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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

Corporate - withholding taxes (WHT) 20


Interest WHT 20 PRSI 49
Royalties WHT 20 Rates 49
WHT on capital gains 20 Employee/Employer PRSI (Class A) 49
Professional services withholding tax (PSWT) 21 Self-employed PRSI (Class S) 49
WHT rate reductions and exemptions 21 PRSI classification of working directors 50

Tax Facts 2017 ii


Index
Universal Social Charge 51 Tax contacts 65
The Universal Social Charge (USC) 51

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

Capital gains tax 56


Rates 56
Losses 57
Exemptions and reliefs 57
Impact of debt write-off 59
Windfall tax 59
Self assessment - payment and returns 60

Capital acquisitions tax 61


General 61
Calculation of CAT 61
Self assessment - payment and returns 61
Main exemptions 61
Main reliefs 62
Discretionary trust 62

Local taxes 63
Carbon Tax 63

Customs and Excise 64


Customs 64
Excise 64

Tax Facts 2017 iii


Tax Facts 2017 - The essential guide to Irish tax
Index

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

Relevant contracts tax (RCT)

Interest

Local Property Tax

Income tax Joe Tynan


Tax and Legal Services Leader
Employee taxation

Employee share schemes

PRSI

Universal Social Charge

Pension schemes

Capital gains tax

Capital acquisitions tax

Local taxes

Customs and Excise

Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland

Tax Facts 2017 1


Tax Facts 2017 Editors page
Index

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

Customs and Excise

Tax contacts
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland

Tax Facts 2017 2


Business taxation
Index

Introduction

Welcome

Business taxation Corporation tax Losses companies resident in a relevant territory


being the EU, an EEA treaty country or
Transfer Pricing Corporation tax is charged on the worldwide A trading loss incurred in an accounting another country with whom Ireland has a
profits of companies that are tax resident in period may be offset against any of the double taxation agreement. In addition, in
Financial Services
Ireland and certain profits of the Irish following: determining whether one company is a 75%
Corporate - withholding taxes (WHT) branches of non-resident companies. Profits subsidiary of another company for the
for this purpose consist of income (business or trading
trading income (including certain foreign
dividends taxable at the 12.5% rate) arising purpose of the group relief provisions, the
Tax treaties trading income comprising active income and
in the same period other company must either be resident in a
investment income comprising passive relevant territory or quoted on a recognised
Value added tax (VAT)
income) as well as certain capital gains. trading
trading income of the immediately stock exchange in a relevant territory or on
Stamp duty preceding period another stock exchange approved by the
Corporation tax rates Minister for Finance.
Relevant contracts tax (RCT) trading
trading income of subsequent periods (to
Rate the extent that the same trade is carried on).
Interest Branch income
12.5% Trading income (including To the extent not usable against trading
Local Property Tax qualifying foreign dividends paid loss can
income, a trading loss can be
be converted
convertedinto
intoaa As above, Irish branches of foreign companies
out of trading profits but excluding which may
tax credit which may bebe used
used totoreduce
reducethe
the are liable to corporation tax at the rates that
Income tax income of excepted trades)a corporation tax payable on passive income apply to Irish resident companies. No tax is
and chargeable gains of the same period and repatriation of
withheld on repatriation of branch
branchprofits
profitsto
to
Employee taxation 25% All other income, including income
the immediately preceding period. the head office.
of excepted tradesa,a,non-trading
non-trading
Employee share schemes income and non-qualifying foreign
dividends Alternatively, group relief may be claimed Company Residence
PRSI whereby one group company is entitled to
33% Capital gains A company is generally regarded as Irish
surrender its trading loss to another member tax-resident if it is managed and controlled in
Universal Social Charge
a of the same group. Both the claimant Ireland. This is the case irrespective of its
perations or activities
an excepted trade iswhich are
a trade exceptedofoperations.
consisting trading
Pension schemes Excepted
operationsoperations
or activitiesinclude
whichworking scheduled
are excepted minerals,
operations. company and the surrendering company must place of incorporation.
mineral
Excepted compounds
operationsor mineral
include substances,
working working
scheduled minerals, be within the charge to Irish corporation tax.
minerals, petroleum activities,
mineral compounds or mineraland dealing inworking
substances, or developing
Capital gains tax land (otherpetroleum
minerals, than suchactivities,
part which andconsists
dealingofinconstruction
or developing To form a group for corporation tax purposes, Furthermore, the legislation provides that an
operations). Special
land (other than suchtaxpartprovisions apply to
which consists ofcertain
construction both the claimant company and the Irish incorporated company is to be regarded
Capital acquisitions tax petroleum
operations).exploration
Special taxlicences granted
provisions applyafter 1 January
to certain
2007 whichexploration
petroleum increase the maximum
licences rate after
granted of tax1 payable
January surrendering company must be resident in an as Irish tax resident unless it falls within
on
2007productive fields from
which increase 25% to 40%.
the maximum rate Aofnew Petroleum
tax payable EU country or an EEA country with whom
Local taxes Production
on productiveTaxfields
has been
from introduced
25% to 40%. forAcertain licences
new Petroleum
certain exceptions. The scope of these
granted
Productionon or
Taxafter
has 18 June
been 2014 which
introduced for increase the
certain licences Ireland has a double taxation agreement exceptions has been scaled back significantly
Customs and excise
Excise maximum
granted onrate of tax
or after 18payable
June 2014 on profits
which from productive
increase the (EEA treaty country). In addition, one in recent Finance Acts in response to
fields
maximumfromrate
40%oftotax55%.
payable on profits from productive
fields from 40% to 55%. company must be a 75% subsidiary of the international concerns raised regarding their
Tax contacts
other company, or both companies must be implications.
Withholding tax on
Appendix 1 payments from Ireland 75% subsidiaries of a third company. The 75%
group relationship can be traced through Under the Finance Act 2014 provisions, an
Withholding tax on
Appendix 2 payments to Ireland Irish incorporated company will be regarded

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

Tax Facts 2017 5


Business taxation
Index

Introduction

Welcome

Business taxation capital allowances


computed before suchavailable to the Finance
deductions. acquirer Intellectualon
commence property
or afterin1 this context
January is defined
2016. Each qualifying
Qualifying asset is to be treated
expenditure
are generally
Act limited
2014 provides for to
anthe amount
increase in this cap as:
Qualifying profits on which the relief can be separately for the purposes of the KDB
Transfer Pricing The definition of Qualifying expenditure on
unclaimed
from 80% to by100%
the transferor.
of those profits with effect claimed are intended to reflect the proportion calculations. However, if a number of
Computer Programs (within the meaning of qualifying assets is broadly aligned to the
Financial Services for accounting periods beginning on or after 1 that the companys R&D costs bear to its qualifying assets are so interlinked that it
the Copyright and Related Rights Act 2000) definition of expenditure on research and
Knowledge
January 2015. Any Development
excess deductions Box
can be overall expenditure on the qualifying asset. would be impossible to provide a reasonable
development for the purposes of the R&D tax
Corporate - withholding taxes (WHT) carried forward and offset against IP profits in The profits onPatents
Qualifying which relief is available are allocation of income and expenses, then
Finance Act 2015 introduced the Knowledge credit. In this regard, where a company
succeeding years. This change will enable calculated using the following formula: provision is made for using a family of assets
Tax treaties Development Box (KDB), a tax relief that Supplementary Protection Certificates develops, improves or creates a qualifying
many companies to claim the allowances and QE + UE x QA and treating the combined assets as one
results in an effective 6.25% corporation tax asset through qualifying R&D activities and
Value added tax (VAT) related interest over a shorter period and will PlantOE
Breeders Rights qualifying asset.
rate to certain profits arising from qualifying the company makes R&D tax credit claims in
also serve to simplify the calculation of
assets, for accounting periods which Each qualifying asset is to be treated relation to this, the expenditure underpinning
Stamp duty allowances. Profits of a specified trade
commence on or after 1 January 2016. Where:
separately for the purposes of the KDB these claims should be broadly aligned to the
Relevant contracts tax (RCT) Qualifying
In addition profits on which
to the above the relief
change, can
the list ofbe calculations.
QE However,
is the qualifying if a number
expenditure onofthe Specified
qualifyingtrading activities
expenditure for the purposes
on qualifying assetsof
claimed are intended to reflect the proportion
specified intangible assets on which capital qualifying asset
assets are so interlinked that it claiming KDB consist
for the purposes of:relief.
of this
Interest that the companys
allowances may be R&D
claimedcosts
wasbear to its by
extended would be impossible to provide a reasonable
overall expenditure on the qualifying asset. UE is the uplift expenditure Managing,
Please developing,
note that paymentsmaintaining,
made to a third
Local Property Tax Finance Act 2014 to include customer lists allocation of income and expenses, then
The protecting,
party to carryenhancing or exploiting
on R&D activities of of
on behalf
acquired otherwise than directly or are
profits on which relief is available provision is made for using a family of assets
Income tax calculated using the following formula: OE is the overall expenditure on the theintellectual
company areproperty,
also regarded as qualifying
indirectly in connection with the transfer of a and treating the combined assets as one
qualifying asset expenditure for the purposes of calculating
business as a going concern. qualifying asset. Researching, planning, processing,
Employee taxation the relief whereas such payments are
QA is the profit of the specified trade relating experimenting, testing, devising,
Finance Act 2014 also provides that no Profits of a specified restricted for the purposes of the R&D tax
Employee share schemes to the qualifying asset trade developing or other similar activity leading
credit. Payments made through group
balancing charge will arise where an
Where: to an invention or creation of intellectual
PRSI Specified trading activities for the purposes of companies to third parties in respect of R&D
intangible asset on which allowances have Qualifying property, or
QE is claimed
the qualifying claiming KDBassets
consist of:
been is sold expenditure
on or after 23onOctober
the activities are also treated as qualifying
Universal Social Charge qualifying asset Qualifying assets are defined as intellectual The sale ofprovided
expenditure goods or no
themark-up
supply ofisservices
taken by
2014 and the sale takes place more than five Managing, developing, maintaining,
years after the beginning of the accounting property, other than marketing related thethat derive
other part
group of their value from activities
company.
Pension schemes UE is the uplift expenditure protecting, enhancing or exploiting of
period in which the asset was acquired. In the intellectual property, which are the result of described above.
intellectual property,
Capital gains tax caseisof
OE a transfer
the to a connected
overall expenditure on company,
the the research and development activities.
Qualifying expenditure
capital allowances
qualifying asset available to the acquirer Researching,
Intellectual planning,
property processing,
in this context is defined
Capital acquisitions tax as:experimenting, testing, devising, The definition of Qualifying expenditure on
are generally limited to the amount
Local taxes QA is the profit
unclaimed of transferor.
by the the specified trade relating developing or other similar activity leading qualifying assets is broadly aligned to the
to the qualifying asset Computer Programs
to an invention (within
or creation ofthe meaning of
intellectual definition of expenditure on research and
Customs and excise
Excise Knowledge Development Box the Copyright
property, or and Related Rights Act 2000) development for the purposes of the R&D tax
Qualifying assets Qualifying Patentsor the supply of services credit. In this regard, where a company
Tax contacts Finance Act 2015 introduced the Knowledge The sale of goods
develops, improves or creates a qualifying
Qualifying assets
Development Box are defined
(KDB), a taxasrelief
intellectual
that that derive part Protection
Supplementary of their value from activities
Certificates
Appendix 1 Withholding tax on asset through qualifying R&D activities and
payments from Ireland property,
results other
in an than marketing
effective related tax
6.25% corporation described above.
Plant Breeders Rights the company makes R&D tax credit claims in
Withholding tax on intellectual
rate property,
to certain which are
profits arising fromthequalifying
result of
Appendix 2 payments to Ireland relation to this, the expenditure underpinning
researchfor
assets, and development
accounting activities.
periods which
these claims should be broadly aligned to the

2017
Tax Facts 2016 6
Business taxation
Index

Introduction

Welcome

Business taxation qualifying expenditure on qualifying assets againstaother


Where profits
company of thea company
incurs loss on thein the Tax
capitaldepreciation
cost of 24,000 and may be restricted
for the purposes of this relief. relevant year.
activities that qualify for the KDB relief, the further (to 50% or zero) depending on the
Transfer Pricing Book (orcarbon
accounting) depreciation is not
loss should be available on a value basis level of emissions of the vehicle.
Please note that payments made to a third There are
against detailed
other provisions
profits in relation
of the company to
in the generally deductible for tax purposes (except
Financial Services
party to carry on R&D activities on behalf of how the relevant
relevant year. income and expenditure in the case
There of IP assets
is a scheme as above). allowances
of accelerated Instead, tax
Corporate - withholding taxes (WHT) the company are also regarded as qualifying should be calculated for the purposes of the depreciation
that provides for 100% capital allowances inis
(known as capital allowances)
expenditure for the purposes of calculating variousare
There definitions detailed above.
detailed provisions in relation to permitted
the year ofon a straight-line
purchase basis
in respect of in respect of
expenditure
Tax treaties the relief whereas such payments are how the relevant income and expenditure expenditure incurred on assets which
incurred by companies on certain qualifying have
restricted for the purposes of the R&D tax Companies
should must track
be calculated forand
thetrace all of the
purposes been
equipmput into use by the company. The
Value added tax (VAT)
credit. Payments made through group various definitions detailed above.to the
expenditure and income relating following rates are applicable:
companies to third parties in respect of R&D qualifying asset on which a KDB claim is
Stamp duty
Up-lift expenditure made and should
Companies prepare
must track anddocumentation
trace all Asset type Tax depreciation
activities are also treated as qualifying
Relevant contracts tax (RCT) which demonstrates
expenditure howrelating
and income such expenditure
to the ent of an energy saving naturerateacquired for
expenditure provided
Costs outsourced no mark-up
to affiliates is taken
or costs by
incurred
and incomeasset
qualifying are linked to the
on which qualifying
a KDB claim isasset. trading purposes. This scheme currently runs
the other
on the group company.
acquisition of the IP are not regarded as Plant31
and machinery 12.5%
Interest made and should prepare documentation until December 2017. In order to qualify
qualifying expenditure. However, such costs Industrial
Irish Revenue
which have published
demonstrates how suchKDB guidelines
expenditure under this buildings
scheme, theused
equipment must meet
Local Property Tax Up-lift expenditure
are allowed as uplift expenditure up to a for manufacturing or criteria and must fall
4%
in August 2016 setting out their interpretation
and income are linked to the qualifying asset. certain energy efficient
combined maximum of 30% of the total qualifying activities
Income tax Costs outsourced to affiliates or costs incurred of the KDB legislation. within the following classes of technology:
qualifying expenditure. Motor vehicles (subject
on the acquisition of the IP are not regarded as Irish Revenue have published KDB guidelines
Employee taxation qualifying expenditure. However, such costs in August 2016 setting out their interpretation to qualifying cost
information and communications 12.5%
Overall expenditure restrictions
technologybelow)
are allowed as uplift expenditure up to a of the KDB legislation.
Employee share schemes Book depreciation
combined
The overallmaximum
expenditure of 30% ofaggregate
is the the total of heating
IP assets and electricity provision
or 7%
PRSI qualifying expenditure.
the acquisition costs and the group Tax depreciation
outsourcing costs related to that qualifying Planning tip! electric and alternative fuel vehicles
Universal Social Charge Overall
asset plusexpenditure
the qualifying expenditure incurred Book (or accounting)
Tax relief depreciation
is available for companiesisonnotthe process and heating, ventilation, and air
in relation the qualifying asset. generally deductible for tax purposes (except
acquisition of qualifying IP assets, including The allowances(HVAC)
conditioning are calculated
controlon the cost
systems
Pension schemes The overall expenditure is the aggregate of
in the case of IP assets as above).
acquisitions from related parties. Instead, tax after deduction of grants, except for plant and
the acquisition costs and the group lighting
Capital gains tax Other points of note depreciation (known as capital allowances) is machinery used in the course of the
outsourcing costs related to that qualifying
permitted on a straight-line basis in respect of manufacture
motors andof processed food for human
drives
asset
A KDBplus the qualifying
election must be madeexpenditure
in the incurred
Capital acquisitions tax expenditure incurred on assets which have consumption. In this case, the allowances are
in relation the
companys tax qualifying
return for theasset.
accounting building energy management systems
been put into use by the company. The calculated on the gross cost. Allowances on
Local taxes period in which the qualifying expenditure is
following rates are applicable: refrigeration
passenger motorand cooling
vehicles aresystems
restricted to a
Other
incurredpoints
and mustof note
be made within 24 months
Customs and excise
Excise capital cost of 24,000 and may be restricted
from the end of that accounting period. owances are calculated on the cost after electro-mechanical systems
A KDB election must be made in the further (to 50% or zero) depending on the
Tax contacts companys tax return for the accounting deduction of grants, except for plant and
catering
level and emissions
of carbon hospitalityofequipment
the vehicle.
period in which the qualifying expenditure is machinery used in the course of the
Withholding tax on
Appendix 1 payments from Ireland manufacture of processed food for human A list ofisthe
There items that
a scheme qualify under
of accelerated the
allowances
incurred and mustincurs
Where a company be made within
a loss 24 months
on the
consumption. In this case, the allowances are scheme can be found at www.seai.ie.
that provides for 100% capital allowances in
Appendix 2 Withholding tax on from the end
activities thatof that accounting
qualify for the KDB period.
relief, the
payments to Ireland calculated on the gross cost. Allowances on
loss should be available on a value basis the year of purchase in respect of expenditure
passenger motor vehicles are restricted to a

