Tax treaties and provides tax relief by way of an income regeneration
which the expenditure is incurredofand
areas in the centres Limerick,
the certification by the relevant Local Authority.
clawback of capital allowances claimed can
tax credit of 13.5% of qualifying expenditure Waterford, Cork, Galway, Dublin
following nine years at a rate of 10% perand In the case of a rental property, it must be 7let
Value added tax (VAT) arise if the property is disposed of within
for repair, renovation or improvement works Kilkenny.
annum of Details of theconversion/
the relevant qualifying areas can as a dwelling on bona fide commercial terms,
years.
carried out by a qualifying contractor on a be located on the websites
refurbishment expenditure. ofIf,
theinrespective
any year, the once the refurbishment/conversion takes
Stamp duty
main home or rental property. The maximum local authorities. The scheme originally
property ceases to be used as the persons only The relief will apply to expenditure incurred
place.
Relevant contracts tax (RCT) tax credit that can apply per property is provided relief for owner-occupiers
or main residence, only but
no relief will be available on the conversion/refurbishment of buildings
4,050. was
for that year. If the property is sold at any in
extended to provide relief for landlords Financein
located Act 2014 introduced
a special regeneration measures to are
area that
Interest Finance Actis2016. ensure that a claim for relief is made
time, there no clawback of the relief in use for the purposes of the retailing of
For the relief to apply, the work must be electronically. The Act requires that certain
Local Property Tax claimed but the relief may not be claimed by a goods.
carried out between 25 October 2013 and 31 The relief takes the form of a deduction from information is provided to Revenue with the
subsequent purchaser.
Income tax December 2018 for Homeowners, and the individuals total income for the year in Broadly, the reliefdetails
claim, including may be ofclaimed by owner-
the aggregate of all
between 15 October 2014 and 31 December which the is
The relief expenditure is incurred.
limited to owner-occupiers and occupiers
qualifyingor landlords but
expenditure property
incurred in respect of
Employee taxation 2018 for Landlords. The scheme was due to consequently does not apply to rental developers
the qualifying arepremises.
excluded from claiming the
expire on 31 December 2016 but was The relief for owner occupiers is given by way
Employee share schemes properties. relief. Any relief claimed will be included in
of a deduction at 10% per annum over ten Finance Act 2016
extended in Finance Act 2016 by two years to the calculation of clarifies
the high that the qualifying
earners restriction,
the end of 2018. years of the
The relief is qualifying
intended toconversion/
include regeneration refurbishment/conversion costs must be
PRSI where applicable.
refurbishment expenditure
works on any residential (must be
buildings at least
built prior greater than 5,000. Previously, qualifying
Universal Social Charge In order to avail of the relief, both 5,000). If, in any year, the property
to 1915 and now includes single-storey ceases to There are limits
expenditure on the
of 10% amount
or more of qualifying
of the propertys
Homeowners and Landlords must have met be used
buildings. as the persons only or main expenditure
market valueon waswhich
needed.reliefThecanActbealso
claimed in
Pension schemes their payment and return filing obligations for residence, no relief will be available for that relation
removesto thecommercial
need for the premises.
buildingThese to haveare
Living City Tax
Local Property Initiative
and the Household Finance
year. Actproperty
If the 2014 introduces
is sold atmeasures
any time,to there 1,600,000
been originally in the case
built as of a company
a dwelling, asand
well as
Capital gains tax
Charge. Landlords must also be registered ensure
is that a claim
no clawback of thefor relief
relief is madebut the
claimed 400,000
removing the in the
capcase of an
on the individual.
floor size of
The Living City Initiative was introduced in
Capital acquisitions tax with the Residential Tenancies Board (RTB). electronically.
relief may not be The Act requires
claimed that certain
by a subsequent buildings.
Finance Act 2013 and has been amended and
information is provided to Revenue with the
purchaser. Where the expenditure is incurred by two or
updated in the two subsequent Finance Acts.
