The 2024 Finance Bill's updates and changes to Ireland's tax regime feature in this month's issue including the widely welcomed Participation Exemption for Foreign Dividends.
Developments across the board in financial services and in financing of the economy are covered throughout this month's issue, at a time of growing momentum that thankfully is resulting in some good news on the global economic front, despite continued geopolitical trauma. The forthcoming mooted global cuts in interest rates (in addition to the most recent ECB cut), and evidence of easing inflation can hopefully begin to build optimism about the shape of 2025.
In advance of the publication of the Department of Finance Report over viewing the Irish investment funds industry 'Funds 2030' the latest issue contains a 'SWOT' analysis of the industry, analysing its current strengths, weaknesses, threats and opportunities. It is in the latest edition of the Finance Dublin Funds Monitor. It is a year that has already seen some very hopeful signs, including the early indications from ELTIF 2.0, the continued strength of NAVs in domiciled Irish funds, and proactive engagement with the regulator, the Central Bank of Ireland.
The Participation Exemption leads the way in Budget tax simplification effort. The much anticipated participation exemption regime for dividends was confirmed in the Budget with it set to come into effect from 1st January and is held up as highlight from Budget 2025 for increasing Ireland's attractiveness for international business.
This month's issues features the Finance Dublin Accountancy Survey 2024. The 14.7 p.c. growth rate in fee income over the past year recorded by Ireland Top 20 Accountancy firms is five times the expected rate of growth of overall GDP this year, and that makes the accountancy industry a leading contributor, and an asset in the continuing success of the Irish economy. The growth of their contribution to the Irish economy can be seen by comparing the industry today, as depicted in this year's 2024 survey, with what it was when we in Finance Dublin/Finance Magazine, published the first such survey in December 1987.
Most of the accountants and tax advisers in the firms covered in the Survey would have been dismayed by the recent Apple judgement - and we provide a perspective in this edition, in the Irish Tax Monitor, quoting the Taoiseach's views on the matter. In our editorial on this we express the point that it, as a judicial decision, is subjective. It is also wrong in our opinion, indeed unjust, to also use the somewhat emotive term used by the relevant Commissioner in her comments on the Judgement. The ruling says it was a sweetheart deal done by the Irish Revenue Commissioners. The very nature of the (distinct) Irish legal system means that the Irish Revenue never did sweetheart deals, as part of its modus operandum, and to insist they did is not just inappropriate for the highest European court to have ruled, but indeed potentially a stain on their reputation as well.
In this Special Budget 2025 Edition of the Irish Tax Monitor contributors give the main points from their firm's pre-Budget observations under the following headings: Investment Funds; Housing; SMEs/Private Business; Tax Simplification and FDI & Financial Services. The Department of Finance's second feedback statement on the Participation Exemption also features.
With a new political cycles beginning in the EU and ahead of elections in Ireland and the US, we assess the potential implications for Ireland's financial services industry. Already, change is signalled at EU level with the re-elected European Commission president signalling, in relation to the EU Green Deal, focus will shift to implementing existing laws rather than passing new ones.
We feature perspectives from thought leaders in the Irish industry on how the existing agenda is likely to be implemented, and to reflect on how it might change and evolve in the coming period. "Financial Services Regulation Review in the election year of 2024" provides a Symposium of views from 16 thought leaders on the critical regulatory issues for Irish FS, as the new electoral cycles begin both in Europe and at home in Ireland.
Also featuring in the issue are a number of assessments and observations on the Enria report on the McMenamin judgement of IFSAT. How this will roll out is seen as positive, expecially given the CBI's plans to implement the recommendations fully. This is also the topic of our editorial comment which says "The reassurance that now will flow from Governor Makhlouf's statements of acceptance of Enria's recommendations will be an important step in increasing confidence amongst international FS FDI investors about the Republic of Ireland as an investable jurisdiction".