2017
Tax Facts 2016 7
Business taxation
Index

Introduction

Welcome

Business taxation Leasing


incurred by companies on certain qualifying other
of the countries in of
capital cost theanyear concerned,
asset rather thanand EU/treaty
resident ofresident
the EU or companies.
an EEA treatyThese territory is
equipment of an energy saving nature any unused
relying credits
on tax may be carried
depreciation forward
over eight years. provisions
less than the areamount
extended thattowould
include bedividends
computed
Transfer Pricing Ireland
acquiredoperates an eight-year
for trading purposes. tax
This scheme indefinitely
This andallows
effectively creditedtheagainst
lessorscorporation
to write-off received fromtotrading
by reference companies
the nominal rate ofresident
tax in thein a
depreciation life on most
currently runs until 31 Decemberassets. A2017.
beneficial
In tax oncapital
their foreign branch profits
investment in purposes
for tax later in territory that has
country from whichratified the Convention
the dividend was paid.on
Financial Services
tax
order to qualify under this scheme, theand
treatment applies to finance leases accounting
line with theperiods.
economic recovery on the asset. Mutual Administrative
The credit may instead be Assistance
based oninthis Tax
Corporate - withholding taxes (WHT) operating
equipmentleases of certain
must meet short
certain life assets
energy efficient Matters.
nominal Allrateother
of taxforeign
in thatdividends
EU/EEA treaty are
(i.e. those with a life of less than eight years).
criteria and must fall within the following An additional
Ireland ascredit for foreign
a holding tax is available
company subject toItcorporation
territory. may be thetax case atthat
the 25% rate. out
the profits
Tax treaties For suchofassets, Ireland allows lessors to for dividends paid from 2013 onwards where
classes technology: location of which the dividend is paid are not
follow the accounting treatment of the the existing credit on a dividend from a In very limited
themselves circumstances,
subject to tax but are foreign
attributable
Value added tax (VAT) Irish tax of
legislation
transaction,
information which provides a faster write-off
and communications resident the EU orprovides for an exemption
an EEA treaty territory is dividends received by an Irish
to profits of another company which havecompany
of technology
the capital cost of an asset rather than from capital gains tax for Irish resident holding not more
Stamp duty less than the amount that would be computed been subject to taxthan
(e.g.5% of the
where share capital
a dividend is
relying on tax depreciation over eight years. companies
by referencewhich
to themake disposals
rate offrom and
heating and electricity provision
nominal tax in the paid to an intermediate holding companyare
voting rights in the foreign company
Relevant contracts tax (RCT) This effectively allows the lessors to write-off qualifying shareholdings
country from which the dividend(at least was
5%)paid.
in exempt from corporation tax. This exemption
from a company which was subject to tax on
their capital
electric andinvestment
alternativefor taxvehicles
fuel purposes in subsidiaries tax resident in an EU
The credit may instead be based on this or treaty only applies where the dividend income is
Interest the underlying profits and the intermediate
line with the economic recovery on the asset. country
nominal(including
rate of tax Ireland), where either
treaty the taxed ascompany
trading income of the Irish
process and heating, ventilation, and air
in that EU/EEA holding is not subject to taxcompany.
on the
Local Property Tax subsidiary itself or the group as a whole
territory. It may be the case that the profits areout
conditioning (HVAC) control systems dividend under a participation exemption
Ireland as a holding company regarded as trading.
of which the dividend is paid are not Irish tax legislation has no thin capitalisation
regime). In such circumstances, the additional
Income tax location
lighting themselves subject to tax but are attributable or controlled foreign corporation (CFC) rules.
credit is instead based on the nominal rate of
Under foreign tax credit pooling rules, and
to profits of another company which have tax in the jurisdiction where the profits
Employee taxation Irish tax legislation
motors and drivesprovides for an exemption subject to limitations placed on credits arising A form of pooling of tax deductions (notwere
been subject to tax (e.g. where a dividend is subject to
from capital gains tax for Irish resident from trading dividends, an excess tax credit credits) fortax.
foreign tax on royalties is available
Employee share schemes building energy management systems paid to an intermediate holding company
companies which make disposals from arising in respect of a foreign dividend may be where such royalties are treated as trading
refrigeration
qualifying and cooling
shareholdings (atsystems
least 5%) in from a company which was subject to tax on Foreign dividends paid out of trading profits
PRSI offset against the corporation tax arising on income for companies. All royalties sourced
subsidiaries tax resident in an EU or treaty the underlying profits and the intermediate are subject to corporation tax in Ireland at the
electro-mechanical systems other foreign dividend income. Excess tax from non-treaty countries from which foreign
Universal Social Charge country (including Ireland), where either the holding company is not subject to tax on the 12.5% rate where the paying company is a
credits arising in an accounting period may be tax has been deducted are aggregated and the
catering itself
subsidiary and hospitality equipment
or the group as a whole are dividend under a participation exemption 75% subsidiary (direct or indirect) of a
carried forward indefinitely for offset against foreign tax applicable is used to reduce the
Pension schemes regime). In such circumstances, the additional company whose shares are traded on an
regarded as trading.
A list of the items that qualify under the corporation tax on foreign dividends in later amount of such royalties subject to Irish tax.
credit is instead based on the nominal rate of approved stock exchange, or where the paying
Capital gains tax schemeforeign
can betaxfound at www.seai.ie. periods. Any excess foreign tax credits arising
Under credit pooling rules, and tax in the jurisdiction where the profits were company is tax resident in an EU/ treaty
in respect of a foreign branch may be offset
Capital acquisitions tax subject to limitations placed on credits arising subject to tax. country and the trading profits arose in this
Leasing against Irish tax arising on branch profits in
from trading dividends, an excess tax credit company or are sourced through a chain of
other countries
Foreign in the
dividends paidyear
out concerned, and
of trading profits
Local taxes arising in
Ireland respectan
operates of eight-year
a foreign dividend
tax may be EU/treaty resident companies. These
any unused credits may be carried forward
are subject to corporation tax in Ireland at the
offset againstlife
depreciation theoncorporation
most assets.taxAarising on
beneficial provisions are extended to include dividends
Customs and excise
Excise indefinitely
12.5% and credited
rate where against
the paying corporation
company is a
other foreign dividend
tax treatment applies toincome.
financeExcess
leases tax
and received from trading companies resident in a
tax on foreign branch profits in later
75% subsidiary (direct or indirect) of a
Tax contacts credits
operatingarising
leasesinofancertain
accounting
shortperiod may be
life assets territory that has ratified the Convention on
accounting
company periods.
whose shares are traded on an
carried forward
(i.e. those with aindefinitely for offset
life of less than eight against
years). Mutual Administrative Assistance in Tax
Withholding tax on approved stock exchange, or where the paying
Appendix 1 payments from Ireland corporation tax on
For such assets, foreign
Ireland dividends
allows lessorsintolater An additional credit for foreign tax is available Matters. All other foreign dividends are
periods. Any excess foreign tax credits company is tax resident in an EU/ treaty subject to corporation tax at the 25% rate.
Appendix 2 Withholding tax on follow the accounting treatment of the arising for dividends paid from 2013 onwards where
payments to Ireland
in respect of which
a foreign brancha may bewrite-off
offset country and the trading profits arose in this
transaction, provides faster the existing credit on a dividend from a
against Irish tax arising on branch profits in company or are sourced through a chain of

2017
Tax Facts 2016 8
Business taxation
Index

Introduction

Welcome

Business taxation Closely held


In very limited companies
circumstances, foreign Closely heldoncompanies
Irish Revenue the grossed up amount of Irish
(but noRevenue
later thanon21st
the day
grossed
of theup amount
month) in of
dividends received by an Irish company the loan the loan
order to avoid the imposition of (i) a
Transfer Pricing Broadly speaking, a close
holding not more than 5%company is a capital
of the share Broadly speaking, a close company is a surcharge of up to 10% of the tax due (subject
company which is under the control
and voting rights in the foreign company of five
areor Start-up
company companies
which is under the control of five or Start-up
to a maximum companies
surcharge of 63,485), (ii) a
Financial Services
fewer participators (which include
exempt from corporation tax. This exemption fewer participators (which include restriction of upcompanies,
to 50% of certain
New or start-up companies, which commence New or start-up whichclaims
commencefor
Corporate - withholding taxes (WHT) shareholders
only applies whereand loan
the creditors) or under
dividend income is the shareholders and loan creditors) or under the relief including
trading between 2009 and 2018 may be trading betweenrelief
2009for trading
and losses
2018 may bearising
control of participators who are directors
taxed as trading income of the Irish company. control of participators who are directors in the same period (subject to a relief.
maximum
Tax treaties eligible for start-up companies relief. This eligible for start-up companies This
(however many directors there are). There are (however many directors there are). There are restriction of 158,715).
relief is available for three years from the relief is available for three years from the
a number
Irish of exclusions
tax legislation has from this
no thin general rule.
capitalisation a number of exclusions from this general rule.
Value added tax (VAT) commencement of the trade. The relief takes commencement of the trade. The relief takes
These include exclusions for non-resident
or controlled foreign corporation (CFC) rules. These include exclusions for non-resident Irish Revenue introduced mandatory filing of
the form of a reduction in the corporation tax the form of a reduction in the corporation tax
Stamp duty companies, specified industrial and provident companies, specified industrial and provident financial statements in iXBRL format in 2012
A form of/pooling liability relating to the new trade (including liability relating to the new trade (including
societies buildingofsocieties,
tax deductions (not
companies societies / building societies, companies on a phased basis. The provisions applied
credits) forby foreign tax on chargeable gains on assets used in the trade) chargeable gains on assets used in the trade)
Relevant contracts tax (RCT) controlled the State / byroyalties
anotherisEU available controlled by the State / by another EU initially to companies which are dealt with by
where such royalties areGovernment
treated as trading and is capped at the amount of the employers and is capped at the amount of the employers
Member State or by the of a Member State or by the Government of a the Revenue Large Cases Division. The second
Interest incometerritory,
for companies. social insurance contributions made on behalf social insurance contributions made on behalf
treaty certainAll royaltieswith
companies sourced treaty territory, certain companies with phase made filing mandatory for all taxpayers
from non-treaty countries from which foreign of the companys employees in the period. The of the companys employees in the period. The
Local Property Tax quoted shares and companies which are quoted shares and companies which are filing corporation tax returns on or after 1
tax has been corporation tax liability relating to the new corporation tax liability relating to the new
controlled bydeducted
a non-close arecompany.
aggregated and the controlled by a non-close company. October 2014 in respect of accounting periods
Income tax foreign tax applicable is used to reduce the trade can reduce to nil where that liability trade can reduce to nil where that liability
ending on or after 31 December 2013 unless
A surcharge
amount of 20%
of such is payable
royalties subjectontothe total
Irish tax. does not exceed
A surcharge 40,000.
of 20% Where
is payable on the total does not exceed 40,000. Where the
Employee taxation the taxpayer met specific iXBRL exemption
undistributed investment and rental income companys
undistributed investment and rentalisincome
corporation tax liability between companys corporation tax liability is between
criteria. It is intended that all remaining
of a close company. Closely held service 40,000 and 60,000, marginal relief
of a close company. Closely held service is 40,000 and 60,000, marginal relief is
Employee share schemes corporation taxpayers will be included in the
companies are also liable to a surcharge of available.
companies are also liable to a surcharge ofon or
For accounting periods ending available. For accounting periods ending on or
final phase which will commence at a date to
PRSI 15% on Contact us: undistributed trading
one-half of their after
15% on1 January
one-half2013, anyundistributed
of their unused relieftrading after 1 January 2013, any unused relief
be announced by Irish Revenue.
income. arising
income. in the first three years of trading can arising in the first three years of trading can
Universal Social Charge be carried forward for use in subsequent be carried forward for use in subsequent
Other specific provisions applying to closely Other
years. specific provisions applying to closely years.
Pension schemes
held companies include: held companies include:
Capital gains tax Corporate Tax administration Corporate Tax administration
certain payments made on behalf of certain payments made on behalf of
Capital acquisitions tax participators in the company or their participators
Taxable period in the company or their Taxable period
associates may be deemed to be associates may be deemed to be
Local taxes Ronan MacNioclais The tax accounting period normally coincides The tax accounting period normally coincides
distributions of the company distributions of the company
Partner with a companys financial accounting period, with a companys financial accounting period,
Customs and excise
Excise interest paid1to792
t: 353 certain
6006directors or their interest
except paidthe
where to latter
certain directors
period or their
exceeds 12 except where the latter period exceeds 12
associates (e.g. on foot of a loan advanced)
e: ronan.macnioclais@ie.pwc.com associates (e.g. on foot of a loan advanced)
months. months.
Tax contacts may be deemed to be a distribution where may be deemed to be a distribution where
Appendix 1 Withholding tax on the interest exceeds specified limits thereturn
Tax interest exceeds specified limits Tax return
payments from Ireland
Withholding tax on a company making loans to participators or a company
A company making
must loans
submit to participators
its corporation tax or A company must submit its corporation tax
Appendix 2 payments to Ireland
their associates may be required, subject to theirwithin
return associates
ninemay be required,
months subject
of the end of theto return within nine months of the end of the
certain exclusions, to pay income tax to certain exclusions,
accounting to pay income
period to which taxrelates
the return to accounting period to which the return relates

Tax Facts 2017 9


Business taxation
Index

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

Transfer Pricing Contact us:


Financial Services

Corporate - withholding taxes (WHT)

Tax treaties

Value added tax (VAT)

Stamp duty John OLeary Paraic Burke


Partner Partner
Relevant contracts tax (RCT) Financial Services & Domestic &
International Structuring International Structuring
Interest
t: 353 1 792 8659 t: 353 1 792 8655
Local Property Tax e: john.oleary@ie.pwc.com e: paraic.burke@ie.pwc.com

Income tax

Employee taxation

Employee share schemes

PRSI

Universal Social Charge Jean Delaney


Partner
Pension schemes Inward Investment &
Capital gains tax International Structuring
t: 353 1 792 6280
Capital acquisitions tax e: jean.delaney@ie.pwc.com
Local taxes

Customs and excise


Excise

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

Business taxation Overview there


there is an exemption for small and medium no further enquiries or
1. no
enterprises (SMEs)
Transfer Pricing Irelands transfer pricing legislation i ssues that need to be further addressed
2. issues
effectively endorses the OECD Transfer Transfer Pricing Compliance within the TPCR process.
Financial Services
Pricing Guidelines and the arms length Review
principle. The transfer pricing rules apply to Irish Revenue reserves the right to escalate a
Corporate - withholding taxes (WHT) In 2015, a dedicated transfer pricing audit
arrangements entered into between case to a formal audit, for example in cases
Tax treaties team was formed within the Large Cases where a company declines to complete a
associated persons, involving the supply or
Division of Irish Revenue to monitor self-review. Should a case escalate from a
acquisition of goods, services, money or
Value added tax (VAT) compliance with Irish transfer pricing rules. TPCR to an audit, the company will be issued
intangible assets. The rules apply only to
Specific transfer pricing audit enquiries and with a separate audit notification letter.
Stamp duty trading transactions that are taxed under
investigations are now being initiated by the
Case I or II of Schedule D of the Taxes Acts (in
Relevant contracts tax (RCT) the main transactions taxable at 12.5%).
Large Cases Division. Country-by-Country Reporting
Interest Irish Revenue also continues to monitor Finance Act 2015 included legislation
The rules confer a power on Irish Revenue to
compliance with the transfer pricing rules introducing country-by-country (CbC)
re-compute the taxable profit or loss of a
Local Property Tax through its Transfer Pricing Compliance reporting for Irish-parented multinational
taxpayer where income has been understated
Review (TPCR) programme. Under this enterprises (Irish MNEs). The legislation
Income tax or where expenditure has been overstated as a
programme, companies selected will be requires Irish MNEs with consolidated
result of non-arms length transfer pricing
Employee taxation notified to undergo a self-review of their annualised group revenue of 750 million or
practices.
compliance with the Irish transfer pricing more to comply with the new requirements,
Employee share schemes Irelands transfer pricing rules came into rules. with the first CbC report to be prepared for
effect for accounting periods commencing on fiscal years beginning on or after 1 January
PRSI Companies selected will be requested to
or after 1 January 2011 in relation to 2016. Irish MNEs captured under the new
provide a transfer pricing report, for a specific legislation must file a CbC report annually to
Universal Social Charge arrangements entered into on or after 1 July
accounting period, to Irish Revenue within include specific financial data covering
2010.
Pension schemes three months. In order to minimise income, taxes, and other key measures of
Other highlights of the transfer pricing compliance costs, Irish Revenue has explicitly economic activity by territory.
Capital gains tax stated that existing studies elsewhere in the
legislation are as follows:
multinational group which cover the related Irish Revenue have also published regulations
Capital acquisitions tax
the
the regime applies to domestic and party dealings of the Irish operations should to provide for a secondary filing mechanism
Local taxes international related party arrangements be sufficient. whereby, in certain circumstances, an Irish
specific
specific guidance issued by Irish Revenue tax resident entity that is part of a foreign
Customs and excise
Excise The TPCR programme is not a formal audit so MNE with consolidated annualised group
states that in order for a company to be in a this allows for voluntary disclosures to be
Tax contacts position to make a correct and complete tax revenue of 750 million or more shall be
made at any time during the process. The required to submit an equivalent CbC report
Withholding tax on return, appropriate transfer pricing outcome of a TPCR will be a letter from Irish
Appendix 1 to Irish Revenue.
payments from Ireland documentation should exist at the time the Revenue indicating either:
Appendix 2 Withholding tax on tax return is filed
payments to Ireland

Tax Facts 2017 12


Transfer Pricing
Index

Introduction

Welcome

Business taxation Irish MNEs or Irish subsidiaries of foreign


MNEs which are subject to CbC reporting are For more information on transfer pricing contact:
Transfer Pricing
required to notify Irish Revenue of their filing
Financial Services requirements. The deadline for notification is
the last day of the fiscal year to which the CbC
Corporate - withholding taxes (WHT) report relates and must be submitted
electronically via Irish Revenues Online
Tax treaties
Service.
Value added tax (VAT)
Advance Pricing Agreements
Stamp duty Gavan Ryle Ronan Finn
Irish Revenue have introduced a formal Partner Partner
Relevant contracts tax (RCT) bilateral Advance Pricing Agreement (APA) Irish Headquartered Groups Foreign Direct Investment
Programme effective from 1 July 2016. t: 353 1 792 8704 t: 353 1 792 6105
Interest
e: gavan.ryle@ie.pwc.com e: ronan.finn@ie.pwc.com
Irelands bilateral APA programme applies to
Local Property Tax bilateral APA applications made to Revenue
Income tax on or after this date and only applies to
transfer pricing issues (including the
Employee taxation attribution of profits to a permanent
permanent
establishment).
establishment).
Employee share schemes
An application for a bilateral APA may be
PRSI
made by a company which is tax-resident in Aoife Harrison
Universal Social Charge Ireland for the purpose of the relevant double Financial Services
tax treaty and also by a permanent t: 353 1 792 5537
Pension schemes establishment in Ireland of a non-resident e: aoife.harrison@ie.pwc.com
company in accordance with the provisions of
Capital gains tax
the relevant treaty.
Capital acquisitions tax
The bilateral APA programme is intended to
Local taxes apply in respect of a transaction(s) where the
transfer pricing issues involved are complex,
Customs and excise
Excise e.g. there is significant doubt over the
appropriate application of the arms length Irelands bilateral APA programme is
Tax contacts
principle, or where, for any other reason, conducted within the legal framework of the
Withholding tax on
Appendix 1 payments from Ireland there would otherwise be a high likelihood of double tax treaty which Ireland has entered
Withholding tax on double taxation arising (in the absence of a into with the other jurisdiction concerned.
Appendix 2 payments to Ireland bilateral APA).