Local taxes Living City Initiative claim, including details of the aggregate of all more persons (companies
Commercial Propertyor individuals), the
From 1 January
qualifying 2017, the
expenditure relief has
incurred been of
in respect maximum amount of tax relief available
Customs and excise
Excise Residential
The Living CityProperty
Initiative was introduced in As regards commercial property,
extended to rented
the qualifying premises. residential properties cannot exceed 200,000 in total. relief can be
Finance Act 2013 and has been amended and within the special regeneration areas. The claimed for expenditure in excess of 5,000
Tax contacts The Living City Initiative is a relief for
updated in subsequent Finance Acts. EU relief for landlords is given by way of an The reliefon
incurred is subject
certain to EU approval
commercial and, when
property
owner-occupiers in relation to expenditure Commercial Property
Appendix 1 Withholding tax on approval for the scheme was received so that accelerated capital allowance of 15% of effective,
located inwill applyregeneration
a special for a period of fiveThe
area. years.
payments from Ireland incurred on the conversion or refurbishment
the provisions are effective from 5 May 2015 As regards expenditure
qualifying commercial property,
(must be at relief
leastcan be It willisalso
relief be subject
provided in theto form
a system of
of capital
Withholding tax on of certain residential properties located in
Appendix 2 payments to Ireland to 4 May 2020. claimed for expenditure incurred on certain allowances for expenditure incurred on the
defined special regeneration areas. The
Introduction
Welcome
Introduction
Welcome
2017
Tax Facts 2016 43
Employee taxation
Index
Introduction
Welcome
2017
Tax Facts 2016 44
Employee taxation
Index
Introduction
Welcome
2017
Tax Facts 2016 45
Employee taxation
Index
Introduction
Welcome
2017
Tax Facts 2016 46
Employee share schemes
Index
Introduction
Welcome
Introduction
Welcome
Annual scheme returns are also required for all
Business taxation Rates tip!
Planning liable to employee PRSI. Share-based Self-employed PRSI (Class S)
approved share schemes. The reporting
remuneration is generally exempt from
deadline is also 31 March following the end of Contact us:are liable for PRSI
Transfer Pricing Shares delivered through a correctly Self-employed persons
Employee/Employer PRSI employer PRSI but liable to USC.ofNo
structured and Revenue-approved share the relevant tax year. In the case approved contributions in respect of income from a
(Class A) deduction is available
Financial Services scheme (e.g. APSS and SAYE) are exempt profit sharing schemes,inthecalculating either
trustees also have trade or profession or from investment
PRSI income
is charged employer or employee PRSI contributions in
from taxon (upemployment
to 40% saving) earnings
and separate e-filing reporting obligations to meet income. The contributions are payable on
Corporate - withholding taxes (WHT) respect of payments made by employees to
including PRSI
employer most benefits. Employees (known
(10.75% saving). by 31 October following the end of the tax year. income net of capital allowances. The
as employed contributors in PRSI pensions.
Tax treaties minimum contribution payable for 2016 is
legislation) who earn less than 352 in any Tax treatment of loans from 500. Payment must be included with
Value added tax (VAT) week are not required to pay employee PRSI
Employer reporting employee benefit schemes preliminary tax, which is payable on or before
in that week, however employer PRSI is still
requirements 31 O Pat Mahon
Stamp duty New anti-avoidance legislation was
due. The weekly PRSI exemption of 127 was Partner
Companies
abolished withare required
effect from to submit
1 Januaryannual
2013. introduced in 2013 to counteract tax
Relevant contracts tax (RCT) T: 353 1 792 6186
returns reporting any unapproved share avoidance schemes where an employer,
From 1 January
scheme 2014, employed
activity during the year. This contributors e: pat.mahon@ie.pwc.com
Interest instead of paying salary or bonus, places
who are alsoisself-assessed
information reportable ontaxpayers
Form RSS1. areOnly
liable funds in an unapproved employee benefit
Local Property Tax to PRSI
the grant,onexercise,
unearned income
release and(e.g. rental of
assignment scheme (usually a discretionary trust located
Income tax profits).
share Previously,
options and otheremployed
similarcontributors
rights are outside the State) or other structure from
were exempt
required to befrom making
declared PRSIRSS1
on Form contributions
and, which an employee (including former or
Employee taxation on such
from income.
2015, must This change
be filed applies toby
electronically future employees or any connected person)
employees with
employers. significant
The statutory amounts
reporting of
deadline is receives, on or after 13 February 2013, loans
Employee share schemes non-employment
31 March following income
the end (generally more tax
of the relevant or other assets from the scheme with no tax
PRSI than 5,000
year. per year)
Other share awards who, for this
which reason,to
are subject arising under general or benefit-in-kind Liam Doyle
are required
employer to submit
payroll an annual
withholding (e.g.Form
RSUs,11 income tax provisions. This anti-avoidance Director
Universal Social Charge self-assessment
Restricted shares,tax return. Such
Forfeitable unearned
shares) are not legislation is consistent with recently enacted t: 353 1 792 8638
income istoliable
required to PRSIon
be reported under
FormClass
RSS1. K at 4%. UK legislation intended to combat what is e: liam.doyle@ie.pwc.com
Pension schemes
Withholdings due on such share awards should described as disguised remuneration.