Global, EU and national developments aimed at reducing the friction caused by the interaction of tax systems feature in this month's issue including the EU's FASTER proposal to improve the bloc's withholding tax procedures. Another EU plan, the Head Office Taxation system (HOT), aims to encourage SMEs to expand across borders by reducing the compliance burden caused by the EU's 27 national tax regimes. The OECD's BEPS, one major source of added tax complexity, also features, specifically in the areas of DTTs and Country by Country Reporting, while delays on agreement on certain aspects of BEPS is raising the risk of a proliferation of national digital services taxes.
The results of the June European and Local elections in Ireland, revealing that actual voting support for Sinn Fein at the ballot box was just 11% of the national poll, along with other revelations about political support levels feeds into an economic backdrop that points to relative financial and political stability in the context of heightened geopolitical instability in Europe and globally.
The report assesses the trends in and accuracy of political polling and actual results in the recent Irish elections, and points to a series of significant features that are now at play in the Irish political outlook in the short term preceding the next general election - in the wake of Budget 2025 (on October 1st) the election date potentially coming as soon as Friday November 8th, or 15th, and no later than March 2025.
In this issue, as election news dominates in both of Ireland's nearest neighbours, and across the Atlantic in the USA, the cover feature provides a political and economic report on the state of the nation for the Republic, and what it means as Ireland enters the latter stages of its own election cycle, on foot of the momentouous European and Local Election results in the Republic of Ireland in June.
It concludes: 'the findings confirm indications that have been evident in the trends shown in opinion polls since late 2023 that the next election is the incumbent Government parties' to lose, and that a re-alignment of the centre parties Fianna Fail and Fine Gael (who together won over 50% of the seats in the local elections) in a coalition with independents or with smaller parties of the centre left is the likely political backdrop indicated in actual voting patterns, and, reflected in the trends identified in opinion polls.
The latest Irish Tax Monitor features a number of areas that are likely to be subject of changes in the Budget, which has been pulled in by one week to October 1st, such as the modernisation of business reliefs, the EIIS scheme and the participation exemption. A number of these areas are among the issues under consideration as signalled by the Taoiseach in his speech at the National Economic Dialogue.
In the latest issue: the 2024 Deals of the Year Awards, which celebrate the achievements of the Irish capital markets and corporate finance dealmaking and advisory community - detailed in 46 articles in the issue each profiling the deals that are recognised this year.
They show that despite the shifting market conditions, and increased uncertainty in the economic environment, the industry continues to show itself as adaptable and flexible, and capable of delivering the impressive achievements profiled in the report.
Elsewhere in the issue we look into the factors behind the leap for Dublin to 25th most important financial centre in an index ranking coveted by the top financial cities of the world, the Global Financial Centres Index of financial centres (GFCI).
Amongst these are the robust stability of the Irish economy, characterised by a surplus in the Exchequer - a not accidental situation that puts the Irish Government in a strong position ahead of the 2025 Budget, forthcoming, which will most likely be the last before the next general election. These are discussed in this month's editorial, and in articles in the Developments pages of the issue, and in the latest Irish Tax Monitor.
This month's issue the Roundtable looks ahead to Budget 2025, an election budget that could conceivably set the budgetary agenda for the next five years. The Tax Monitor's reviews of individual finance sectors continues this month with an article by BDO's Tatheer Fatma setting out an agenda for improving the tax framework for Securitisation in Ireland. Also the ITM discusses the various uncertainties in the area of global direct tax, citing
a discussion with Monique Pisters, head of tax at Grant Thornton Netherlands, and Sasha Kerins, international tax partner with Grant Thornton Ireland, which includes consideration of the UN's potential future role in international taxation.
The Attorney General, speaking as part of the Ireland for Law series of events in North America in September drew parallels between the British, Irish and American legal systems in a scholarly address delivered at his old alma mater, the University of Michigan.
In it he said that, 'with the departure of the United Kingdom from the European Union we are now the only substantive common law jurisdiction left' and 'that means that there is less of a common law 'anglosphere' voice in the European Union and Ireland is going to have to speak more loudly to ensure that its voice and the common law tradition are heard and respected'.
The lecture at an alma mater of his reflects on the relationship between Ireland, the US and Europe, entitled 'Closer to Michigan or Madrid? Reflections on Ireland's Unique Geopolitical Position', a title that borrows from former Minister Mary Harney's oft-quoted observation that Ireland could be considered "closer to Boston than Berlin" in many respects.