2017
Tax Facts 2016 13
Financial services
Index

Introduction

Welcome

Business taxation Banking and treasury Favourable


Favourable and improving income tax rules corporation tax at the rate of 12.5% on their
for non-Irish domiciled individuals working tax adjusted trading profits and enjoy the
Transfer Pricing The international banking sector has in Ireland same attractive tax framework outlined above
developed into a vital component of the Irish for the banking and treasury sector. In
Financial Services Stamp
Stamp duty exemptions available on the
economy, with approximately half of the top addition, there are a number of tax features
50 world banks located in Ireland. In addition, majority of financial instruments
Corporate - withholding taxes (WHT) specific to the Irish insurance sector as
a large number of multinationals have Tax
Tax credit for research and development follows:
Tax treaties established corporate treasury operations in activities
Ireland to manage inter alia, inter-group a
a gross roll up regime for life funds whereby
Value added tax (VAT) Deduction
Deduction for certain interest/dividend
lending, cash pooling, cash management, debt investment returns for non-Irish resident
factoring, multicurrency management and payments made in respect of capital policyholders accrue on a tax-free basis,
Stamp duty
hedging activities on behalf of their respective instruments issued by banks in order to
Relevant contracts tax (RCT) satisfy their Tier 1 capital requirements exemption
exemption from US Federal Excise Tax
groups.
(FET) under the US/Ireland double tax
Interest A bank levy applies to banks and building treaty in respect of the insurance/
Irish resident companies are subject to 12.5%
societies and is calculated as 59% of the reinsurance of US risks, and
corporation tax on their tax adjusted trading
Local Property Tax amount of DIRT (Deposit Interest Retention
profits. A higher tax rate of 25% applies to no
no Insurance Premium Tax (IPT) on
Tax) paid by the bank or building society from
Income tax passive income. These comparatively low insurance premiums received in Ireland in
2017 onwards. The levy is payable on 20
tax rates have been supported by an enviable respect of risk located outside of Ireland and
Employee taxation October annually. The annual levy was due to
tax framework, as detailed below, in no IPT on reinsurance irrespective of where
expire at the end of 2016 but will now run
Employee share schemes contributing to Irelands success in attracting the risk is located.
until 2021. The base year for calculating the
investment from international banks, various
levy due in 2017 and 2018 will be 2015, with A number of leading insurers
insurers and
and reinsurers
reinsurers
PRSI financial institutions and treasury companies:
2017 being the base year for the levies due in have established significant
significant hub
hub operations
operations in
in
Universal Social Charge Absence
Absence of CFC and thin capitalisation rules 2019 and 2020. The base year for the tax due Ireland. The hub and spoke
spoke model,
model, whereby
whereby
in 2021 will be 2019. pan-European insurance
pan-European insurance and
andreinsurance
reinsurance
Pension schemes Tax
Tax deductions are generally available for
funding costs operations centralise
centralisetheir
theirorganisational
organisational
Capital gains tax
Insurance structure in
in aa single
single head
head office
office located
locatedwithin
within
Extensive
Extensive domestic exemptions from Ireland is a key player in the global insurance the EU, creates significant capital
capital and
and
Capital acquisitions tax withholding tax on interest, dividend and and reinsurance industry. The key factors operational efficiencies.
efficiencies. Ireland
Ireland isisaaleading
leading
royalty payments behind this success include the fiscal location for such hubs and two of the main main
Local taxes
Generous
Generous double taxation relief provisions environment, the European standard factors behind this
this are:
are:
Customs and excise
Excise for foreign taxes and withholding taxes regulatory regime (in particular the
Irelands
12.5% corporation
Ireland's 12.5% corporationtax
taxrate
rateon
onthe
the
suffered passporting regime), a relatively low cost base
Tax contacts Irish head office profits, and
Irish head office profits, and
and a strong business infrastructure relating
Access
Access to Irelands extensive double tax Irelands genrous double
Appendix 1 Withholding tax on
payments from Ireland treaty network with 72 treaties signed of
to international insurance and reinsurance. Ireland's generous doubletaxation
taxationrelief
relief
regime that provides credit forforeign
regime that provides credit for foriegntax
tax
Appendix 2 Withholding tax on which 70 are in effect Insurance and reinsurance companies that are paid on foreign branch profits against the
payments to Ireland paid on foreign branch profits against the
No
No capital duty or net assets wealth tax tax resident in Ireland are subject to Irish Irish tax on these profits. This achieves an

2017
Tax Facts 2016 14
Financial services
Index

Introduction

Welcome

Business taxation Irish tax on


effective those profits.
exemption This achieves
for foreign branch an means significant acceleration for such Aviation Sector Capital
effective exemption for foreign branch tax
profits given that the Irish corporation long-life assets. Ireland has an extensive (and allowances for aviation services
Transfer Pricing
rate is genrally lower than corporation tax
profits given that the Irish corporation tax ever increasing) high quality double tax treaty
rate isingenerally
rates lower than corporation tax
other countries. network, with the majority of these treaties introduces enhanced capital
Finance Act 2015 introduced
Financial Services
rates in other countries. providing for 0% withholding tax on inbound allowances for capital expenditure incurred
Ireland is a leading European domicile for on buildings employed in a trade of
Corporate - withholding taxes (WHT) lease rentals. In addition, there are no
reinsurers
Ireland is aseeking
leadingto redomicile
European from centres
domicile for maintenance, repair or overhaul of
withholding taxes on outbound lease rentals.
Tax treaties such as Bermuda and Ireland continues
reinsurers seeking to redomicile from centres to be commercial aircraft or a commercial aircraft
Since 2011, Irelands Section 110 companies
one of the largest exporters of life insurance
such as Bermuda and Ireland continues to be dismantling trade. The scheme provides for
Value added tax (VAT) (see Section 110 companies below) can hold
in
onetheofEU.
the largest exporters of life insurance in tax depreciation over a seven year period
leased aircraft or engines as qualifying assets,
Stamp duty the EU. providing potentially tax neutral aircraft instead of the normal 25 year period but is
Exit tax limited to the first 5 million of expenditure
leasing opportunities. There is 0% stamp duty
Relevant contracts tax (RCT) Exit tax on relevant buildings (where incurred by a
A withholding tax, known as exit tax, is on instruments transferring aircraft or any
required to be operated in as
respect of Irish company) and 1.25 million (where incurred
Interest A withholding tax, known exit tax, is life interest, share or property of or in an aircraft
by an individual). Expenditure in excess of
policies on payments to taxable Irish
required to be operated in respect of Irish life and there is 0% VAT on international aircraft
Local Property Tax individual these limits may still qualify for the normal
policies on policyholders on certain
payments to taxable Irishchargeable leasing. In addition, there is a stamp duty
industrial buildings allowances regime. The
events at the rate of 41% and
individual policyholders on certain at 25% on
chargeable exemption on the issue, transfer or
Income tax scheme, providing for accelerated allowances
payments to corporate policyholders.
events at the rate of 41% and at 25% on The redemption of an Enhanced Equipment Trust
holding over seven years, will operate in respect of
Employee taxation payments to corporate policyholders. Theyear
of policies at the end of an eight Certificate (EETC) as an aviation financing
relevant expenditure incurred up to 13
period
holding(and each subsequent
of policies at the end of eight year year
an eight tool in Ireland.
Employee share schemes anniversary) will constitute a deemed October 2020. The scheme further enhances
period (and each subsequent eight year Irelands offering in the aviation sector.
disposal on which exit tax may arise indisposal
respect Unilateral credit relief was introduced in 2012
PRSI anniversary) will constitute a deemed
of taxable Irish policyholders. Non-Irish where withholding taxes are suffered on lease
on which exit tax may arise in respect of Section 110 companies
Universal Social Charge resident and policyholders.
exempt Irish resident rental payments from countries with which
taxable Irish Non-Irish resident
policyholders areresident
not subject to exit tax on Ireland does not have a tax treaty. This relief Ireland has a favourable securitisation tax
Pension schemes and exempt Irish policyholders are
Irish life policies provided relevant was further amended in 2013 to provide for regime for entities known as Section 110
not subject to exit tax on Irish life policies
declarations are indeclarations
place. the carry forward of excess foreign tax credits companies. A Section 110 company is an Irish
Capital gains tax provided relevant are in place.
arising on lease rental income received by an resident special purpose company that holds
Capital acquisitions tax Aircraft leasing
Aircraft leasing Irish trading entity that would otherwise be and/or manages qualifying assets, which
lost. includes financial assets. The term financial
Local taxes Ireland was the
Ireland was the birthplace
birthplaceofofthe
theaircraft
aircraft
leasing industry over 35 years ago. Since then,
then, The introduction and amendments over asset is widely defined and includes both
leasing industry over 35 years ago. Since mainstream financial assets such as shares,
Customs and excise
Excise Ireland has pioneered the development of an recent years to the Special Assignment Relief
Ireland has pioneered the development of an loans, leases, lease portfolios, bonds, debt,
envious and supportive tax and
envious and supportive tax and legallegal Programme incentivises executives to relocate
Tax contacts derivatives, all types of receivables as well as
environment
environment to to incentivise
incentivisethe
thecontinued
continued to Ireland and the Foreign Earnings
Withholding tax on growth of the industry. Deduction regime, which provides tax relief to assets such as carbon offsets and plant and
Appendix 1 payments from Ireland growth of the industry.
Irish employees who spend time working machinery.
Withholding tax on A
Appendix 2 payments to Ireland A tax depreciation write-off
tax depreciation write-offperiod
periodof
ofeight
eight
overseas, helps to promote the growth of the It is possible to establish a Section 110
years is available for aircraft and engines and
years is available for aircraft and engines and aircraft leasing sector in Ireland. Company as an onshore investment platform

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

Value added tax (VAT)

Stamp duty

Relevant contracts tax (RCT)

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

Employee share schemes

PRSI

Universal Social Charge

Pension schemes

Capital gains tax Jim McDonnell Marie Coady


Partner Partner
Capital acquisitions tax Financial Services Financial Services
t: 353 1 792 6836 t: 353 1 792 6810
Local taxes
e: jim.mcdonnell@ie.pwc.com e: marie.coady@ie.pwc.com
Customs and excise
Excise

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,

Capital gains tax


state, provided they are not controlled by Interest WHT 2. u unquoted
 nquoted (unlisted)
(unlisted) shares
shares derivingtheir
deriving their
Irish residents. value
value oror the
the greater
greater part
part ofof theirvalue
their value
Certain annual interest payments are subject
Capital acquisitions tax to WHT at 20%. Interest payments made by (more
(more than
than 50%)
50%) from
from assets
assets describedinin
described
Non-resident companies which are
Non-resident
Local taxes ultimately controlled by residents of a treaty companies to companies resident in another (1)(1) above,
above,
country or another EU member state. EU member state or in a treaty country are
Customs and excise
Excise generally not subject to WHT. The EU Interest 3. u unquoted
 nquoted (unlisted)
(unlisted) shares
shares issued
issued inin
Non-resident companies whose principal
Non-resident exchange
exchange forfor shares
shares derivingtheir
deriving theirvalue
valueor
and Royalties Directive may also provide an
Tax contacts class of shares is traded on a recognised theorgreater
the greater
part part of their
of their valuevalue
fromfrom
assets as
exemption from WHT for payments between
stock exchange in a treaty country or assets asin
described described
(1) above,in and
(1) above, and
Appendix 1 Withholding tax on associated companies. Furthermore, interest
payments from Ireland another EU member state or on any other
payments from one Irish resident company to 4. g goodwill
 oodwill ofof a trade
a trade carriedononininIreland.
carried Ireland.
Appendix 2 Withholding tax on stock exchange approved by the Minster for
payments to Ireland another Irish resident company in the same

2017
Tax Facts 2016 20
Corporate - withholding taxes (WHT)
Index

Introduction

Welcome

Business taxation The requirement to withhold withhold tax taxdoes


doesnot not Professional
include governmentservices
departments, local
apply where the consideration does not exceed authorities and health boards. Credit is
Transfer Pricing withholding tax (PSWT)
exceed 500,000
500,000 (or 1 million
(or 1 million in the case in the case of
of houses granted for any PSWT withheld against the
Financial Services houses disposed
disposed of after of after 1 January
1 January 2016) or2016)where orthe corporation
Income tax attax
the(or income rate
standard tax for an
(currently
where the
person personof
disposing disposing
the assetof the asseta
produces individual)
20%) is deducted from payments for period
liability of the accounting
Corporate - withholding taxes (WHT) produces acertificate
clearance certificatefrom fromIrish the Revenue
Irish Revenue in which tax services
is withheld.
professional made to individuals and
authorising payment in in full.
full.In A clearance
the case of companies by accountable persons, which
Tax treaties
certificate
certain may be intra-group
qualifying obtained bytransfers
making an of WHT rate reductions and
include government departments, local
Value added tax (VAT) application
assets, to Irish Revenue
the consideration supported
is deemed to bebythea exemptions
authorities and health boards. Credit is
copy of the
original costagreement
of acquiring or the
contract
asset for
by thesale. The granted for any
Exemptions andPSWT withheld against
rate reductions the
apply under
Stamp duty certificate
vendor may be obtained on the grounds
company. corporation
domestic lawtax
and(orunder
income
taxtax for an Where
treaties.
that (i) the vendor is Irish resident, (ii) that no individual) liability
Relevant contracts tax (RCT) A clearance an exemption from of
WHTthe is
accounting period
not available, a
capital gainscertificate
tax is duemay be obtained
in respect of the by in which rate
tax isofwithheld.
making an application to Irish Revenue reduced WHT may apply under an
Interest disposal or (iii) that the capital gains tax has
supported applicable tax treaty (please refer to
been paid. byWHT a copy of the agreement
is creditable against the or
WHT rate
Local Property Tax contract for sale. The certificate may be Appendix 1). reductions and
capital gains tax liability of the vendor, and exemptions
obtained
any excess onisthe grounds that (i) the vendor is
refundable.
Income tax Irish resident, (ii) that no capital gains tax is Exemptions and rate reductions apply under
Employee taxation To
dueavoid the requirement
in respect of the disposal to withhold,
or (iii) that the domestic law and under tax treaties. Where an
clearance
capital gains musttaxbe has obtained
been paid. before
WHT theis exemption from WHT is not available, a
Employee share schemes consideration
creditable against is paid. The withholding
the capital gains tax liability reduced rate of WHT may apply under an
procedure
of the vendor, is also
andrequired
any excess to be applied, and
is refundable. applicable tax treaty (please refer to Appendix
PRSI therefore clearance should also be obtained, 1).
To avoid
where thethe requirement
asset is held as to withhold,
trading stock or
Universal Social Charge
clearance must be obtained
where the transaction is intra-group before theand a
Pension schemes consideration is paid. The withholding
capital gains tax liability does not arise.
procedure
Failure is also the
to obtain required to be will
certificate applied,
lead and
to the
Capital gains tax therefore clearance should also be obtained,
purchaser being assessed to capital gains tax
where
for the assetofis15%
an amount heldofasthetrading stock or
consideration
Capital acquisitions tax
where the transaction is intra-group
even if no capital gains tax liability would and a
Local taxes capital gains tax liability
arise on the disposal of the asset. does not arise. Failure
to obtain the certificate will lead to the
Customs and excise
Excise purchaser being assessed to capital gains tax
Professional services
for an amount of 15%
withholding taxof(PSWT)
the consideration
Tax contacts
even if no capital gains tax liability would arise
Withholding tax on Income tax at the
on the disposal of standard
the asset. rate (currently
Appendix 1 payments from Ireland
20%) is deducted from payments for
Withholding tax on
Appendix 2 payments to Ireland professional services made to individuals and
companies by accountable persons, which