Certain taxable
be remitted withlump sum payments
the companys madefor
P30 return to
Capital gains tax
employees on leaving an employment
the month in which the shares are delivered. These new anti-avoidance measures will not
Capital acquisitions tax (including
The taxableredundancy and ex-gratia) are not
benefit and associated apply to schemes that are approved by Irish
liable to PRSI. However,
withholdings should be reported the Universal
in the Social Revenue such as Approved Profit Sharing
Local taxes Charge (USC) may still need to be applied to Schemes, Employee Share Ownership Trusts
companys annual end-of-year P35 return and,
any taxable element of such
from 2017 onwards, must be separately payments. Most or Occupational Pension Schemes. Revenue
Customs and excise
Excise
employed
disclosed inpersons are liable to PRSI at Class
that return. have also confirmed that these provisions are
Tax contacts A; however, other classes may apply in certain not intended to impact on the current tax
circumstances (e.g. certain public sector treatment of unapproved share option
Withholding tax on
Appendix 1 payments from Ireland employments or employees aged over 66). schemes, restricted shares (clog schemes) or
Appendix 2 Withholding tax on RSUs.
payments to Ireland All share awards, share options and Revenue
approved share schemes (APSS / SAYE) are
Introduction
Welcome
2017
Tax Facts 2016 49
PRSI
Index
Introduction
Welcome
2017
Tax Facts 2016 50
Universal Social Charge
Index
Introduction
Welcome
2017
Tax Facts 2016 51
Pension schemes
Index
Introduction
Welcome
2017
Tax Facts 2016 52
Pension schemes
Index
Introduction
Welcome
2017
Tax Facts 2016 53
Pension schemes
Index
Introduction
Welcome
2017
Tax Facts 2016 54
Pension schemes
Index
Introduction
Welcome
Business taxation
Age for whole of tax year Where the value of all Where the value of all
Transfer Pricing ARFs is under 2m ARFs is over 2m Contact us:
Financial Services Deemed distribution % Deemed distribution %
Income tax
Employee taxation
Local taxes
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 55
Capital gains tax
Index
Introduction
Welcome
Capital acquisitions tax date. Indexation factors for disposals in 2017 are as follows:
Local taxes
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 56
Capital gains tax
Index
Introduction
Welcome
Business taxation Losses Exemptions and reliefs period 1 January 2014 to 31 December
2018. The tax credit, which is available on a
Transfer Pricing Losses in any year are set off against The following are some of the main subsequent disposal of the chargeable
chargeable gains arising in the same year. exemptions and reliefs are available: business asset, is the lower of (1) the CGT
Financial Services
Unused losses may be carried forward paid on the original asset disposal (pro-
indefinitely. Capital losses cannot generally be Annual
Annual exemption 1,270. For married
Corporate - withholding taxes (WHT) rated where the full proceeds were not
carried back. Capital losses arising in relation couples or civil partners the exemption is
(non-transferable)
1,270 each (non-transferable). reinvested in a qualifying manner) or (2)
Tax treaties to disposals to a connected person may only 50% of the CGT due on the subsequent
be used to shelter chargeable gains on Transfers
Transfers between spouses/civil partners disposal.
Value added tax (VAT)
disposals to that same connected person. are generally treated as disposals on which
Stamp duty Gains on development land may only be offset arise
no gain/loss will arise. Broadly, an initial risk finance investment
Broadly, an initial risk finance investment
by losses on development land. Inflation relief is defined as funding a qualifying
The
The gain on the disposal of an individuals is defined as funding a qualifying
Relevant contracts tax (RCT) may not operate to convert a monetary gain enterprise by way of equity or investment
principal private residence. Certain enterprise by way of equity or investment
into an allowable loss or to increase a for the purpose of new business where the
Interest restrictions may apply where the residence for the purpose of new business where the
monetary loss. funding does not exceed 15 million and is
has development potential, has been used funding does not exceed 15 million and is
Local Property Tax provided in full within six months of the
for business purposes and/or where the provided in full within six months of the
commencement of the new business.