In this issue the CBI's Fitness & Probity review process, recently put in place following the McMenamin 'AB' judgement. features prominently and in relation to this we express a hope that the review will take due account of the point made by legal adviser James Grennan that "our constitutional democracy protects fundamental rights to fair procedures and to earn a living".
On the bread and butter issue of earning a living, new Minister of State in the Department of Finance Neale Richmond has hit the ground running setting out an emphasis on the potential for jobs in the financial services industry, in Dublin and the regions, and, in a welcome new point for the official agenda, the potential of moving up the value chain for an IFSC that has now reached maturity, emphasising the potential for expanded 'front office' activity in the future mix for the industry.
That future mix is rich and varied, with many aspects emphasised in the latest Action Plan for the Ireland for Finance Strategy, recently published. This plan, is an agenda for state agencies in the main, and emphasises sustainability this year, alongside other key aims, and sits alongside other plans emanating from Government, most importantly in the year to come in the area of taxation and expenditure, referencing a 'whole of government' approach for SMEs, such as that outlined by Deloitte's Tatiana Kelly.
There is also the Department of Finance's Funds Industry review, now underway in earnest, and other submissions, such as that for a branded Irish SPE vehicle, which IDSA's CEO Gary Palmer speaks about.
This month's issue of the Irish Tax Monitor includes an assessment of the Department of Finance's Strawman proposal on the introduction of a participation exemption for foreign dividends, while tax policy enhancements to support Irish SMEs also feature. Roundtable topics include BEPS Pillar 2 and investment funds; share options; VAT on FS negotiation services; TAC determinations; ERR updates and aircraft leasing.
In the latest issue of Finance Dublin the strength in depth of Ireland as a financial services centre, serving capital markets that span the globe is vividly in evidence in this month's issue, which profiles in outline the 220 Deals that have been nominated for the Finance Dublin Deals of the Year 2024. The Awards, which will be announced in 2 months' time, will reflect the ever evolving markets that are covered in the five broad categories listed, including M&A, Debt and Equity Capital Markets, Financial Services and Loans and Financing, be it in banking or more broadly based credit origination.
Also in this issue: analysis of IFSAT's findings in AB and Central Bank of Ireland; the Commission's AML package; criminal enforcement of financial services law; Sustainable Banking, reform of SFDR; Ireland's new investment screening rules.
This month's issue analyses the fundamental changes in the taxation of financial services ushered in the Finance Act. Amongst these are changes Revenue's approach to the taxation of leasing, and the ramifications for Ireland aircraft leasing sector. Interest deductibility rules and the new concept of 'qualifying finance companies' introduced in the Act also feature. Further implications of a move to a territorial tax system are analysed as well as the concept of 'trading' in Irish tax law, which has implications for funds, insurance and the tax treatment of many other Irish corporate structures.
In the latest issue of Finance Dublin we feature the views of the newly incumbent Lord Mayor of the City of London Michael Mainelli who visited Dublin in a whirlwind series of meetings, including with the Taoiseach for an hour at the end of January, and in an interview in the issue he makes very clear that London will offer an open door to Dublin and its businesses as a financial centre - as a partner to the City's necessary new post-Brexit focus on a truly global role.
Also starting the year on the front foot are the Department of Finance who made their final pitch to secure for Ireland the HQ of AMLA, the proposed headquarters of the European Union's Anti Money laundering Authority. While the jury will be out on the siting for it until a scheduled decision on February 22nd, the mood music seems to be good as to the prospects of it coming to Ireland.
2024 brings with it 'a brand new tax system' as BEPS Pillar Two, which includes the introduction of a minimum tax rate for the world's largest corporates, enables a once-in-a-generation reform of Ireland's corporate tax regime. These BEPS reforms and further planned moves at EU level, such as 'Unshell' proposals, mean refinements to Ireland's tax offering will be required to remain competitive.