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

Universal Social Charge Cyprus Israel

Pension schemes
Contact us:
Capital gains tax

Capital acquisitions tax

Local taxes

Customs and excise


Excise

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

Business taxation Rates Exempt activities old


old property which has been significantly
re-developed i.e. made new again
Transfer Pricing The rates of VAT and some of the supplies to The supply of certain goods and services is
which they apply are set out below: exempt from VAT including most banking and supplies of property
Exempt supplies/use may may
of property result in a in
result
Financial Services capital
a capital goods
goods scheme
scheme (CGS)
(CGS) adjustment.
adjustment.The
insurance services, education and training,
* The Jobs Initiative (10 May 2011) announced the CGSCGS
The was was
introduced as part
introduced on of the new
1 July 2008. The
Corporate - withholding taxes (WHT) Rates of this temporary VAT rate of 9% for certain
introduction medical services and passenger transport. If a
tourism related services. The reduced rate was effective supplier is engaged in exempt supplies, regime
CGS on 1 July
provides for 2008. The CGS provides
the adjustment of VAT for
Tax treaties 23%
from The standard
1 July 2011and due to be inrate ofupVAT
place applies
to 31 December the adjustment
deductibility in of VAT deductibility
respect of acquisitioninor respect
2013. Howeverto subsequent
typically no input VAT deductibility on related
suppliesFinance Acts have
not subject confirmed
to the rates of acquisitioncosts
development or development costs over
over the propertys the
VAT
that this reduced rate will continue to apply until further
below costs is possible i.e. VAT is a real cost.
Value added tax (VAT) notice. propertys
life VAT lifethe
i.e. it monitors i.e.use
it monitors the use for
of the property of
Stamp duty 13.5% Land and buildings (if taxable), Property property for
the purposes the purposes
of input of input VAT
VAT deductibility.
building services, heating fuel, deductibility.
Typically Typically
the VAT thebeVAT
life will life will be 20
20 years.
electricity, and waste disposal VAT on property rules were substantially
Relevant contracts tax (RCT) years. However
However a 10-year
a 10-year VAT life VAT life applies
applies in
in the case
services changed on 1 July 2008. Transitional rules
therefurbishment
of case of refurbishment
(development(development
work on worka
Interest continue to apply to the supply of interests in
9%* Certain printed matter e.g. on a previously
previously completed
completed building).
building).
immovable goods that were acquired or
Local Property Tax newspapers/periodicals, hotel/
holiday accommodation, developed prior to 1 July 2008 and which are
Income tax restaurant/ catering services, supplied on or after that date. Planning tip!
hairdressing services, cinemas,
museums, art gallery exhibitions, new1post
Under the post July12008
July VAT
2008on VAT on
property Irish VAT on property rules are complex and
Employee taxation
certain musical performances, propertytypical
regime, regime, typical occupational
occupational lease in
lease interests specific advice should be sought in respect
Employee share schemes fairgrounds/amusement parks, interests in
property areproperty
exempt arefrom exempt fromaVAT
VAT (with of all property related supplies. There can be
facilities for taking part in sporting (with a landlords
landlords option option to tax
to tax the rentthe rent in
in certain pitfalls and planning opportunities.
PRSI activities. certain circumstances
circumstances i.e. VAT
i.e. charge charge VAT23%
at the at the (formerly Section 13A)
Universal Social Charge 4.8% Supply of livestock (note - only live 23% standard
standard rate).rate). The supply
The supply of freehold
of freehold and
horses in certain circumstances). and freehold
freehold equivalent
equivalent interests
interests in new
in new Section 56
Accountable Authorisation
persons may be authorised (by
Pension schemes
0% Exports, books, oral medicine,
property is subject to VAT at 13.5%. The sale (formerly
Irish Revenue)Section 13A)
to import, to make intra-
childrens clothing & footwear, of old property is exempt from VAT unless Community acquisitions of goods and to
Capital gains tax Accountable persons may be authorised (by
fertilizers and certain food the vendor and purchaser exercise a joint acquire most domestic goods and services at
Irish Revenue) to import, to make intra-
Capital acquisitions tax products option for taxation. the zero-rate of Irish VAT if at least 75% of
Community acquisitions of goods and to
their annual turnover comprises of exports or
Local taxes acquire most domestic goods and services at
Examples of new property include: zero-rated intra-Community supplies of
the zero-rate of Irish VAT if at least 75% of
goods. Suppliers to such qualifying persons
Customs and excise
Excise the
the first supply of a completed property their annual turnover comprises of exports or
should ensure they obtain a valid VAT56B
within 5 years of its completion zero-rated intra-Community supplies of
Tax contacts prior to applying the zero rate of VAT. Such
goods. Suppliers to such qualifying persons
the
the second and subsequent supply of a suppliers also have additional invoicing
Appendix 1 Withholding tax on should ensure they obtain a valid VAT56B
payments from Ireland completed property within 5 years of its obligations.
from their customer prior to applying the zero
Withholding tax on completion unless it has been occupied for
Appendix 2 payments to Ireland rate of VAT. Such suppliers also have
at least 2 years
additional invoicing obligations.

2017
Tax Facts 2016 24
Value added tax (VAT)
Index

Introduction

Welcome

Business taxation Withdrawal of VAT credit for


Transfer Pricing
bills not paid within six months Contact us:
As part of the Governments initiatives to
Financial Services
tackle the shadow economy and protect
Corporate - withholding taxes (WHT) compliant businesses, measures were
introduced in 2013 which provide that where
Tax treaties payment for a supply of goods or services has
not been made within six months of the period
Value added tax (VAT)
in which the VAT was deducted, i.e. the initial
Stamp duty period, the purchaser will be obliged to adjust John Fay Tom Corbett
the amount of original deductible VAT Partner Partner
Relevant contracts tax (RCT) accordingly. t: 353 1 792 8701 t: 353 1 792 5462
e: john.fay@ie.pwc.com e: tom.corbett@ie.pwc.com
Interest The measures took effect for initial periods
beginning on or after 1 January 2014. For
Local Property Tax
example, VAT deducted on invoices received
Income tax in Jan/Feb 2014 that remain unpaid in
September should be adjusted in the July/
Employee taxation August VAT return. If payment is subsequently
Employee share schemes made, in full or in part, the deductible VAT
can be increased accordingly. It is important Sean Brodie Caroline McDonnell
PRSI to note that where, on or before the due date Partner Partner
for the return, the Revenue Commissioners t: 353 1 792 8619 t: 353 1 792 6526
Universal Social Charge are satisfied that there are reasonable grounds e: sean.brodie@ie.pwc.com e: caroline.mcdonnell@ie.pwc.com
Pension schemes for not having paid the full amount, such a
clawback of VAT will not be required.
Capital gains tax

Capital acquisitions tax Planning tip!

Local taxes Remember to claim VAT bad debt relief at the


earliest opportunity **
Customs and excise
Excise

Tax contacts ** VAT previously paid over on invoices which subsequently


Withholding tax on become reclassified as bad debts can be reclaimed
Appendix 1 payments from Ireland provided certain conditions are met

Withholding tax on
Appendix 2 payments to Ireland

2017
Tax Facts 2016 25
Stamp duty
Index

Introduction

Welcome

Business taxation Stamp duty is a tax on certain documents / allowances


Stamp duty are available
is payable (seeonIntellectual
based the higher of Transfer/purchase of other
Transfer Pricing
instruments. It is payable on transfers of land Property on page 5 ). paid for the transfer and
(a) the consideration property
and on other assets the title to which cannot (b) the market value of the assets transferring.
be passed by delivery. It is chargeable on Stamp duty is payable based on the higher of Written transfers of other types of property
Financial Services
instruments of transfer executed in Ireland (a) the consideration paid for the transfer and
Rates such as land, buildings, goodwill, book debts,
Corporate - withholding taxes (WHT) and on instruments, wherever executed, (b) the market value of the assets transferring. cash on deposit and benefits of contracts
which relate to Irish property or relate to attract stamp duty at a rate of 2%. Stocks and
Tax treaties
matters done or to be done in Ireland. Rates
Transfer/purchase of shares are liable to stamp duty of 1%. Gifts are
chargeable on their market value at the same
Value added tax (VAT) residential
Rate property
A form of stamp duty, known as a levy, also rates as for other conveyances.
Stamp duty arises on certain policies of insurance and on 1% Transfer of certain
certain financial cards and instruments. stocks and shares (including
Relevant contracts tax (RCT) share options) Planning tip!
Stamp duty on the transfer of assets between Nil Issue of shares Always seek advice before executing a
Interest associated companies may be fully relieved Business Purchase Agreement. Careful drafting
from stamp duty provided the following key 1% - 2% Transfer of property other than can help to minimise the stamp duty liability.
Local Property Tax stocks and shares
conditions are met:
Income tax 1% - 2% Premiums on leases
The
Thecompanies
companies havehavea 90%
a 90% relationship
relationship of houses, land and other real
Employee taxation (that is, is,
(that oneonecompany
company is, is,
directly
directlyor or property
indirectly,
indirectly, thethe
beneficial
beneficial owner
owner of of
at at
least
least
Employee share schemes 1% - 12% Average annual rent reserved
90%90% of of
thethe ordinary
ordinary share
share capital of of
capital thethe
by lease (rate depends on the
PRSI other
otherand andis entitled
is entitledto to
at at
least 90%
least 90%of of
thethe
length of the lease)
profits available
profits available forfor
distribution
distribution and at at
and least
Universal Social Charge 90% of 90%
least the assets
of theinassets
the case of acase
in the winding-
of a transfers of shares not exceeding 1,000 in value are
exempt.
upwinding-up
of the otherof company,
the otherorcompany,
a third company
or a
Pension schemes
hasthird
these rights, directly
company has these or rights,
indirectly, in
directly Transfer/purchase of
Capital gains tax respect of both companies).
or indirectly, in respect of both residential property
companies).
Capital acquisitions tax This relationship is maintained for a period
Value of property Rate
of This
at least two yearsisafter
relationship the transfer
maintained for aof the
Local taxes assets
period of at least two years after theback.
to avoid the relief being clawed Up to 1,000,000 1%
transfer
There of the assets
is an exemption fromto avoid
stampthe relief
duty for
Customs and excise
Excise Any excess over 1,000,000 2%
being clawed back.
transfers of intellectual property (IP). The
Tax contacts categories of IP qualifying for this exemption
There is an exemption from stamp duty for
Withholding tax on are identical to those for which IP capital
Appendix 1 payments from Ireland transfers of intellectual property (IP). The
allowances are available (see Intellectual
Withholding tax on categories of IP qualifying for this exemption
Appendix 2 Property on page 5).
payments to Ireland are identical to those for which IP capital

2017
Tax Facts 2016 26
Stamp duty
Index

Introduction

Welcome

Business taxation Exemptions and reliefs


Transfer Pricing
Transaction Stamp Duty Analysis
Financial Services
Transfers between associated companies where the necessary Full relief available
Corporate - withholding taxes (WHT) 90% beneficial ownership relationship exists and where certain
other conditions are satisfied
Tax treaties
Transfers on certain reorganisations, takeovers and mergers Full relief available
Value added tax (VAT)
Most transfers of surplus assets by liquidator to shareholder Nil
Stamp duty Transfers of intellectual property, such as copyright, trademarks, Exempt
brands and patents
Relevant contracts tax (RCT)
Most transfers of foreign shares and foreign land Exempt
Interest
A wide range of financial services instruments Exempt
Local Property Tax
Transfers of Irish government stocks Exempt
Income tax
Transfers under wills Exempt
Employee taxation Transfers between spouses or civil partners Exempt
(including certain transfers on divorce/dissolution)
Employee share schemes
Transfers of carbon credits Exempt
PRSI

Universal Social Charge


Contact us:
Planning tip!
Pension schemes
Remember that transfers of assets between
Capital gains tax spouses or civil partners are exempt from
stamp duty. If you are married or in a civil
Capital acquisitions tax
partnership you should consider whether
Local taxes you hold your assets in the most tax efficient
manner. Darragh Duane
Customs and excise
Excise
Director
Tax contacts t: 353 1 792 6313
Withholding tax on
e: darragh.duane@ie.pwc.com
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland

2017
Tax Facts 2016 27
Relevant contracts tax (RCT)
Index

Introduction

Welcome

Business taxation Relevant Contracts Tax (RCT) is a carried


The out in the
definition territoryoperations
of relevant of Ireland, its Operation
The of RCT
scheme involves the mandatory use of
withholding tax on payments by Principal includes the
territorial installation,
waters and the
the repairareas
and designated of the electronic means for sending information,
Transfer Pricing RCT operates
filing through
returns and an electronic
making paymentssystem
through
Contractors (as defined) to subcontractors Continental
alteration of Shelf.
systems The designated
such areas
as heating, of the
lighting,
Financial Services under a relevant contract in respect of Continental Shelf arepower
telecommunications, the extension of
supply, water the Revenue Online systemOnline
(eRCT). The Irish Revenue (ROS).system
Principal
works defined as relevant operations. Irelandsairterritorial
supply, waters
conditioning, where thesecurity,
ventilation, natural (ROS) has three
contractors mustRCT rates:
notify 0%, 20%online
all contracts and
Corporate - withholding taxes (WHT) land extends
drainage and under the sea
sanitation to the outer edge
systems. 35%. The rate that is applied to a
and notify Irish Revenue in advance of
While the common perception is that it is of of the continental margin. subcontractor
making depends
payments on the subcontractors
to subcontractors. Revenue
Tax treaties relevance only to the construction, meat RCT applies to works carried out in the compliance record. Criteria for to
theapply
ratestoare
will then confirm the RCT rate a
processing or forestry industries, a broad The definition
territory of relevant
of Ireland, operations
its territorial waters and summarised aspayment
subcontractor follows: and authorise the
Value added tax (VAT)
range of businesses have found that they are includes, inareas
designated addition
of theto Continental
installation,Shelf.
the repair
The Principal
required to withhold RCT from payments to and alteration
designated of systems
areas such as heating,
of the Continental Shelf are 0% rateto make the payment.
- subcontractors fully tax compliant
Stamp duty
contractors. Examples of non-construction lighting,
the telecommunications,
extension power
of Irelands territorial supply,
waters RCT(among other
withheld conditions)
will be treated as a payment on
Relevant contracts tax (RCT) type companies where RCT can apply are water supply,
where the naturalair conditioning,
land extends ventilation,
under the sea account
20% rate and- available for offset
subcontractors againstfor
registered other
tax,
hospitals, banks, telecommunication security,
to drainage
the outer edge ofand thesanitation
continental systems.
margin. taxare
liabilities including
tax compliant andPAYE
haveor VAT or zero
received for
Interest
companies, oil and gas undertakings, repayment at year-end.
rate authorization from Revenue
Local Property Tax supermarkets, utility companies and local In recent years of
Operation the RCT
RCT base has been
broadened considerably requiring many 35%are
There ratesignificant
- subcontractors
penalties notfor
registered
non- for
authorities. A person connected with a
Income tax RCT operates
entities, throughthose
in particular an electronic
in the system tax or with poor tax compliance
company engaged in construction, land operation of RCT by a Principal Contractor.
(eRCT). The Irish Revenue Online system the
telecommunications industry, to evaluate
Employee taxation development, meat processing or forestry From 2015, the
The scheme penalties
involves for non-compliance
the mandatory use of
(ROS) has three RCT rates: 0%, 20% and
scope of RCT and the extent of its application
activities may
activities may also
also be
besubject
subjectto
toRCT.
RCT. range frommeans
electronic 3% to for
35% of the gross
sending payment
information,
35%. The rate that
to their businesses. is applied to a
Employee share schemes amount and are
filing returns anddependent on the taxthrough
making payments
Principalsthat
The broad category of Principals liable tofall
can subcontractor depends on the subcontractors
compliance
Revenue On-lineposition of the
system subcontractor.
(ROS). Principal As
PRSI deductthe
within RCTscope
fromofpayments
RCT means that that many
means compliance record. Criteria for the rates are
the RCT base
contractors has notify
must been broadened
all contracts online
and companies
individuals and companies need
needtoto evaluate,
evaluate, summarised as follows:
Universal Social Charge considerably
and notify Irishin recent
Revenue years, it requires
in advance of many
making payments
in advance of making paymentsto to entities
making (including
payments to those in the
subcontractors. Revenue
0% rate - subcontractors fully tax
Pension schemes impact of
contractors, the impact of RCT
RCT in
in order
order to
to telecommunications
will then confirm theindustry), evaluate
RCT rate to apply to a
compliant and have obtained zero rate
avoid a costly tax settlement.
settlement. the scope of RCT
subcontractor and theand
payment extent of its the
authorise
authorisation approval from Revenue.
Capital gains tax application
Principal toto theirthe
make businesses.
payment.
RCT
Wide scope of RCT 20% rate (standard rate) - subcontractors
Capital acquisitions tax
As above, telecommunications companies and registered for tax, are mainly tax There are four main stages to the eRCT
Local taxes others in that sector, including companies compliant, however have not received system:
involved in the alteration and repair of zero rate authorization from Revenue
Customs and excise
Excise 1. Contract Notification Stage: Principals
telecommunications systems, are regarded as must notify Revenue upon entering into a
35% rate - subcontractors not registered
Tax contacts Principal Contractors
Principal ContractorsforforRCT
RCTpurposes
purposesand
and relevant contract, providing Revenue with
for tax or with a history of poor tax
required to
are required to operate
operate the
RCTRCT
procedures in in
procedures online details of the contract and
Appendix 1 Withholding tax on compliance
payments from Ireland respect of payments to subcontractors for subcontractor.
Appendix 2 Withholding tax on relevant operations. RCT applies to works
payments to Ireland

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.