Planning tip! property was not the individuals principal commencement of the new business.
Income tax
private residence for the entire period of Chargeable business assets are assets
Employee taxation Review your asset portfolios prior to year costing not less
Chargeable than 10,000
business assets areacquired
assetson or
ownership
ownership.
end to consider whether any losses can be costing not less than 10,000 acquired31on or
after 1 January 2014 but on or before
Employee share schemes crystallised in order to mitigate capital gains A
A proportion of the gain on the disposal of December
after 20182014
1 January whichbutareoneither (1) used
or before 31
tax liabilities. certain property purchased between 7 wholly for the purposes of a new
December 2018 which are either (1) usedbusiness
PRSI
December 2011 and 31 December 2014. Full carriedfor
wholly on the
by apurposes
qualifying of aenterprise
new business or
Universal Social Charge CGT relief is available if the property is sold (2) new ordinary shares in a qualifying
carried on by a qualifying enterprise or
seven years from the date it was acquired. company
(2) carrying
new ordinary on new
shares in abusiness (or a
qualifying
Pension schemes Where the property is held for a period in 100% parent of such a company).
company carrying on new business (or a The
excess of seven years, the relief is allowed in individual
100% must
parent own aatcompany).
of such least 15% of Thethe
Capital gains tax
the proportion that the seven years bears to ordinary share capital and be a full-time
individual must own at least 15% of the
Capital acquisitions tax the total period of ownership. working director
ordinary of theand
share capital qualifying
be a full-time
The
The gain on the disposal of a dwelling home company. The chargeable business asset
working director of the qualifying
Local taxes must be held for more than three years.
occupied rent-free by a dependent relative. company. The chargeable business asset
Customs and excise
Excise must be held for more than three years.
Entrepreneur
Entrepreneur Relief pre 2016. This A qualifying company is an unlisted
measure provides a CGT tax credit to qualifying enterprise. A qualifying
Tax contacts A qualifying company is an unlisted
individuals who use the proceeds of an asset enterprise is one that qualifies as a micro,
Withholding tax on qualifying enterprise. A qualifying
Appendix 1 payments from Ireland disposal, made on or after 1 January 2010 small or medium-sized enterprise under EU
enterprise is one that qualifies as a micro,
and upon which CGT has been paid, to Commission Recommendations (i.e. fewer
Appendix 2 Withholding tax on small or medium-sized enterprise under EU
payments to Ireland
acquire certain chargeable business assets than 250 employees and either annual
Commission Recommendations (i.e. fewer
as an initial risk finance investment in the
2017
Tax Facts 2016 57
Capital gains tax
Index
Introduction
Welcome
2017
Tax Facts 2016 58
Capital gains tax
Index
Introduction
Welcome
payment entitlements under the Single Impact of debt write-off Windfall Gains Tax
Payment Scheme where those entitlements
were fully leased Finance (No.2) Act 2013 introduced a The windfall gains tax charge of 80% in
Business taxation Impact
restrictionof ondebt write-off
CGT exemption on gains arising from the Planning tip!
the base cost allowable in respect of disposals of development land
disposal
CGT by farmers
relief for farmtorestructuring
active farmers of a
where calculating theAct
gain/ loss on disposal
Transfer Pricing
payment entitlements under the Single Finance (No.2) 2013 introduced a of a (where both
Consider a rezoning
the tax impact ofand a disposal
debt write offtook
sale, purchase or exchange of land occurs in chargeable asset in situations where a loan or inplace on ornegotiations
any debt after 30 October 2009)
to ensure has
that allbeen
Payment Scheme restriction on the base cost allowable in
Financial Services the period from 1where
Januarythose
2013entitlements
to 31 part of a loan, relating toonthe purchase
were fully leased. calculating the gain/ loss disposal of aor abolished.
potential taxFrom
costs1are
January 2015,
factored intosuch
the profits
December 2016, provided certain enhancement
Corporate - withholding taxes (WHT) chargeable assetofinthe disposed
situations asset,ahas
where loanbeen
or will be taxed at the standard rate of CGT
discussions.