In this issue the opportunities for growth that present themselves for Ireland's funds industry for 2024 are examined including the soon to be implemented update of the European Long Term Investment Fund (ELTIF) regime, coined ELTIF 2.0. The incoming IAF/SEAR is considered, with the broad Impact welcomed by Lisa Kealy, EMEIA ETF Leader of EY. Gerry Brady, a funds board director, and former CEO of leading funds administration organisations in Ireland provides an overall assessment, making the point that many elements of the IAF already exist in existing executive and board obligations, and that on balance it will have a positive impact on the jurisdiction's standing.
The latest issue has an assessment of the incoming (on December 29th) IAF legislation's constitutionality and vulnerability to legal challenge by the Vice Chair of the Financial Services Bar Association, John Freeman BL. This is part of the issue's overall cover feature, and it appears alongside Central Bank Deputy Governor Derville Rowland's reassurances on the Bank's intentions to be proportional and mindful of the potential the IAF will have to improve financial regulation in Ireland. These articles along with new expert adviser assessments, build on the various IAF features in the October and November issues in particular.
The Key Employee Engagement Programme (KEEP), including an extension of the programme to 2025 features and comes as the Department of Finance launches a new Public Consultation on the taxation of share-based remuneration. The consultation will form part of a broader review of share-based remuneration and the Irish share scheme environment to ensure Ireland's options 'meet the needs of modern companies and their employees.'
With the Central Bank releasing its final guidance on the Individual Accountability Framework financial services industry legal advisers comment on the regime as it is set for coming into effect from December 29th next. While a number of changes have been welcomed, industry concerns persist about the new powers with advisers pointing out that they still fall short of allaying uncertainties about the implementation of the regime.
The race to host the soon-to-be established EU Anti Money Laundering Authority (AMLA) also features in the issue with Ireland's credentials being backed by a strong bid from the Government, with Dublin topping a poll of global anti-crime professionals as their recommended best location for the AMLA HQ. The Government had no hesitation in doubling down on its position regarding the Apple tax case once the AG from the European Court of Justice published his surprise decision to refer it back down to the lower court that decided initially in Ireland's favour. Analysis of the factors behind this important and landmark case, one that will be central to Ireland's international tax identity as an EU member state is in the November issue.
Elsewhere in the issue there are a number of developments that can fuel positive expectations about the consolidation of IFS business in Ireland. These include the green light from the Central Bank of a full fledged regulatory Sandbox, of similar features to those in other jurisdictions. It will add to the 'Innovation Hub' that the CBI has operated since 2018, and which received 375 engagements from project developers. Also, looking at developments north of the Irish border, Jenny Santiago Young, Regional Director for Ireland of UK Government Agency Invest Northern Ireland, highlights the unique strengths of the sector in NI, and which should be seen as complementing businesses in the Republic.
In this issue, the unexpected latest twist in the Apple case is analysed, with the non-binding opinion of the EU Court of Justice's AG likely to mean a final judgment remains years away. It is now likely to run and run, with the Irish Government instantly doubling down on its position, as confirmed by Minister for Finance Michael McGrath. The Finance Bill is also analysed, as are the latest developments around BEPS, including the new MLC for Amount A and the Revenue Commissioners plans to modernise Ireland's VAT system.
The latest issue of Finance Dublin contains a series of articles by the heads of the biggest representative bodies in the financial services industry and leading company directors' institutes about the most radical set of proposals for reform of the regulation of the industry since the Great Financial Crisis - the Individual Accountability Framework (IAF). They paint a clear picture of growing unease about the framework with the bodies calling for more time to assess the IAF's potential consequences, for examination of possibilities for reform, and for a postponement of the measures until mid 2024 at least.
Regulation was cited as one of the key reasons behind the erosion of Ireland's attractiveness as a hub for international insurance in an Insurance Ireland-commissioned report by Milliman, presented at the European Insurance Forum. The broader cost of doing business and talent shortages were also identified to help invigorate Ireland's cross-border insurance industry.
The dangers in the delay of revamping aspects of Ireland's corporate tax regime feature with The Irish Tax Institute President Tom Reynolds expressing disappointment (he is joined in this by BDO's Angela Fleming in the Irish Tax Monitor) that the introduction of territorial tax elements to the Irish regime has been decoupled from the introduction of BEPS rules.