PRSI RCT withheld will be treated as a payment on Jim Kinahan


account and available for offset against other Senior Manager
Universal Social Charge tax liabilities including PAYE or VAT or for t: 353 1 792 8641
repayment at year-end. e: jim.kinahan@ie.pwc.com
Pension schemes
There are significant penalties for non-
Capital gains tax
compliance with the online operation of RCT.
Capital acquisitions tax

Local taxes

Customs and excise


Excise

Tax contacts Elaine ORourke


Senior Manager
Withholding tax on
Appendix 1 payments from Ireland t: 353 1 792 5098
Withholding tax on
e: elaine.orourke@ie.pwc.com
Appendix 2 payments to Ireland

2017
Tax Facts 2016 29
Interest
Index

Introduction

Welcome

Business taxation Interest paid/payable at leastadditional


one director who is also
alsoaapply.
director
Forof Individual borrowings
Certain conditions Loans to acquire Interest in a
the investee company and,
is where
lent to,moneys
Transfer Pricing Relief is available for interest payable in
instance, where the money or is Partnership
Relief was previously available to an
on-lent are
subscribed forused by issued
newly a connected company,
share capital of aof
respect of money borrowed: individual for interest paid on moneys
Financial Services the connected
company, it mustcompany.
be used for the specific Tax relief on interest payable on a loan to
borrowed to acquire an interest in or to lend
trading,additional
rental or holding company activities purchase a share in or to contribute to certain
for
for the purpose of a trade or profession Certain conditions also apply. For to a trading company or holding company
Corporate - withholding taxes (WHT) of that company or of a connected company. partnerships has been abolished in respect of
carried on by an individual or company (but instance, where the money is lent to, or is where certain conditions were met.
There is a restriction loans made after 15 October 2013, with a
Tax treaties may be restricted in certain tax avoidance subscribed for newly on the amount
issued of interest
share capital of a
relief available to an investing company phasing out period
Interest relief to 2017 for
was abolished inloans made
respect of
situations) company, it must be used for the specific
Value added tax (VAT) providing fundsortoholding
a company whereactivities
the before that date. However, the cessation
loans, including replacement loans, made on
for
for the purchase, improvement or repair of a trading, rental company
funds are used to acquire specified intangible provisions do not apply
or after 7 December 2010to with
farm apartnerships.
phasing out
Stamp duty rented property except that, in the case of a of that company or of a connected company.
assets is
There upon which theon
a restriction company is entitled
the amount to
of interest period to 2013 for loans made before that
residential premises, relief is subject to date.
Relevant contracts tax (RCT) claim capital allowances.
relief available to an investing company
conditions which includes that the
deduction may not exceed 75% of the providing funds to a company where the
Interest Anti-avoidance provisions deny or restrict Loans to acquire Interest in a
interest otherwise allowable. Finance Act funds are used to acquire specified intangible
relief for interest on related party borrowings Partnership
Local Property Tax 2015 introduced measures whereby a 100% assets upon which the company is entitled to
for the acquisition of related entities, or the
interest deduction can be claimed for claim capital allowances. Tax relief on interest payable on a loan to
acquisition of assets or trades from a related
Income tax purchase a share in or to contribute to certain
certain qualifying lettings. party. These measures
Anti-avoidance provisionsare deny
subject
or to a number
restrict
of conditions. partnerships has been abolished in respect of
Employee taxation Relief is available
Relief is also available for interest
to a company foron money
interest relief for interest on related party borrowings
loans made after 15 October 2013, with a
borrowed
paid on moneys borrowed to acquire an lend
to acquire an interest in or to for the acquisition of related entities, or the
Employee share schemes Recovery of capital and other anti- phasing out period to 2017 for loans made
to a company,
interest aslend
in, or to follows:
to, a company which is a acquisition of assets or trades from a related
avoidance measures also restrict relief for before that date. However, the cessation
PRSI trading company, a rental company or a party. These measures are subject to a number
interest on both related and third party provisions do not apply to farm partnerships.
Company
holding companyborrowings
of trading or rental of conditions.
Universal Social Charge borrowings.
companies.
Relief is available to a for
To qualify relief, the
company investing
for interest Recovery of capital and other anti-
Pension schemes company must have:
paid on moneys borrowed to acquire an avoidance measures also restrict relief for
Planning tip!
interest
in, orinterest
a material to lend (more
to, a company
than 5%which
of the is a interest on both related and third party
Capital gains tax
trading
equity)company, a rentalin
in the company company
which itoris a Review your company structure annually to
Capital acquisitions tax holding company
investing of trading
and, where moneysor rental
on-lent are ensure that the conditions for interest relief
companies. To qualifyconnected
used by a company for relief, the
withinvesting
that remain satisfied.
Local taxes company
company, must have:
in the connected company, and
Customs and excise
Excise a least oneinterest
atmaterial director(more than
who is also5% of the of
a director
equity) in thecompany
the investee companyand,
in which
whereitmoneys
is
Tax contacts
investing
on-lent areand,
usedwhere moneys on-lent
by a connected are of
company,
Withholding tax on used by a company connected with that
Appendix 1 payments from Ireland the connected company.
company, in the connected company, and
Withholding tax on
Appendix 2 payments to Ireland

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

Customs and excise


Excise

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

Business taxation Returns Late Payment/Non-Compliance


Transfer Pricing 2016 Payment Instruction was due to be
The 2017 If a liable person fails to submit a return, Irishthe
submitted to Irish Revenue by 25 November Irish Revenue
Revenue can estimate
can estimate thedue.
the LPT LPT Adue.rateAof
Financial Services
2015. Payment was due by 11
2016. 7 January
January2016.
2017. rateper
8% of 8% per annum
annum will be will be charged
charged on the
on the amount
Corporate - withholding taxes (WHT) As outlined above, a property is not required amount outstanding.
outstanding. A maximum A maximum penalty
penalty of 3,000 of
to be revalued for 2017.2016. TheThe market
market value
value // 3,000
will will be imposed
be imposed forto
for failure failure
submitto asubmit
returna
Tax treaties valuation band declared on the 2013 LPT1 return
or or for knowingly
for knowingly undervaluing
undervaluing property to
applies for
Return applies. Anythe period
work 2013out
carried 2016.
on a property
reduce to reduce
LPT payable.LPT payable.
Where Where
the LPT the
remains
Value added tax (VAT)
Any work carried
residential property outunder
on a residential
the Home property LPT remains outstanding,
outstanding, a charge will aattach
chargetowill
the attach
Stamp duty under the Home
Renovation Renovation
Incentive will notIncentive
affect thewill not to the property.
property.
affect the
amount ofamount of LPT payable for 2014,
LPT payable.
Relevant contracts tax (RCT) 2015 and 2016. Chargeable Persons for Income Tax/
If arrangements have not been made to pay Corporation Tax/ Capital Gains Tax who are
Interest If arrangements
the tax in full or by have not been
phased made to pay
payments also designated liable persons for LPT may
the tax in full
throughout or by
2017, phased
the liable payments
person should incur a LPT generated surcharge of 10% of
Local Property Tax
throughout
access 2016, the
the Revenue liable
LPT person
On-line should
system their Income Tax/ Corporation Tax/ Capital
Income tax access the Revenue
immediately to file aLPT
2017On-line
Paymentsystem Gains Tax liability, where the LPT return is
immediatelyintoorder
Instruction file ato
2016 Payment
minimise interest outstanding or an agreed payment Contact us:
Employee taxation Instruction
charges. in order
If the liableto minimise
person paid interest
the 2016 LPT arrangement is not being met at the date of
Employee share schemes charges.
by phasedIf payment
the liablemethod,
person paid the 2015LPT
deferred the full filing the Income Tax/ Corporation Tax/
by phased
charge paymentanmethod,
or claimed deferred
exemption, the full
the current Capital Gains Tax Return. There are a limited
PRSI charge ormethod/
payment claimed an exemption,
exemption willthe current number of exemptions available.
payment method/
automatically applyexemption
for 2017 and willthere is no
Universal Social Charge automaticallytoapply
requirement for Revenue.
contact 2016 and there is no
Pension schemes requirement to contact Revenue.
There are various payment methods including
There areby
payment various
Singlepayment methodsDebit/
Debit Authority, including Lisa McCourt
Capital gains tax Senior Manager
payment
Credit by Single
Card, DirectDebit
DebitAuthority,
and voluntaryDebit/
Capital acquisitions tax Credit Card,
deduction at Direct
sourceDebit
from and voluntary
salary, an t: 353 1 792 7492
deduction at source
occupational pension from
andsalary,
certainan payments e: lisa.mccourt@ie.pwc.com
Local taxes
occupational
from Department pension and certain
of Social payments
Protection or the
Customs and excise
Excise from Department
Department of Social Protection
of Agriculture, Food and the or the
Department
Marine. Where of Agriculture,
a liable person Food and
does the
not elect a
Tax contacts Marine. Where
method, a liable may
Irish Revenue person doesthe
deduct nottax
elect a
Withholding tax on method,
due the Irish
at source Revenue
(through may deduct
the PAYE system, the tax
Appendix 1 payments from Ireland
due at welfare
social source (through
paymentsthe PAYE system,
etc).
Withholding tax on social welfare payments etc).
Appendix 2 payments to Ireland

2017
Tax Facts 2016 33
Income tax
Index

Introduction

Welcome

Business taxation Main personal tax credits and reliefs


Transfer Pricing
2017 2016
Financial Services
Single person with no dependent child 1,650 1,650
Corporate - withholding taxes (WHT) Married or in a civil partnership 3,300 3,300
Tax treaties Widowed person or surviving civil partner with no dependent child 2,190 2,190

Value added tax (VAT) Widowed person or surviving civil partner bereaved in the year 3,300 3,300

Stamp duty Single person with dependent child a 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

Pension schemes d. the reliefpaid


3,000 for fulltime
is restricted to courses and the
the first 1,000
Employee (PAYE) tax credit 1,650 1,650 first 1,500
per adult paid for
insured and part-time
the first courses
500 peris
disregarded
child insuredfor the purposes of
Capital gains tax Earned income tax credit 950 550 calculating the relief.
e. the maximum limit on qualifying fees
Capital acquisitions tax Medical insurance d standard rate standard rate f. expenses paidperson
is 7,000 per to nursing homes The
per course. which
provide 24 hour
first 2,750 paid nursing carecourses
for fulltime are tax
Local taxes relieved at the1,375
marginalpaidtax
forrate
Dental insurance d standard rate standard rate and the first part time
courses is disregarded for the purpose of
g. With effect from 1 January 2017, credit is
Customs and excise
Excise Certain fees for third level colleges - standard rate standard rate calculating the relief
calculated at 20% of the income from
maximum qualifying fees e 7,000 7,000
Tax contacts f. fishing,
expenses subject to nursing
paid to a maximum
homes of 1,270
which
(2017).
provideIt24is hour
available where
carea are
person
Medical expenses f standard rate standard rate spends
nursing tax
Withholding tax on relieved aattotal of 8 hourstax
the marginal per day for a
rate
Appendix 1 payments from Ireland minimum of 80 days per year fishing in a
Fisher tax credit (max) g
1,270 Nil registered fishing vessel. A claim for the
Withholding tax on
Appendix 2 payments to Ireland
seafarer's allowance cannot also be
made in the same year.

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

Capital gains tax Married couple or civil 42,800 42,800


partnership: both with (with an (with an
Capital acquisitions tax incomes increase increase
balance balance
of up to of up to
Local taxes 24,800 24,800
max b) max b)
Customs and excise
Excise
a. This rate is available for the principal carer of the child only
Tax contacts
b. The increase in the standard rate tax band is restricted to the lower of (i) 24,800 or (ii)
Withholding tax on the amount of the income of the spouse or civil partner with the lower income
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland

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

Business taxation Domicile Levy 2015 which are


effect from 1 January have a base The
of 12 months. salary of at least
individual can75,000;
be engaged individual
have been arrives in Ireland,
non-resident that thefor the
in Ireland
designed to increase the take-up levels of under an Irish or non-Irish employment qualifying
five yearsconditions
immediatelyhave been met.
preceding the year of
Transfer Pricing A domicile levy of up to 200,000 applies to be tax resident in Ireland and not resident
SARP. contract. arrival; and
individuals who are Irish domiciled elsewhere; There are differing conditions in relation to
Financial Services have
irrespective of their tax
The relief is available forresidence
a maximum position and
of five Qualifyingpredominantly
exercise individuals willall bebut
entitled to
incidental what is been employed
included on a full
as earnings bothtime
forbasis by a
the base
whether or not they hold Irish citizenship. exclude relevant employer for the entire
salary and the income to which the 30% is 12 months
Corporate - withholding taxes (WHT) consecutive tax years both to Irish domiciled duties30% of employment
of their employmentearnings
in Ireland over
Liability to the levy depends on the level of 75,000 immediately
applied. Certainprior
othertoreliefs
arrival. (e.g. for non-
and certain non-Irish domiciled individuals duringfrom the charge period;
the assignment to Irish income tax.
Tax treaties worldwide income (relevant if more
who are required by their existing employer than 1 For the years 2012 to 2014, the maximum Irish workdays) cannot be claimed in
have SARP conditions for individuals
million) and the value of Irish-located
organisation to come to Ireland between 2012 incomebeen
uponnon-resident
which relief mayin Ireland for the
be claimed was conjunction with SARP relief. The relief also
Value added tax (VAT) five years immediately preceding the year of arriving in Ireland from 2015 to 2020
property
and 2017(relevant
to work hereif infor
excess of 5 million).
a minimum period 500,000. This upper 500,000 threshold was imposes certain reporting obligations on
of 12 months. The individual can be engaged arrival; and
removed for 2015 and subsequent years. For tax years 2015 to 2020, in order to qualify
employers.
Stamp duty
The
underdomicile
an Irishlevy must be paid
or non-Irish on a self-
employment and claim SARP relief the individual must:
have been employed on a full time basis by a
Relevant contracts tax (RCT) assessment
contract. basis and any Irish income tax In addition, qualifying individuals are entitled It should be noted that, while the income is
relevant employer for the entire 12 months
paid will be allowed as a credit against the to receive tax free payment or reimbursement have afrom
relieved baseincome
salary of atitleast
tax, 75,000;
is not relieved
Interest immediately prior to arrival.
levy. Individuals
Qualifying liable to
individuals the
will belevy mustto
entitled file a of the reasonable costs of one return trip to from the Universal Social Charge (USC) or
be tax resident in Ireland (the individual
return
excludeand
30% pay
ofthe appropriate
employment levy byover
earnings 31 their home
SARP country for
conditions andindividuals
school fees (up to PRSI (where applicable).
Local Property Tax may also be resident elsewhere);
October
75,000 following the yeartoend.
from the charge Irish tax. For the 5,000 perin
arriving annum)
Ireland for from
each child,
2015subject
to 2017 to
Income tax years 2012 to 2014, the maximum income restrictions. The relief may be claimed Note:
haveThe old
been SARP regime
non-resident still applies
in Ireland for
for the
Special
upon whichAssignment
relief may be claimed Relief was For tax years
up-front by way2015
of atopayroll
2017, indeduction
order to qualify
or by employees
five yearswho arrived inpreceding
immediately Ireland before
the year of
Employee taxation Programme (SARP)
500,000. This upper 500,000 threshold has and
way of a repayment after the tax yearmust:
claim SARP relief the individual end. 2012.
arrival; and
Employee share schemes been removed
A special for 2015
expatriate and subsequent
assignment relief years. Either way,
have advance
a base salaryapproval
of at leastby75,000;
Irish have been employed on a full-time basis by
Revenue is required. Cross border workers
programme applies to certain
In addition, qualifying employees
individuals are entitled a relevant employer for the entire 6 months
PRSI be tax resident in Ireland (the individual Income tax relief is available to individuals
assigned to Ireland to work for a period of at
to receive tax free payment or reimbursement immediately prior to arrival.
may also
SARP be resident
conditions forelsewhere);
individuals who are resident in Ireland but who work
Universal Social Charge least
of theone year. Thecosts
reasonable relief
ofwas
one first introduced
return trip to arriving in Ireland from 2012 to The relevant employer must have been
in 2009. A new enhanced scheme was have been non-resident in Ireland for2014
the outside Ireland. The relief operates in such a
their home country and school fees (up to incorporated and resident in a country
Pension schemes introduced for individuals arriving in Ireland five
For theyears
yearsimmediately preceding
2012 to 2014, in order the year of
to qualify way as to effectively exclude from Irishwith
tax the
5,000 per annum) for each child, subject to which Ireland
from 2012. Further amendments were arrival;
and claim and
SARP relief the individual must: income arisinghas
from either a doubleemployment.
a qualifying tax treaty or
Capital gains tax restrictions. The relief may be claimed anorder
exchange of information agreement. From
introduced In to qualify for the relief, the individual
up-front by to
waythis
ofenhanced scheme with
a payroll deduction or by have
effect from 1 January 2015 which are end. have been
a baseemployed
salary ofon
ataleast
full-time basis by
75,000; 2015, the employer must certify to
must hold an employment outside Ireland for Irish
Capital acquisitions tax way of a repayment after the tax year a relevant employer for the entire 6 months Revenue within 30 days
designed to advance
increase approval
the take-up levels of a continuous period of atofleast
the 13
date the in a
weeks
Either way, by Irish immediately
be tax resident in Ireland
prior and not resident
to arrival. individual arrives in Ireland, that the
Local taxes SARP. country with which Ireland has a double tax
Revenue is required. elsewhere; qualifying conditions have been met.
The relevant employer must have been treaty. Income from the qualifying
Customs and excise
Excise The relief is available for a maximum of five exercise predominantly
incorporated and resident all
in abut incidental
country with employment must be fully taxed in that
There are differing conditions in relation to
SARP conditions
consecutive tax yearsfor
bothindividuals
to Irish domiciled duties of their employment in Ireland
which Ireland has either a double tax treaty or country and the foreign tax paid. The
Tax contacts arriving in Ireland from 2012 to 2014 what is included as earnings both for the base
and certain non-Irish domiciled individuals anduring
exchangethe of
assignment
informationperiod;
agreement. From individual must also be present in Ireland for
Withholding tax on salary and the income to which the 30% is
Appendix 1 payments from Ireland whothe
For areyears
required
2012bytotheir
2014,existing
in orderemployer
to qualify 2015, the employer must certify to Irish at least one day per week during the period of
applied. Certain other reliefs (e.g. for non-
organisation
and to come
claim SARP relieftothe
Ireland between
individual 2012
must: Revenue within 30 days of the date the the qualifying employment.
Appendix 2 Withholding tax on Irish workdays) cannot be claimed in
payments to Ireland and 2020 to work here for a minimum period