conditions
relief forare met. forgiven or written offtoby the lender. As
CGT farm restructuring where a part of a loan, relating the purchase or the (currently 33%). The restrictions on the use
Tax treaties sale, purchase
CGT exemption or exchange of landon
on gains arising occurs investor will of
the in enhancement notthehave suffered
disposed a real
asset, has been of indexation and the use on non-development
the period from 1 January 2013 to
transfer of a site of up to 1 acre from a 31 economic
forgiven or burden
written in
off respect
by the of the
lender. portion
As the of Windfall Gains
losses still apply Tax of development
to disposals
Value added tax (VAT) December 2019, provided certain conditions the cost written off, a restriction on the land it is only the windfall tax rate that has
parent to a child provided it is for the investor will not have suffered a real
allowable base cost is imposed in these The windfall
been gains tax charge of 80% in
abolished.
Stamp duty are met.
construction of the childs principal private economic burden in respect of the portion of
circumstances. Where a release of debt occurs respect of disposals of development land
residence
CGT exemptionand the market
on gains valueon
arising of the
the site the cost written off, a restriction on the
in a subsequent year, in circumstances (where both a rezoning and a disposal took
Relevant contracts tax (RCT) does not
transfer of exceed
a site of500,000.
up to 1 acre from a allowable base cost is imposed in these where
a deduction has been ataken in aofprior place on or after 30 October 2009) has been
parentexemption
to a child provided it is for the making circumstances. Where release debtyearoccurs
Interest CGT for Irish companies CGT calculation, theinamount of the release abolished. From 1 January 2015, such profits
construction of the childs principal in a subsequent year, circumstances where
disposals from qualifying holdingsprivate
in will be taxed at the standard rate of CGT
Local Property Tax residence and the market value of the a will, in certain
deduction circumstances,
has been taken in a prior be chargeable
year
companies which are tax resident in site
the EU to CGT in that year. This provision applies to (currently 33%). The restrictions on the use
does not exceed 500,000. CGT calculation, the amount of the release
or countries with which Ireland has borrowings of indexation and the use on non-development
Income tax will, in certainincurred by the person
circumstances, making
be chargeable
concluded a double taxcompanies
treaty, subject to losses still apply to disposals of development
CGT exemption for Irish making tothe
CGT disposal
in that or to borrowings of a connected
year.
Employee taxation certain conditions.
disposals from qualifying holdings in person. It does not apply to a debt write-off land it is only the windfall tax rate that has
companies which are tax resident in the EU This provision
between group applies
companiesto borrowings
or to a debt incurred been abolished.
Employee share schemes
or countries with which Ireland has bywrite-off
the person makingofthe
in respect disposal
exempt or to
assets in certain
PRSI concluded a double tax treaty, subject to borrowings
circumstances.of a connected
The provision person.
willItbe does not
certain conditions. apply to a debt
academic write-off
where between
the investor group has
concerned
Universal Social Charge companies or to aCGT
plentiful other debtlosses
write-off in respect
available of
for offset
Pension schemes exempt
but may assets
createin acertain
real tax circumstances.
cost in other The
provision will beand
circumstances academic
shouldwhere be bornethe ininvestor
mind in
Capital gains tax concerned has plentiful other CGT losses
debt negotiations.
available for offset but may create a real tax
Capital acquisitions tax cost in other circumstances and should be
Local taxes borne in mind in debt negotiations.
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 59
Capital gains tax
Index
Introduction
Welcome
Local taxes
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 60
Capital acquisitions tax
Index
Introduction
Welcome
2017
Tax Facts 2016 61
Capital acquisitions tax
Index
Introduction
Welcome
2017
Tax Facts 2016 62
Local taxes
Index
Introduction
Welcome
Business taxation Local taxes known as rates are not based on collect 22 cent
to Emissions in respect
Trading Scheme of (ETS)
every plastic
income but rather are levied on the occupiers bag or bag containing
installations, to combinedplastic,
heatregardless
and power of
Transfer Pricing
of business property by reference to a deemed size, unless
plants or forspecifically exempted, that
electricity generation. is also
Relief
Financial Services rental value of the property concerned. The provided
applies toto customers and remit all plastic
biofuels.
level of rates levied can depend on the region bag levies collected to Irish Revenue. As a
Corporate - withholding taxes (WHT) in which the property is located. Rates are an Carbon
result oftaxthealso
levy,applies to natural gas and
most non-supermarket
allowable deduction for corporation tax solid fuel where supplied
retailers provide paper carrier for combustion.
bags, and many
Tax treaties Again,
purposes. supermarket retailers offerthese
reliefs apply where fuels
for sale arefor
bags
supplied
life (i.e. re-usable bags), which are not for
to ETS installations, CHP plants,
Value added tax (VAT)
Local authorities are also empowered to levy electricity
subject to the generation or for use
environmental in chemical
levy.
