Contributing Firms:
This month’s Irish Tax Monitor features a number of areas that are likely to be subject of changes in the Budget such as the modernisation of business reliefs, the EIIS scheme and the participation exemption. As our cover report indicates, a number of these areas are among the issues under consideration, signalled by the Taoiseach in his speech at the National Economic Dialogue.
In this Month’s Roundtable the work of TALC’s Sub-Committee on Simplification and Modernisation of Business Reliefs features with its goal to improve the administration of such reliefs, as do suggestions on the policy side, and specifically around tax relief for interest. The High Court’s decision on TAC’s determination in the VAT dispute between The Revenue Commissioners and Covidien is analysed, as it the first detailed guidance from Revenue on BEPS Pillar Two. Changes to two tax reliefs, namely the EIIS Scheme and retirement relief on the transfers of a family business, also feature with changes to the latter relief potentially creating large capital gains tax liabilities once they come into effect from 1st January next.
In late 2023 a new Tax Administration Liaison Committee (TALC) sub-committee, the Sub-Committee on Simplification and Modernisation of Business Reliefs was set up to address concerns noted by the Minister of Finance regarding “awareness by small businesses of the range of supports available through the tax system and to examine administrative hurdles faced by such businesses in availing of these supports”. The sub-committee is mandated to present a report on recommended changes by mid-year. While TALC’S remit is limited to administrative matters what changes might you recommend to improve the administrative ease of use and access of such reliefs from both a policy and administrative procedural respect?
The income tax relief now available to investors in the EIIS Scheme, one of the few remaining tax reliefs other than pension contributions, has been tapered into bands ranging from 20pc to 50pc, replacing the previous 40% (FA 2023). This has been due to the application of revised rules under the EU’s General Block Exemption (State Aid & Competition Regulation). With future schemes likely to include a focus on projects seeking ‘initial risk finance’ - relief being available for those at 50% - can you assess the tax efficiencies for Irish resident investors in the new EIIS of 2024 and the options that promoters will have in launching new EIIS schemes in 2024?
A recent judgment from the High Court has upheld a 2022 determination of the Tax Appeals Commission in Revenue Commissioners V Covidien Ltd, a case which revolved around a disputed €45.9 million VAT claim. What are the takeaways of the case of interest to multinationals carrying out cross border activity from Ireland? Can you please also explain the ‘used-for’ test?
Changes to retirement relief on the transfer of a family business to the next generation are set to come into effect from 1st January 2025. Can you outline the changes to the relief and the possible implications for family businesses?
The Revenue Commissioners have published their first detailed guidance on the BEPS Pillar Two rules, following the introduction of the EU Minimum Taxation Directive (Pillar Two) in Finance (No. 2) Act 2023. Please comment on the guidance.
Deloitte’s Kathy Lai assesses the progress on plans to introduce a participation exemption for foreign dividends, including the Department of Finance’s Strawman proposal.
Simplification/Modernisation of Business Reliefs: In late 2023 a new Tax Administration Liaison Committee (TALC) sub-committee, the Sub-Committee on Simplification and Modernisation of Business Reliefs was set up to address concerns noted by the Minister of Finance regarding "awareness by small businesses of the range of supports available through the tax system and to examine administrative hurdles faced by such businesses in availing of these supports". The sub-committee is mandated to present a report on recommended changes by mid year. While TALC'S remit is limited to administrative matters what changes might you recommend to improve the administrative ease of use and access of such reliefs from both a policy and administrative procedural respect?
EIIS Schemes in 2024: The income tax relief now available to investors in the EIIS Scheme, one of the few remaining tax reliefs other than pension contributions, has been tapered into bands ranging from 20pc to 50pc, replacing the previous 40% (FA 2023). This has been due to the application of revised rules under the EU’s General Block Exemption (State Aid & Competition Regulation). With future schemes likely to include a focus on projects seeking ‘initial risk finance’ - relief being available for those at 50% - can you assess the tax efficiencies for Irish resident investors in the new EIIS of 2024 and the options that promoters will have in launching new EIIS schemes in 2024?
VAT - a case of interest to multinationals carrying out cross border activity from Ireland: A recent judgment from the High Court has upheld a 2022 determination of the Tax Appeals Commission in Revenue Commissioners V Covidien Ltd, a case which revolved around a disputed €45.9 million VAT claim. What are the takeaways of the case of interest to multinationals carrying out cross border activity from Ireland? Can you please also explain the ‘used-for’ test?
Retirement relief: Changes to retirement relief on the transfer of a family business to the next generation are set to come into effect from 1st January 2025. Can you outline the changes to the relief and the possible implications for family businesses?
BEPS Pillar Two guidance: The Revenue Commissioners have published their first detailed guidance on the BEPS Pillar Two rules, following the introduction of the EU Minimum Taxation Directive (Pillar Two) in Finance (No. 2) Act 2023. Please comment on the guidance.