2017
Tax Facts 2016 37
Income tax
Index

Introduction

Welcome

Business taxation Foreign earnings


conjunction deduction
with SARP relief. The relief also Ireland or between
and Pakistan and (2)relevant States
reducing will also be
the minimum Employment
spent in a Relevant& Investment
State, which was not
Transfer Pricing
(FED) certain reporting obligations on
imposes deemed
requiredto be timeofspent
number days in a relevant
working in a State, Incentive
previously the/case.
Seed Capital
From 2017, theScheme
minimum
employers. which was
Relevant not previously
State from 40 to the case.per annum.
30 days number of days required working abroad has
FED relief was introduced in 2012 to The
beenEmployment
further reduced Investment
to 30 daysIncentive (EII) is
per annum.
Financial Services
encourage
It should becompanies
noted that,that arethe
while expanding
income isinto The relief provides for a reduction in the a tax relief incentive scheme that provides tax
Corporate - withholding taxes (WHT) emerging markets. The relief applies to
relieved from income tax, it is not relieved individuals employment income (excluding relief for investment
Employment &inInvestment
certain corporate
from the Universal Social Charge (USC) or of
individuals who spend significant amounts certain benefits in kind but including share Incentive / Startupan
trades. The scheme allows individualfor
Refunds
Tax treaties time working in a relevant State.
PRSI (where applicable). based rewards) by apportioning the income by Entrepreneurs (SURE) on
investor to obtain income tax relief
reference to the number of qualifying days investments up to a maximum of 150,000
Value added tax (VAT) The reliefBorder
provides for a reduction in the The Employment
Cross Workers worked in a Relevant State in the year over per annum in eachInvestment
tax year upIncentive
to 2020. (EII)
The is
individuals employment income (excluding the number of days that the employment is a tax reliefinvestment
minimum incentive scheme that company
in any one provides taxis
Stamp duty Income tax reliefiniskind
available to individuals
certain benefits but including share held in the year. However, the reduction is relief
250.for investment
Individuals in certain
interested incorporate
EII can invest
who
based rewards) by apportioningwho
are resident in Ireland but the work
income by trades.
Relevant contracts tax (RCT) capped at 35,000 in any year. directlyThe scheme
through allowsplacement
a private an individualor
outside
reference Ireland. The relief
to the number ofoperates
qualifying in such
days a investor
through to obtain income
a Designated tax reliefFund.
Investment on
Interest way as to effectively exclude from
worked in a relevant State in the year over Irish taxthe
the For the years 2012 to 2014, the relief applies investments up to a maximum of 150,000
income arising from a qualifying
number of days that the employment is held inemployment. to individuals who spent at least 60 days a Income
per annum tax inrelief is tax
each granted in two
year up to 2020. The
Local Property Tax In order
the year.to qualify for
However, thethe relief, the
reduction individual
is capped at year working in Brazil, Russia, India, China, instalments
minimum - the initial,
investment in based
any one oncompany
30/40thsisof
Income tax must hold an employment
35,000 in any year. outside Ireland for and South Africa and from (1 January 2013) the amount
250. invested,
Individuals is generally
interested in EIIgranted in
can invest
a continuous period of at least 13 weeks in a Algeria, The Democratic Republic of the the first year
directly through andathe balance
private is deferred
placement or until
Employee taxation For the years
country with 2012
whichtoIreland
2014, the
hasrelief applies
a double tax Congo, Egypt, Ghana, Kenya, Nigeria, Senegal the year of
through assessmentInvestment
a Designated following the later of 4
Fund.
to individuals
treaty. Incomewho fromspent at least 60 days a
the qualifying and Tanzania. For the years 2015 to 2017, the years after the date the shares were issued or
Employee share schemes year workingmust in Brazil, Russia, India, China,
employment be fully taxed in that relief has been extended to include Japan, Income tax relief is granted
trading commenced. in two
Tax relief in respect of
PRSI and South
country andAfrica and from
the foreign tax(1 January
paid. The 2013) Singapore, South Korea, Saudi Arabia, the instalments - the initial, based
the deferred amount is conditional on 30/40ths
upon theof
Algeria,
individual The Democratic
must Republic
also be present of the for
in Ireland United Arab Emirates, Qatar, Bahrain, the amount invested, is generally
investee company demonstrating that it has granted in
Universal Social Charge Congo, Egypt,
at least one dayGhana,
per week Kenya, Nigeria,
during Senegal
the period of the first year and the balance is
increased employment numbers or research deferred until
Indonesia, Vietnam, Thailand, Chile, Oman,
and Tanzania.employment.
the qualifying For the years 2015 to 2017, the Kuwait, Mexico and Malaysia. For the years the
andyear of assessment
development following the later of
expenditure.
Pension schemes
relief has been extended to include Japan, 2017 to 2020, the list of Relevant States also four years after the date the shares were
Capital gains tax Foreign
Singapore, SouthEarnings Deduction
Korea, Saudi Arabia, the includes Colombia and Pakistan. This scheme
issued or tradingis available
commenced.to the majority
Tax reliefofin
(FED)
United Arab Emirates, Qatar, Bahrain, small and
respect medium-sized
of the tradingiscompanies
deferred amount conditional
Capital acquisitions tax Indonesia, Vietnam, Thailand, Chile, Oman, For the years 2012 to 2014, only periods that satisfy
upon certaincompany
the investee EU Statedemonstrating
Aid regulations.
FED relief was introduced in 2012 to
Kuwait, Mexico and Malaysia. comprising at least four consecutive days An overall
that limit of 15
it has increased million (and
employment 5 million
numbers or
Local taxes encourage companies that are expanding into
working in these locations count towards the annually)and
research is placed on the amount
development of the
expenditure.
emerging
Only periods markets. The relief
comprising applies
at least to
4 consecutive
Excise
Customs and excise 60 day threshold. From 2015, the 60 day investment raised by a qualifying company
individuals who spend significant
days working in these locations count towards amounts of This scheme is available to the majority of
threshold was reduced to 40 days and only which can qualify for relief under the EII.
Tax contacts time working in a Relevant State.
the 60 day threshold for the years 2012 to Finance small and medium-sized trading companies
three consecutive days working in these
Act
2014.2016
From extended
2015, the the60relief
day until 31 has
threshold that satisfy certain EU State Aid regulations.
Withholding tax on locations was required to count towards the
Appendix 1 payments from Ireland December 2020 and made
been reduced to 40 days and only 3 some An overall limit of 15 million (and 5 million
40 day threshold. From 2015, time spent
Withholding tax on enhancements
consecutive days to working
the reliefinfor FEDlocations
these claims foris annually) is placed on the amount of the
Appendix 2 travelling to/from Ireland or between
payments to Ireland 2017 and subsequent years
required to count towards the 40 day by: (1) increasing
Relevant States is also deemed to be time
the list of Relevant
threshold. Time spent States to include
travelling Colombia
to/from

2017
Tax Facts 2016 38
Income tax
Index

Introduction

Welcome

Business taxation In order to qualify


investment under
raised by the scheme,
a qualifying the
company investor may have
the employee mustbeen
nota have
top rate
hadtaxpayer
a material only make
First timea buyers
claim to Irish Revenue for a tax
individual
which must subscribe
can qualify for reliefon his/her
under theown
EII. when employed
interest in the so the scheme
employer is designed to
company; refund after the tax year-end.
Transfer Pricing In the case of qualifying first time buyers, tax
behalf for shares which: allow him/her elect to shelter income earned
In order to qualify under the scheme, the the employee must perform at least 50% of relief is available on the first 10,000 of
Financial Services during any of the previous six years in order to Relief for Mortgage Interest
representmust
individual newsubscribe
ordinary share capital
on his/her ownin a their duties in the conception, or creation interest paid each year (single person). The
maximise the tax rebate. The maximum Payments
qualifying
behalf company,
for shares which:and of new knowledge, products, processes, rate at which tax relief will apply is based on a
Corporate - withholding taxes (WHT) investment that can qualify under SURE is
methods or systems; and Mortgage
sliding scale interest
(25% downtax relief is no
to 20%) forlonger
the first
carry no preferential rightsshare
as to capital
dividends, 700,000 (100,000 per annum for the
Tax treaties represent new ordinary in a available
seven years for
ofloans taken outloan
any qualifying afterbut31see the
assets on a winding up or to be redeemed. at leastsix
previous 50%taxofyears
the emoluments
and 100,000 of the
in the
qualifying company, and December
exception below2012.regarding
However,properties
tax relief at
Value added tax (VAT) employee
current year).must qualify as R&D expenditure.
Shares must be held for at least four years if source
purchasedis available
betweenup1 to 2017 in2004
January respect
andof 31
carry no preferential rights as to The effective rate of tax of the employee qualifying
December 2008.loans taken out on
From year 8,or
thebefore
rates 31
and
Stamp duty the investor wants to retain the full tax relief. R&D Tax Credit
dividends, assets on a winding up or to be cannot be reduced below 23% and unused tax December
thresholds 2012 for residences
for relief situated time
are as for non-first in
Gains realised on the disposal of EII shares
Relevant contracts tax (RCT) redeemed. credits which
Companies thesurrender
may employeeahas beenof
portion allocated
their Ireland.
buyers. From January 2014, lenders are
are subject to normal capital gains tax rules
but losses arebe not generally allowed may be
R&D taxcarried forward.
credit to rewardThekeyemployee
employeesmay who obliged to grant this tax relief at source (TRS)
Interest Shares must held for at least four due
yearstoifthe
availability of income tax relief. only make
have a claim toinIrish
been involved Revenue
the R&D for a tax
activities of based on the amount of interest actually paid
the investor wants to retain the full tax relief.
Local Property Tax refund
the after the
company, tax year-end.
allowing them to effectively by the borrower within a tax year. This
Gains realised on the disposal of EII shares
The Seed Capital Scheme (SCS) is a slightly receive part of their remuneration tax-free. In change will have no impact for borrowers who
are subject to normal capital gains tax rules
Income tax more generous version of the EII that targets
but losses are not generally allowed due to the
Relief for mortgage
order to qualify interest
as a key employee: pay the correct mortgage amount on time, in
individuals who leave PAYE employment to
availability of income tax relief.
payments accordance with the terms of their loan.
Employee taxation set out own companies. The SCS investor may the employee must not have been a However, where borrowers do not make
Mortgage interest
director of thetax relief iscompany;
employer no longer
Employee share schemes have been
When first aintroduced
top rate taxpayer when
in Finance Actemployed
2011, payment/s or pay less than the amount of
available for loans taken out after 31
so the
the EIIscheme
relief was is designed
subject totothe
allow
Highhim/her
Earners interest charged to their account, the TRS
the employee
December must nottax
2012. However, have hadat
relief a source
PRSI elect to shelter
Restriction. income
Finance (No.earned
2) Actduring
2013 any of amount due will be reduced to reflect the
material
is available upinterest
to 2017ininthe employer
respect of qualifying
the previous
provided 6 years
for the in order
removal to maximise
of the EII, relatingtheto actual amount paid.
Universal Social Charge loanscompany;
taken out on or before 31 December
tax rebate. The
investments maximumcompanies
in qualifying investment that15
from 2012 for residences situated in Ireland. From
Pension schemes can qualify
October 2013 under
to 31SCS is 600,000
December 2016,(100,000
from the the employee mustareperform atto
least 50% First time buyers
January 2014, lenders obliged grant
per of
list annum
specifiedoverreliefs
6 years).
caught by the High of their duties in the conception, or
this tax relief at source (TRS) based on the In the case of qualifying first time buyers, tax
Capital gains tax Earners Restriction. Finance Act 2016 creation of newactually
knowledge, products,
amount of interest paid by the relief is available on the first 10,000 of
R&D
extended taxthecredit
exclusion of the EII from the processes, methods or systems; andwill
Capital acquisitions tax borrower within a tax year. This change interest paid each year (single person). The
High Earners
Companies may Restriction
surrenderfor subscriptions
a portion of theirof have no impact for borrowers who pay the rate at which tax relief will apply is based on a
Local taxes eligible shares made on or after 1 January at least 50% of the emoluments of the
R&D tax credit to reward key employees who correct mortgage amount on time, in sliding scale (25% down to 20%) for the first
2017. employee must qualify as R&D
have been involved in the R&D activities of accordance with the terms of their loan. seven years of any qualifying loan, but see the
Customs and excise
Excise expenditure.
the company, allowing them to effectively However, where borrowers do not make exception overleaf regarding properties
The scheme Startup Refunds for
Tax contacts receive part of their remuneration tax-free. In payment/s
The effective or rate
pay of
less than
tax theemployee
of the amount of purchased between 1 January 2004 and 31
Entrepreneurs (SURE), formerly known as
order to qualify as a key employee: interest
cannot becharged
reduced to below
their account,
23% andthe TRS tax
unused December 2008. From year 8, the rates and
Appendix 1 Withholding tax on the Seed Capital Scheme, is a slightly more
payments from Ireland amount due will
credits which thebe reducedhas
employee to reflect the
been allocated thresholds for relief are as for non-first time
generous versionmust
the employee of the
notEII thatbeen
have targets
a director
Appendix 2 Withholding tax on actual
may beamount
carried paid.
forward. The employee may buyers.
payments to Ireland individuals who leave PAYE
of the employer company; employment to
set up their own companies. The SURE

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

Tax Facts 2017 41


Income tax
Index

Introduction

Welcome

Business taxation certificationorbyrefurbishment


conversion the relevant Local Authority,
of a qualifying Childminding
reliefs) and specifiedrelief
reliefs for the year Self-assessed
or more of thetaxpayers are also
share capital liable to PRSI
of certain
details of which
property. have allowances
The capital yet to be announced.
are available exceeding 80,000. This results in an at 4% on their
companies. The unearned income system
self-assessment (e.g. places
Transfer Pricing Income
at a rate of 15% per annum (years 1 6) and effectivetax is of
rate notincome
payable
taxonofthe
32%earnings of
where the investment
the onus on income, rental to
the individual income).
file a return,
Employment of a carer
10% (year 7). A clawback of capital an individual arising from
maximum restriction applies. the taking care of Previously,
calculate self-assessed
the tax liability,contributors
and pay the were relevant
Financial Services
allowances claimed can arise if the property is up to three children in the individuals own exempt
tax due.from making
To avoid PRSI contributions
a surcharge, returns of on
A tax allowance of up to 50,000 for the home, provided
Any reliefs the gross
not used amount received
in a particular tax yearis
Corporate - withholding taxes (WHT) disposed of within seven years. such income.
income for thePlease
2016 refer to the
tax year must PRSI section
be filed on
actual cost of employing a person to care for less than 15,000 a year. If such earnings
are carried forward. In the case of married on page 48
or before 31for further2017.
October details.
Any balance of tax
Tax treaties an
Theincapacitated family
relief will apply member may
to expenditure be
incurred exceed
couples15,000 the total each
or civil partners, amount is taxable.
spouse/civil due for the year must also be paid by this date,
claimed at the claimants marginal tax rate. Certain conditions apply. Certain
Value added tax (VAT)
on the conversion/refurbishment of buildings partner is treated separately when calculating providedindividuals
preliminary aretax
obliged to file for
obligations returns
the
located in a special regeneration area that are this restriction. As such, each spouse or civil and pay any tax due electronically
year have been met (see below). via the
Stamp duty in use for the purposes of the retailing of Self-assessment
partner can benefit from - payment
the thresholdand of Irish Revenues On-line system (ROS), e.g.
goods. returns
125,000. Individuals subject to these individuals claiming
To avoid interest certain
charges, property income
preliminary
Relevant contracts tax (RCT) restrictions are obliged to file and pay via the incentive
tax due forreliefs, who acquire
2017 must be paid certain offshore
by 31 October
Broadly, the relief may be claimed by owner- In general, self-assessment applies to all
Irish Revenues On-line Service (ROS).
individuals with non-PAYE income in excess products,
2017 The tax or who
paidclaim
mustrelief for pension
represent at least 90%
Interest occupiers or landlords but property
of 5,000 and to all directors controlling 15% contributions
of the individuals(RACs, AVCs), film
estimated relief
liability foretc.
2017
developers are excluded from claiming the Employment
Local Property Tax or more of the shareof a Carer
capital of certain or 100% of the ultimate liability for 2016
The Irishany
Revenue generally
relief. Any relief claimed will be included in
companies. The of
self-assessment (before Employment andannounces
Investmentan
Income tax the calculation of the high earners restriction, A tax deduction up to 75,000system
for theplaces extension to mid-November to the ROS return
the onus onofthe individual to file ato
return, Incentive (EII) relief).
where applicable. actual cost employing a person care for filing and tax payment date for self-
Employee taxation calculate
an the tax liability,
incapacitated and paymay
family member the be
relevant assessment income
Self-assessed tax customers
taxpayers are also liablewhoto both
PRSI
There are limits on the amount of qualifying tax due. at
claimed Tothe
avoid a surcharge,
claimants returns
marginal taxof
rate. pay
at 4%andonfile electronically.
their unearned income (e.g.
Employee share schemes income for the 2015 tax year
expenditure on which relief can be claimed in The maximum deduction wasmust be filed on
previously investment income, rental income).
PRSI relation to commercial premises. These are or beforefor
50,000 31 tax
October
years2016.
up to Any balance of tax
and including Previously, self-assessed contributors were
1,600,000 in the case of a company trading due for the year must also be paid by this date,
2014. exempt from making PRSI contributions on
Universal Social Charge from the premises, or 800,000 if the investor provided preliminary tax obligations for the such income. Please refer to the PRSI section
is a company letting the premises, and year have beenServices
Childcare Relief
met (see below). on page 49 for further details.
Pension schemes
400,000 in the case of an individual.
Income
To avoidtax is notcharges,
interest payable on the earnings
preliminary of
income
Capital gains tax Certain individuals are obliged to file returns
Special apportionment rules apply where an individual arising from the taking
tax due for 2016 must be paid by 31 Octobercare of
and pay any tax due electronically via the
individuals and companies incur qualifying up to three children in the individuals
2016. The tax paid must represent at least own
Capital acquisitions tax Irish Revenues On-Line Service (ROS), e.g.
expenditure on a joint basis on the same home,
90% ofprovided the gross
the individuals amount liability
estimated receivedfor
is
individuals claiming certain property
Local taxes building. The application of these rules less than 15,000 a year. If such earnings
2016 or 100% of the ultimate liability for 2015 incentive reliefs, who acquire certain offshore
effectively caps the value of the relief at exceed
(before15,000 the total amount
any Employment is taxable.
and Investment
Customs and excise
Excise products, or who claim relief for pension
200,000 for an individual project. Certain conditions apply.
Incentive (EII) relief and relief for investment contributions (RACs, AVCs), etc.
Tax contacts in films).
High Earners Restriction Self-Assessment - Payment and Irish Revenue generally announces an
Appendix 1 Withholding tax on
payments from Ireland Returns extension to mid-November to the ROS return
Certain tax reliefs available to high income
Appendix 2 Withholding tax on In general, self-assessment applies to all filing and tax payment date for self-
payments to Ireland earners are restricted. A tapering restriction
individuals with non-PAYE income in excess assessment income tax customers who both
applies to individuals with income in excess of
of 5,000 and to all directors controlling 15% pay and file electronically.
125,000 (before claiming the specified tax
2017
Tax Facts 2016 42
Income tax
Index