While the introduction of BEPS around the world continues, with the Irish Government's BEPS Pillar II legislation contained in the Finance Bill, in this month's issue we feature the potential channels for resolving tax disputes under the new international tax rules. How to best use the time afforded by the likely delay to the introduction of the EU's ViDA reforms also feature as do the main Budget points for the financial services industry including interest deductiblity rules, the bank levy and newly enhanced R&D regime.
The Finance Dublin Annual Accountancy Survey shows a year of strong fee income growth amongst Ireland's leading firms and big changes at the top of the table. The figures for latest year ends ending in 2022 and 2023, show Republic of Ireland fee income growth of 17% for 2022-3 with a new leader as all of the Big Four firms switch places in terms of their size and growth rankings at the top.
The "Agile" software project management system can also be applied to complex financial services projects. EY's Jeff Cowhig and Kieran Hanley assess the possibilities, with examples of its successful application in FS.
The 2023 edition of the Finance Dublin Yearbook, the annual print & E paper snapshot of Ireland's financial services centre - including the world's 3rd largest funds centre, the 6th largest financial services exporter, and with our updates of the significant developments in the profiles of the top 500+ financial services companies and institutions in Ireland.
The Yearbook's 2023 Review & Outlook provides an overview of the 'state of the centre' - reflecting a year of exceptional progress as IFS industry in the jurisdiction of Ireland deepened and strengthened, despite the headwinds caused by monetary tightening in global financial markets. This is covered in a series of analytical articles in the publication, featured here.
The Yearbook contains the 2023 Finance Dublin Yearbook's Professional Services Guide, with its Who's Who of advisers and practitioners in the jurisdiction.
The full E-Paper edition can be accessed by subscribers HERE.
With uncertainty around the makeup and timeline of the EU's Unshell Directive Maple's Lynn Cramer assesses the current proposals and demands on in-scope entities. With the proposed implementation date of 1 January 2024 now likely slipping to 2026, she says, 'Given the general desire of taxpayers for stability (and, yes, certainty), the two year back and forth in relation to these proposals is highly unsatisfactory. That is particularly true given that aspects of the proposals involve a review of activities and fact patterns during a lookback period (of one year, or two - yet more uncertainty).'
Despite uncertainty around timelines for the EU's ATAD 3 (the Unshell Directive) Deloitte's Anna Holohan outlines the actions that can be taken now in preparation for the new rules so that entities can demonstrate substance or ease compliance with the proposed reporting standards that could be required.
BDO's Mark O'Sullivan outlines the changes and implications for companies availing of the R&D Tax Credit following significant updates by the Revenue Commissioners, and the considerations companies availing of the credit need to take when deciding to opt-in to the new rules during the transition period.
July saw the publication by the Department of Finance of data on the background to the 2024 Budget, in the Tax Strategy Group papers. This article puts forward a hypothesis positing why, after 2016, there has been an acceleration of the growth in the Corporation Tax yield.
As a result of the latest BEPS guidance from the OECD new areas of concern are beginning to come into focus for stakeholders, with one such areas, aircraft lessor's ability to avail of BEPS SBIE examined in detail in this month's Irish Tax Monitor. Life insurance, and in particular the treatment of the Ireland-specific 'old basis business', is also raised as an area that requires guidance in relation to BEPS rules. Other topics featuring this month include ESG and the tax function; the EU's Carbon Adjustment Mechanism, simplifying Ireland's interest deductibility rules, VAT developments and the latest key TAC decisions.
The prospect of Double Taxation of US corporates in Ireland has been raised by the American Chamber of Commerce in Ireland if the proposed QDTT to level up Irish corporation tax to 15% for qualifying (large) companies is not recognised as creditable foreign tax in the US.
Writing in the latest issue of the Irish Tax Monitor, Louise Kelly, Partner, Corporate and International, Corporate Tax, Deloitte Ireland LLP (pictured) says: "both sides of the political divide in the US may coalesce around the need to give an FTC for the QDTT to ensure that US groups are not financially disadvantaged; it is perhaps the one aspect of Pillar Two on which it could be hoped that a consensus would be reached at an early stage".