Stamp duty charges on all occupiers for specific services reduction, electrolytical or metallurgical Contact us:
(e.g. water supply). These charges are also processes.
Carbon tax
Relevant contracts tax (RCT) deductible for corporation tax purposes.
Reliefs
Irelandalso
leviesapply for solid
a carbon tax fuels which oils
on mineral contain
Interest a high
(e.g. biomass
auto fuels,content.
kerosene) The reliefare
which will be
supplied
Carbon Tax
Environmental Taxes
Local Property Tax determined
in Ireland. The by reference
rate of carbonto thetaxlevel of
broadly
Emissions allowances biomass
equates to content
EUR 20 of per
the tonne
solid fuel.
of CO2 emitted.
Income tax Relief applies where mineral oils are supplied
Irish tax legislation contains provisions
Plastic
to EmissionsBagTrading
Tax Scheme (ETS) Ronan MacNioclais
Employee taxation dealing with the tax treatment of emission
installations, to combined heat and power Partner
allowances under the EU Emissions Trading In Ireland, a levy (currently 22 cent per bag) is
Employee share schemes plants or for electricity generation. Relief also t: 353 1 792 6006
Scheme. The legislation distinguishes imposed upon consumers provided with a
applies to biofuels. e: ronan.macnioclais@ie.pwc.com
between allowances acquired free of charge plastic bag when purchasing goods in
PRSI
from the Environment Protection Agency supermarkets
Carbon tax also and otherto
applies retail outlets.
natural Under
gas and
Universal Social Charge under the EU Scheme and those which are the applicable legislation, retailers
solid fuel where supplied for combustion. are obliged
purchased. to collect 22 cent in respect of every
Again, reliefs apply where these fuels are plastic
Pension schemes bag or bag
supplied tocontaining plastic, CHP
ETS installations, regardless
plants,offor
Allowances which are purchased are treated size, unless specifically exempted, that is
Capital gains tax electricity generation or for use in chemical
as trading assets, subject to corporation tax provided to customers and remit all plastic
reduction, electrolytical or metallurgical
treatment. Allowances which are acquired bag levies collected to Irish Revenue. As a
Capital acquisitions tax processes.
free of charge are subject to capital gains tax result of the levy, most non-supermarket Mary Douglas
Local taxes treatment. Reliefs also
retailers applypaper
provide for solid fuelsbags,
carrier whichandcontain
many Director
a high biomass
supermarket content.
retailers Thefor
offer relief
salewill befor
bags t: 353 1 792 7024
Customs and excise
Excise Environmental
Carbon tax taxes determined
life by reference
(i.e. re-usable to the level
bags), which are notof e: mary.douglas@ie.pwc.com
Tax contacts In Ireland,
Ireland a levy
levies (currently
a carbon 22mineral
tax on cent peroils
bag) is biomasstocontent
subject of the solid fuel.
the environmental levy.
Withholding tax on imposed
(e.g. autoupon
fuels,consumers
kerosene) provided
which arewith a
supplied
Appendix 1 payments from Ireland plastic
in bag The
Ireland. when purchasing
rate of carbongoods in
tax broadly
Appendix 2 Withholding tax on supermarkets
equates to EURand20 other retailofoutlets.
per tonne Under
CO2 emitted.
payments to Ireland
the applicable
Relief legislation,
applies where retailers
mineral are
oils are obliged
supplied
2017
Tax Facts 2016 63
Customs and Excise
Index
Introduction
Welcome
2017
Tax Facts 2016 64
Tax contacts
Index
Introduction
Welcome
2017
Tax Facts 2016 65
Tax contacts
Index
Introduction
Welcome
Local taxes
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 66
Appendix 1
Index
Introduction
Welcome
2017
Tax Facts 2016 67
Appendix 1
Index
Introduction
Welcome
Local taxes
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 68
Appendix 2
Index
Introduction
Welcome
2017
Tax Facts 2016 69
Appendix 2
Index
Introduction
Welcome
Local taxes
Excise
Customs and excise
Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland
2017
Tax Facts 2016 70
www.pwc.ie
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