Introduction

Welcome

Business taxation Termination


Planning tip! payments (A x B /15) C where:
Transfer Pricing Your 2016 made
Payments tax return is due by with
in connection 31 October
the A = average annual taxable remuneration for Contact us:
2017. If your total
termination of anincome for 2017
employment, onisretirement
less than the last 3 years service
Financial Services that
or oninremoval,
2016 consider basingfor
may qualify your
onepreliminary
of the
tax payment
following taxfor 2017 on the
exemptions estimated
(the highest 2017 B = number of complete years service
Corporate - withholding taxes (WHT)
liability.
exemption usually applies):
C = net present value of any future tax free
Tax treaties
Basic Exemption - 10,160 with an lump sum entitlement from an occupational
Value added tax (VAT) additional 765 for each complete year of pension scheme. No reduction applies where
service. Generally applicable where an the individual irrevocably waives their right to
Stamp duty Pat Mahon
employees length of service is short. the pension lump sum
Partner
Relevant contracts tax (RCT) Increased Exemption - the basic exemption The maximum exemption available in respect t: 353 1 792 6186
may be increased by up to 10,000. The of termination payments is restricted to a e: pat.mahon@ie.pwc.com
Interest
additional amount is reduced Euro for Euro lifetime limit of 200,000. Termination
Local Property Tax by the net present value of any future tax payments in excess of the applicable
free lump sum entitlement from an exemption are subject to tax and the Universal
Income tax
occupational pension scheme. No reduction Social Charge (USC) but not PRSI.
Employee taxation applies where the individual irrevocably Termination payments made in connection
waives their right to the pension lump sum. with the death of an employee or on account
Employee share schemes It cannot be claimed if an exemption other of injury to or disability of an employee are
than the Basic Exemption has been used by also subject to the 200,000 exemption limit. Frances Smith
PRSI
the individual in the previous ten tax years. Senior Manager
Prior approval by Irish Revenue is no longer Special rules apply where two or more
Universal Social Charge t: 353 1 792 6141
required, but employers still need to check termination payments are made by the same
e: frances.smith@ie.pwc.com
Pension schemes with the employee that the criteria have or associated employers.
been met.
Capital gains tax Certain reliefs associated with termination
Standard Capital Superannuation Benefit payments have recently been abolished. In
Capital acquisitions tax (SCSB) - generally for those employees with particular, Foreign Service Relief was
Local taxes long service/high earnings but dependent abolished from 27 March 2013 and Top
on pension choices of employee. It is based Slicing Relief was abolished from 1 January
Excise
Customs and excise on average earnings and length of service 2014.
and is calculated as follows:
Tax contacts Statutory redundancy payable under the
Withholding tax on Redundancy Payments Acts 1967-2012
Appendix 1 payments from Ireland continues to be exempt from tax, USC and
Appendix 2 Withholding tax on PRSI.
payments to Ireland

2017
Tax Facts 2016 43
Employee taxation
Index

Introduction

Welcome

Business taxation Benefits-in-kind


Termination (BIKs) - general
payments BIK on preferential
A = average annual taxable loans
remuneration for Planning tip! by an employer of a monthly
the provision
the last 3 years service or annual bus/train/Luas pass for
Transfer Pricing The majority
Payments madeof employee benefits
in connection withare
thesubject In calculating the BIK charge in respect of Ensure you know what counts as service for
employees. If certain conditions are met, it
to PAYE, PRSI
termination ofand the Universalon
an employment, Social
retirement preferential
B = number loans from employers,
of complete the
years service statutory redundancy, tax exemptions and
Financial Services is possible to provide such travel passes by
Charge
or (USC). may
on removal, The taxable
qualify benefit
for one is
oftreated
the specified rates applicable for 2016 are 4% ex-gratia purposes.
reducing gross salary.
as notional
following taxpay from which
exemptions (thePAYE,
highestPRSI and C = netloans)
(home present
andvalue
13.5%of any future
(other tax The
loans). free
Corporate - withholding taxes (WHT)
USC are deducted.
exemption usually applies): lumpcharge
BIK sum entitlement from
arises on the an occupational
difference between with effect from 22 October 2015, the
Tax treaties pension
the scheme.
interest on theNo reduction
loan applies where
at the specified rate provision by an employer of a voucher or a

BIKBasic
on Exemption
company - 10,160
cars -with an
general the individual
and irrevocably
the interest waives
actually paid their
on the right
loan forto Forbenefit
non-cash more to information
a value not exceeding
Value added tax (VAT) additional 765 for each complete year of 500.Contact:
rules the year.
the pension lump sum No more than one such benefit may
service. Generally applicable where an be given to an employee in a tax year.
Stamp duty The BIK charge applying
employees length of to company
service cars is
is short. The maximum exemption available in respect
BIK on professional
payable under the PAYE system. The cash of termination payments is restricted to a Certain other benefits are, by concession,
Relevant contracts tax (RCT)
Increased
equivalent Exemption
of the private use- the
of basic
a company car
subscriptions treated as tax exempt. For details of the tax
lifetime limit of 200,000. Termination
Interest exemption
is calculated may be
at 30% increased
of the originalbymarket
up to The BIK statutory
payments in excessexemption for professional
of the applicable treatment of employer contributions to
value10,000. The additional
(OMV) with a reductionamount is
for business subscriptions
exemption arewas removed
subject to taxfrom
and 2011. The
the Universal occupational pension schemes, refer to the
Local Property Tax reduced
travel Euro for Euro by the net present
over 24,000km. taxableCharge
Social benefit(USC)
is treated as notional
but not PRSI. pay section Pension schemes on pages 51-55.
Income tax value of any future tax free lump sum from which PAYE,
Termination paymentsPRSImade
and the USC are
in connection
A further reduction
entitlement fromis an
available on a euro
occupational for
pension deducted. There Where an Maryindividual
OHarais obliged to use their
with the death ofare certain limited
an employee or on account
euroscheme.
basis forNo
anyreduction
amount made good by
applies where thean exceptions private car
Partnerbusiness purposes and incurs
for
Employee taxation of injury to where no BIKofwill
or disability arise, including
an employee are
employee directly
individual to the employer
irrevocably in respect
waives their right where thereto
is a 200,000
statutory requirement for expenses t: in relation
353 1 792to6215
the business use of the
also subject exemption limit.
Employee share schemes of the cost of providing or running
to the pension lump sum. It cannot the car.
be membership of a professional body. vehicle (e.g. petrol, insurance,
e: mary.ohara@ie.pwc.com tax) or an
claimed if an exemption other than the Special rules apply where two or more individual incurs subsistence expenses when
PRSI Where an employee is required to work performing their employment duties away
Basic Exemption has been used by the
abroad for an extended period, the notional
BIK on travel
termination payments passes and
are made small
by the same
Universal Social Charge individual in the previous ten tax years. benefits
or associated employers. from their normal place of work, subject to
pay is reduced by reference to the number of certain conditions these expenses may be
Prior approval by Irish Revenue is no
Pension schemes days spent working abroad. This is conditional The following
Certain reliefs benefits
associatedarewith
exempt from
termination reimbursed by the employer tax-free up to the
longer required, but employers still need
on the employee travelling abroad without the income tax:
payments have recently been abolished. In level of the prevailing civil service rates.
Capital gains tax to check with the employee that the
car and the car not being available for use by particular, Foreign Service Relief was
criteria have been met. the provision of new bicycles and/or
family or household members. abolished from 27 March 2013 and Toprelated
Capital acquisitions tax safety equipment to employees up to a cost Sean Walsh
Standard Capital Superannuation Benefit Slicing Relief was abolished from 1 January
There is a 20% relief from notional pay on of
2014.1,000, provided the bicycle is used for Senior Manager
Local taxes (SCSB) - generally for those employees
cars for employees whose annual business travel between home and the normal place t: 353 1 792 6543
with long service/high earnings but e: sean.walsh@ie.pwc.com
Customs and excise
Excise travel exceeds 8,000km, who spend 70% or of work redundancy
Statutory or travel between
payablework places.
under the The
dependent on pension choices of
more of their time away from their place of exemption Payments
Redundancy can only be claimed
Acts once in a
1967-2012
Tax contacts employee. It is based on average earnings
work on business and who do not avail of the five yeartoperiod.
continues If certain
be exempt fromconditions
tax, USC andare
and length of service and is calculated as
Appendix 1 Withholding tax on tapering relief for high business travel. met, it is possible to provide the benefit by
PRSI.
payments from Ireland follows:
reducing gross salary.
Withholding tax on
Appendix 2 payments to Ireland (A x B /15) C where:

2017
Tax Facts 2016 44
Employee taxation
Index

Introduction

Welcome

Business taxation Benefits-in-kind (BIKs)


The following travel and - general
subsistence rates may beBIK on preferential
paid tax-free loanstravel in
for genuine business work places. The exemption can only be
Ireland subject to certain limits and conditions. (Alternative rates apply in respect of time spent claimed once in a five year period. If
Transfer Pricing The majority of employee
working abroad. The ratesbenefits are subject
are dependent on workIn calculating
location the BIK
and other charge in respect of
factors). certain conditions are met, it is possible to
to PAYE, PRSI and the Universal Social preferential loans from employers, the provide the benefit by reducing gross
Financial Services
Motor(USC).
Charge travelTherates
taxable benefit is treated specified rates applicable for 2016 are 4% salary.
Corporate - withholding taxes (WHT) as notional pay from which PAYE, PRSI and (home loans) and 13.5% (other loans). The
USC are deducted. BIK charge arises on the difference between the provision by an employer of a monthly
Tax treaties Subsistence rates - within Ireland the interest on the loan at the specified rate or annual bus/train/Luas pass for
BIK on company cars - general and the interest actually paid on the loan for employees. If certain conditions are met,
Value added tax (VAT)
rules the year. it is possible to provide such travel passes
Stamp duty The BIK charge applying to company cars is by reducing gross salary.
Travel and subsistence expenses BIK on professional
payable under the PAYE system. The cash
Relevant contracts tax (RCT) for Non-Executive Directors subscriptions with effect from 22 October 2015, the
equivalent of the private use of a company car
(NEDs) provision by an employer of a voucher or
Interest is calculated at 30% of the original market The BIK statutory exemption for professional a non-cash benefit to a value not
From 1
value January
(OMV) 2016,
with non-resident
a reduction NEDs are
for business subscriptions was removed from 2011. The
Local Property Tax exceeding 500. No more than one such
exemptover
travel from income tax, USC and PRSI on
24,000km. taxable benefit is treated as notional pay benefit may be given to an employee in a
vouched travel and subsistence costs incurred from which PAYE, PRSI and the USC are
Income tax A tax year.
forfurther reduction
the purposes is available
of attending on a meetings
board euro for deducted. There are certain limited
Employee taxation euro basis
in Ireland. for any amount made good by an exceptions where no BIK will arise, including Certain other benefits are, by concession,
employee directly to the employer in respect where there is a statutory requirement for treated as tax exempt. For details of the tax
Employee share schemes of the cost of providing or running the car. membership of a professional body. treatment of employer contributions to
PRSI Where an employee is required to work occupational pension schemes, refer to the
abroad for an extended period, the notional
BIK on travel passes and small section Pension schemes on pages 52-55.
Universal Social Charge
pay is reduced by reference to the number of
benefits
Pension schemes days spent working abroad. This is conditional The following benefits are exempt from Planning tip!
on the employee travelling abroad without the income tax:
Capital gains tax car and the car not being available for use by If employees are contributing to the running
family or household members. The following benefits are exempt from costs of the car, consider whether such
Capital acquisitions tax income tax: payments can be structured to reduce the
There is a 20% relief from notional pay on BIK charge.
Local taxes the provision of new bicycles and/or
cars for employees whose annual business
Customs and excise
Excise travel exceeds 8,000km, who spend 70% or related safety equipment to employees up
more of their time away from their place of to a cost of 1,000, provided the bicycle is
Tax contacts work on business and who do not avail of the used for travel between home and the
Withholding tax on tapering relief for high business travel. normal place of work or travel between
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland

2017
Tax Facts 2016 45
Employee taxation
Index

Introduction

Welcome

Business taxation Unapproved


Travel employee share
and subsistence commercial reasons. The permitted disposal of shares may give rise to a capital
Transfer Pricing
schemes abatement is determined by the period of
Where an individual is obliged to use their private car for business purposes and incurs
gains tax liability.
For more information
years for which the restriction applies (e.g.
expenses
Unapproved in relation
share to option
the business use of the vehicle
schemes 10%(e.g.
for apetrol, insurance,
one-year tax)20%
restriction, or anfor a Contact:
Save As You Earn (SAYE) approved
Financial Services
individual incurs subsistence expenses when performing their employment duties
two-year restriction) up to a maximum away from
60% share option schemes
Where
their an employee
normal place ofreceives an unapproved
work, subject to certain conditions these expenses may be reimbursed by
Corporate - withholding taxes (WHT) abatement for a restriction of greater than five
share
the option, a
employer chargeup
tax-free to to
income tax of
the level arises on
the prevailing civil service rates. Options under a Revenue approved SAYE
exercise. Income tax may also arise at grant if years. The abated market value will also be
Tax treaties scheme can be granted at a price discounted
The following
the option is attravel and subsistence
a discount ofmay beused
rates
and is capable paid when calculating
tax-free for genuinethebusiness
USC andtravel
employee
in by up to 25% of the market value of the share.
Value added tax (VAT) Ireland subject to
being exercised 7 certain limits
years after theand of grant. (Alternative rates apply in respect of timeof
dateconditions. PRSI exposures. Employer withholding spent To fund the exercise of the option, employees
working abroad.
The taxable amountTheonrates are dependent
exercise on workincome
is the excess location tax,
andUSC andfactors).
other employee PRSI through
must commit to regular monthly savings
Stamp duty the PAYE system is required. If shares are
of the market value of the share over the (maximum 500) from after-tax income, over
Motor travel rates awarded subject to forfeiture and a qualifying Tara Murray
Relevant contracts tax (RCT) option price. Income tax, the Universal Social a period of 36 or 60 months. The SAYE
forfeiture ultimately occurs, employees may Director
Charge (USC) and employee PRSI must be scheme must be open to all employees on
Interest Official km in a Engine capacity Engine
seek tax, capacity
USC and PRSI Engine
rebates capacity
where tax is t: 353 1 792 5465
remitted by the employee along with a Form similar terms. Subject to certain
calendar year up to 1,200cc 1,201cc
paid in toyear
the 1,500cc
of acquisition.over 1,500cc e: tara.g.murray@ie.pwc.com
RTSO1 within 30 days of exercise. requirements, options granted under SAYE
Local Property Tax
(cent) (cent) (cent) schemes are not liable to income tax on grant
Free or discounted share schemes PRSI position for unapproved share
Income tax or exercise. However, the gain on exercise is
Up to 6,437km 39.12 awards and share
46.25 options 59.07
Where free or discounted shares are awarded, subject to employee PRSI and USC (collected
Employee taxation All forms of share based remuneration28.46 arevia employer payroll withholding for current
a 6,438km
tax charge and over for the recipient. The
arises 21.22 23.62
Employee share schemes taxable benefit is equal to the fair market now liable to an employee PRSI charge. There
employees). Capital gains tax may arise on the
value of the shares at the date when beneficial is no employers PRSI charge on any share sale of the shares.
PRSI Subsistence rates -less
ownership is transferred, within Ireland
the employees
Universal Social Charge purchaseOvernight
price, if any. As a(from
rates general rule, 2015) Revenue
1 July
approved employee
Day rates (from 1 July 2015)
Restricted Stock Unit (RSU) plans also fall share schemes Colm Waters
Pension schemes normal rate reduced rate
within this category. Employers are obliged to detention rate 10 hours between 5 & Senior Manager
Approved profit sharing schemes t: 353 1 792 6531
withhold income tax, USC and employee PRSI or more 10 hours
Capital gains tax Employees are exempt from income tax on e: colm.waters@ie.pwc.com
through
125 the PAYE system 112.50 when the shares are
62.50 33.61 14.01
delivered to employees. shares received, up to the value of 12,700
Capital acquisitions tax
Notes: The day rate applies in respect of a continuous absence ofannually, fromfrom
5 hours or more Revenue approved
the employees normalprofit
place of
Local taxes work, provided the employee is not absent at a place within 8km of home orschemes.
sharing normal placeHowever,
of work. Advice should be
employee taken
PRSI
Restricted shares and forfeitable
before proceeding with any payments.
shares and USC apply on appropriation and must be
Customs and excise
Excise collected via employer payroll withholding.
Where
Travel share
and awards are restricted
subsistence such that for
expenses Non-Executive
Significant employer PRSI Directors
savings are(NEDs)
still
Tax contacts the individual is precluded from selling the
From 1 January 2016, non-resident NEDs are exempt from income
available. To avoidtax,anUSC and tax
income PRSI on vouched
liability, the travel and subsistence costs incurred for the
Appendix 1 Withholding tax on shares
purposes forofa attending
certain period
board ofmeetings
time, andincertain
Ireland. shares must be held in trust for a total of three
payments from Ireland
other conditions are met, the taxable value of years. The profit sharing scheme must be
Withholding tax on
Appendix 2 payments to Ireland the
Withshares
effectcan
frombe1abated.
JanuaryThe 2017,prohibition
vouchedon travel and subsistence
available costs incurred
to all employees by and Irish
on similar terms. resident
A NED will also be exempt from income tax,
disposal
USC and mustPRSI,be absolutethat
provided andtheir
for genuine
income from that office does not exceed 5,000 per annum.

2017
Tax Facts 2016 46
Employee share schemes
Index

Introduction

Welcome

Business taxation Unapproved employee share the relevant tax


commercial year. The
reasons. In the case of approved
permitted Revenue approved employee
Transfer Pricing
schemes profit sharing
abatement schemes, thebytrustees
is determined alsoof
the period have share schemes
separate
years for e-filing
which thereporting obligations
restriction appliesto meet
(e.g.
Financial Services Unapproved share option schemes by 31for
10% October following
a one-year the end20%
restriction, of the
fortax
a year. Approved profit sharing schemes
Where an employee receives an unapproved two-year restriction) up to a maximum 60% Employees are exempt from income tax on
Corporate - withholding taxes (WHT)
share option, a charge to income tax arises on Tax treatment
abatement of loans
for a restriction from
of greater than five shares received, up to the value of 12,700
exercise. Income tax may also arise at grant if employee benefit schemes
years. The abated market value will also be annually, from Revenue approved profit
Tax treaties
the option is at a discount and is capable of used when calculating the USC and employee sharing schemes. However, employee PRSI
New anti-avoidance legislation was
Value added tax (VAT) being exercised 7 years after the date of grant. PRSI exposures. Employer withholding of and USC apply on appropriation and must be
introduced in 2013 to counteract tax
The taxable amount on exercise is the excess income tax, USC and employee PRSI through collected via employer payroll withholding.
avoidance schemes where an employer,
Stamp duty the PAYE system is required. If shares are
of the market value of the share over the instead of paying salary or bonus, places Significant employer PRSI savings are still
option price. Income tax, the Universal Social awarded subject to forfeiture and a qualifying available. To avoid an income tax liability, the
Relevant contracts tax (RCT) funds in an unapproved employee benefit
Charge (USC) and employee PRSI must be forfeiture ultimately occurs, employees may shares must be held in trust for a total of three
scheme (usually a discretionary trust located
Interest remitted by the employee along with a Form seek tax, USC and PRSI rebates where tax is years. The profit sharing scheme must be
outside the State) or other structure from
mployer reporting requirements paid in the year of acquisition.
RTSO1 within 30 days of exercise. which an employee (including former or available to all employees on similar terms. A
Local Property Tax
Companies are required to submit annual future employees or any connected person) disposal of shares may give rise to a capital
Free orreporting
returns discounted share schemes
any unapproved share PRSI position for unapproved share gains tax liability.
Income tax receives, on or after 13 February 2013, loans
scheme activity during the year. This awards and share options
Where free or discounted shares are awarded, or other assets from the scheme with no tax
Employee taxation information is reportable on Form RSS1. Only All forms
arising of share
under based
general or remuneration
benefit-in-kindare Save As You Earn (SAYE) approved
a tax charge arises for the recipient. The
the grant, exercise, release and assignment of now
incomeliable
taxto an employee
provisions. ThisPRSI charge. There
anti-avoidance share option schemes
Employee share schemes taxable benefit is equal to the fair market
share options and other similar rights are is no employers
legislation PRSI charge
is consistent on any share
with recently enacted
value of the shares at the date when beneficial Options under a Revenue approved SAYE
PRSI required to be declared on Form RSS1 and, based remuneration.
UK legislation intended to combat what is
ownership is transferred, less the employees scheme can be granted at a price discounted
from 2015, must be filed electronically by described as disguised remuneration.
Universal Social Charge purchase price, if any. As a general rule, by up to 25% of the market value of the share.
employers. The statutory reporting deadline is
Restricted Stock Unit (RSU) plans also fall Planning
These newtip!
anti-avoidance measures will not To fund the exercise of the option, employees
Pension schemes 31 March following the end of the relevant tax
within this category. Employers are obliged to apply to schemes thatofare approved must commit to regular monthly savings
year. Other share awards which are subject to
withhold income tax, USC and employee PRSI Employer PRSI costs 10.75% couldbybeIrish
saved (maximum 500) from after-tax income, over
Capital gains tax employer payroll withholding (e.g. RSUs, Revenue
by such asemployees
remunerating Approved Profit Sharing
with shares in the
through the PAYE system when the shares are employer
Schemes,or parent company
Employee rather thanTrusts
Share Ownership cash. a period of 36 or 60 months. The SAYE
Restricted shares, Forfeitable shares) are not
Capital acquisitions tax delivered to employees. or Occupational Pension Schemes. Revenue scheme must be open to all employees on
required to be reported on Form RSS1.
have also confirmed that these provisions are similar terms. Subject to certain
Local taxes Withholdings due on such share awards should
Restricted shares and forfeitable requirements, options granted under SAYE
be remitted with the companys P30 return for not intended to impact on the current tax
shares Planning schemes are not liable to income tax on grant
Customs and excise
Excise the month in which the shares are delivered. treatment tip!
of unapproved share option
schemes, restricted shares to
(clog schemes) or or exercise. However, the gain on exercise is
Where sharebenefit
The taxable awards areassociated
and restricted such that Employees may be entitled claim a reduction
Tax contacts of between 10% and 60% in the taxable value of
RSUs. subject to employee PRSI and USC (collected
the individualshould
withholdings is precluded from in
be reported selling
the the
company shares received if there is an absolute via employer payroll withholding for current
Appendix 1 Withholding tax on shares for aannual
companys certainend-of-year
period of time, and certain
P35 return.
payments from Ireland restriction imposed on the sale of the shares employees). Capital gains tax may arise on the
other conditions are met, the taxable value of and other conditions are met.
Annual scheme returns areThe
alsoprohibition
required for sale of the shares.
Appendix 2 Withholding tax on
payments to Ireland the shares can be abated. onall
approvedmust
disposal sharebeschemes.
absoluteThe
andreporting
for genuine
deadline is also 31 March following the end of

Tax Facts 2017 47


Employee share schemes
Index

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

Tax Facts 2017 48


PRSI
Index

Introduction

Welcome

Business taxation PRSI classification of working


Rates Self-employed PRSI (Class S)
Transfer Pricing
directors Self-employed persons are liable for PRSI
Earnings Employer Employee
Before 1 July 2013, the PRSI status of working contributions in respect of income from a
Financial Services Class A was
- most employed
directors decided on a persons
case-by-case basis trade or profession or from investment
Corporate - withholding taxes (WHT) under general employed vweek
38 - 352 inclusive per self-employed 8.5% Nil income. The contributions are payable on
352.01 - including
principles, 424 per week
the guidelines outlined 8.5% 4%* income net of capital allowances. The
Tax treaties in424.01
the Codeperofweek or more
Practice for Determining the 10.75% 4% minimum contribution payable for 2017 is
Employment or Self-employment Status of 500. Payment must be included with
Value added tax (VAT) Class S - self-employed people, including
Individuals. preliminary tax, which is payable on or before
certain company directors N/a 4%
Stamp duty 31 October each year.
From 1 July 2013, proprietary directors who
Relevant contracts tax (RCT) *Subject to PRSI Credit. Invalidity Pension and Treatment benefit
own or control 50% or more of the
shareholding of the company, either directly entitlements will be extended to self-
Interest Employee/Employer PRSI Certain taxable lump sum payments made to employed individuals for the first time during
or indirectly, are considered self-employed
(Class A) employees on leaving an employment 2017.
Local Property Tax contributors and are liable to pay PRSI at Class
(including redundancy and ex-gratia) are not
PRSI is charged
S on income from onthe
employment
company. earnings
Interestingly,
Income tax liable to PRSI. However, the Universal Social
including
the Act also most benefits.
provides thatEmployees (known
such directors are
Charge (USC) may still need to be applied to Planning tip!
as employed
also insurablecontributors
under Class Sin inPRSI
respect of
Employee taxation any taxable element of such payments. Most
legislation)
duties carriedwho outearn lessperiod
in the than 352
beforein1any
July The question of social insurance liability
employed persons are liable to PRSI at Class
Employee share schemes week are
2013. not required
However, shouldtoa pay employee
working PRSI
director for Irish people working abroad and those
A; however, other classes may apply in certain
in that week,
believe however
that Class employer
S should PRSIbefore
not apply is still coming to Ireland to take up employment
PRSI circumstances (e.g. certain public sector
due.date,
this Where theformal
then employees weekly earnings
confirmation must be should not be overlooked. Careful planning
employments or employees aged over 66).
are between
obtained from 352.01 and 424,ofthe
the Department 4%
Social for international assignments can help to
Universal Social Charge
employee PRSI charge is reduced by a tapered
Protection. All share awards, share options and Revenue reduce or eliminate the often higher cost
Pension schemes PRSI credit up to a maximum of 12 per week. approved share schemes (APSS / SAYE) are of social insurance abroad, particularly in
The PRSI class of individuals who own or mainland Europe. However, the impact in
liable to employee PRSI. Share-based
Capital gains tax Employed
control lesscontributors
than 50% ofwho the are also self- of
shareholding respect of benefits available must also be
remuneration is generally exempt from
assessed
the company taxpayers are liable
will continue toto
bePRSI on
determined considered.
Capital acquisitions tax employer PRSI but liable to USC. No
unearned
under income
general (e.g. rental profits).
principles.
deduction is available in calculating either
Local taxes Previously, employed contributors were
The above rules do notPRSI
apply to the PRSI on employer or employee PRSI contributions in
exempt from making contributions
classification of non-executive directors. In respect of payments made by employees to
Customs and excise
Excise such income. This change applies to Planning tip!
the absence of an employment contract, fees pensions.
employees with significant amounts of
Tax contacts paid to such directors will(generally
generally be subject Employer pension contributions qualify for full
non-employment income more
to Class S contributions. relief in calculating employee and employer
Appendix 1 Withholding tax on than 5,000 per year) who, for this reason,
payments from Ireland PRSI contributions. This is something that
are required to submit an annual Form 11
Withholding tax on should be considered by employers when
Appendix 2 payments to Ireland self-assessment tax return. Such unearned
deciding on a reward policy for employees.
income is liable to PRSI under Class K at 4%.

2017
Tax Facts 2016 49
PRSI
Index

Introduction

Welcome

Business taxation The Universal


PRSI classificationSocialofCharge
working (USC)
Transfer Pricing
directors
The USC is payable on gross income after relief for certain trading losses and capital
allowances,
Before 1 Julybut before
2013, the relief for pension
PRSI status contributions.
of working
Financial Services
directors was decided on a case-by-case basis
Corporate - withholding taxes (WHT) under general employed v self-employed
principles, including the guidelines outlined
Tax treaties in the Code of Practice for Determining the
Employment or Self-employment Status of
Value added tax (VAT)
Individuals.
Stamp duty
From 1 July 2013, proprietary directors who
Relevant contracts tax (RCT) own or control 50% or more of the
shareholding of the company, either directly
Interest or indirectly, are considered self-employed
contributors and are liable to pay PRSI at Class
Local Property Tax
S on income from the company. Interestingly,
Income tax the Act also provides that such directors are
also insurable under Class S in respect of
Employee taxation duties carried out in the period before 1 July
Employee share schemes 2013. However, should a working director
believe that Class S should not apply before
PRSI this date, then formal confirmation must be
obtained from the Department of Social
Universal Social Charge Protection.
Pension schemes
The PRSI class of individuals who own or
Capital gains tax control less than 50% of the shareholding of
the company will continue to be determined
Capital acquisitions tax under general principles.
Local taxes The above rules do not apply to the PRSI
classification of non-executive directors. In
Excise
Customs and excise
the absence of an employment contract, fees
Tax contacts paid to such directors will generally be subject
to Class S contributions.
Withholding tax on
Appendix 1 payments from Ireland
Withholding tax on
Appendix 2 payments to Ireland

2017
Tax Facts 2016 50
Universal Social Charge
Index

Introduction

Welcome

Business taxation The Universal


Certain Social Charge
rules apply throughout (USC) For PRSA plans (see below) an unrelieved
the pensions pension plans. The percentage of an
cycle. These are summarised below as benefit-in-kind charge arises on the excess individuals earnings (subject to the upper
Transfer Pricing The USC is payable on gross income after relief forwhere
certain trading contributions
losses and capital
follows: employer to the PRSA limit of 115,000 above) that qualifies for tax
allowances, but before relief for pension contributions.
(when combined with the employees) exceed relief each year is based on age as follows:
Financial Services
Pension contribution rules - the amount of the age related contribution limits outlined
Corporate - withholding taxes (WHT) pension
2017 contributions that can be madeRate
Bands by 2016
below.Bands
The unrelieved contribution can be Rate ly where both an employer and an individual
individuals and employers carried forward and relieved in future years pay into a PRSA plan for that employee. For
Tax treaties 0 - 12,012 .5% 0 - 12,012 1%
subject to the age related contribution limits. certain specified occupations and professions
Pension accumulation rules the limits on
12,013 - 18,772 2.5% 12,013 - 18,668 3% a minimum rate of 30% applies for individuals
Value added tax (VAT) how much pension benefits can be built up
Pension contribution rules - for aged under 50.
in a tax to
18,773 efficient
70,044manner for an individual5% 18,669 to 70,044 5.5%
Stamp duty individuals, the earnings limits
Pension distribution
70,045 and above rules - the options that8% 70,045 and above 8% Pension accumulation rules
Relevant contracts tax (RCT) are available at retirement and their tax There are tax rules and limits regarding the lifetime pensions limit
100,000 and above 11% 100,000 and above
personal contributions made to approved11%
treatment
Interest (self-assessed income (self-assessed income
pension plans. These limits apply to Whilst there are annual earnings and age
only)
Local Property Tax Pension contribution rules - for only) employees who pay towards occupational related limits for individual pension
employers pension contributions, (the contribution rules can be
Individuals aged over 70 or individuals in possession of a full medical card schemes
pay the USC oratAdditional Voluntary
a maximum 2.5% rate on
Income tax income above 12,012 provided their aggregate income for theContribution (AVC)
year is 60,000 or arrangements.
less. Aggregate The not
income does rules more generous where employers make
Employers
include qualify
payments forDepartment
from the tax relief ofwhen
Socialthey
Protection. A GP only card is not considered to be a full medical card for pension contributions to an occupational
also apply where individuals contribute to
Employee taxation make
USC pension contributions to approved
purposes. pension scheme) there is also an overall
Retirement Annuity Contracts (RACs) and
pension plans on behalf of their employees. lifetime pensions limit beyond which pension
Employee share schemes where individuals and their employers both Contact us:
Employees, on their part, are exempt from funds cease to be tax efficient. The rules are
Planning tip! pay into a Personal Retirement Savings
Income Tax, PRSI and Universal Social Charge broadly as follows:
PRSI Account (PRSA):
(USC) welfare
Social where those employer
payments contributions
are not considered
Universal Social Charge are made toearnings
reckonable an occupational
and arepension
exempt scheme.
from individuals can make pension contributions the maximum tax relieved pension fund
Previously,
PRSI and the a liability
Universal to Social
USC arose where
Charge. In the based on their annual earnings limit from all pension arrangements is 2
Pension schemes employer
certain made pensionthere
circumstances, contributions
is now the on million (from 1 January 2014)
(employment or self-employed income)
behalf of for
potential employees to a Personal
these payments to beRetirement
made subject to a maximum annual earnings limit
Capital gains tax a higher personal fund threshold of up to
Savings to
directly Account (PRSA).ItThe
the employer. USC liability
is possible with no of 115,000 2.3m can be agreed with the Revenue
Capital acquisitions tax longer applies
careful planning in to
respect
reduceof both
employer
employee Ken OBrien fund threshold has been
personal contributions to a pension plan (unless a personal
contributions
and employer on PRSIor after
costs1in
January 2016.
this area where Director
Local taxes qualify for tax relief but not for PRSI or USC previously agreed with Revenue) where the
employees continue to be paid while taking
For occupational pension schemes, there is no relief value t:
of353 1 792 6818pension benefits at 1
an individuals
Excise
Customs and excise certain leave of absence. e: ken.obrien@ie.pwc.com
January 2014 already exceeded the 2
specific monetary limit on the amount of
employer pension contributions that can be Pension contribution rules - for million limit. Applications for a personal
Tax contacts
made but overall pension benefits at individuals, the age related fund threshold should have be made
Appendix 1 Withholding tax on
payments from Ireland retirement must fall within certain limits set limits electronically on or before 1 July 2015 via
by Irish Revenue (see below regarding ROS or PAYE Anytime In such cases, only
Withholding tax on In addition to the earnings limit of 115,000
Appendix 2 payments to Ireland pension distribution rules). pension benefits above the agreed personal
above, there is also an age related limit for
individual pension contributions to approved

2017
Tax Facts 2016 51
Pension schemes
Index

Introduction

Welcome

Business taxation threshold


Certain are apply
rules liable throughout
to penal ratestheofpensions
tax- see For
bePRSA plans
treated as a(see below)
further an unrelieved
benefit and a pension plans. The percentage of an
below These are summarised below as
cycle. benefit-in-kind charge
re-grossing will arises onto
be required the excess
calculate individuals earnings (subject to the upper
Transfer Pricing
follows: where employer
the correct taxcontributions
due to the PRSA limit of 115,000 above) that qualifies for tax
a 20:1 capitalisation factor is applied for the
Financial Services (when combined with the employees) exceed relief each year is based on age as follows:
purposescontribution
Pension of valuing Defined Benefit
rules - the amount(DB)of public service employees can, subject to
the age related contribution limits outlined
pensionscontributions
pension which have accrued
that canatbe1 made
Januaryby certain rules, discharge any such taxes by
Corporate - withholding taxes (WHT) below. The unrelieved contribution can be Age attained Maximum
2104. For the
individuals portion
and of DB pensions
employers way of a reduced pension lump sum, by a
carried forward and relieved in future years during tax year relief
Tax treaties accrued after 1 January 2014, a range of reduced pension over a specified period or
Pension accumulation rules the limits on subject to the age related contribution limits.
age-related valuation factors apply ( from by settlement from their own resources Less than 30 15%
Value added tax (VAT) how much pension benefits can be built up
37: 1 for retirement at age 50 and 22:1 at
in a tax efficient manner for an individual Pension contribution
public sector employees with rules
separate- for 30 but less than 40 20%
age 70)
Stamp duty
Pension distribution rules - the options that
individuals, the earnings
pension arrangements in respect oflimits
private
40 but less than 50 25%
in valuing DB benefits for crystallisations on sector income can elect to encash their
Relevant contracts tax (RCT) are available at retirement and their tax There are tax rules and limits regarding
or after 1 January 2014 the pension is private sector pension, subject to certain 50 but less than 55 30%
treatment personal contributions made to approved
Interest valued before any pension that may be conditions, and pay a once-off tax at their
pension plans. These limits apply to 55 but less than 60 35%
Pension
commuted contribution rules
in favour of a pension - for
lump marginal tax rate, USC and PRSI on a lump
employees who pay towards occupational
Local Property Tax employers
sum sum withdrawal from their private pension. 60 and over 40%
pension schemes or Additional Voluntary
Encashed private pensions are not counted
Income tax where thequalify
Employers aggregate value
for tax reliefof all
whenpension
they Contribution (AVC) arrangements. The rules These are the upper percentage limits that
towards the overall lifetime pensions limit
funds
make (whichcontributions
pension have been crystallised
to approved since 7 also apply where individuals contribute to apply where both an employer and an
Employee taxation December
pension plans2005) at retirement
on behalf exceeds the
of their employees. Retirement Annuity
Pension Contractsrules
distribution (RACs)-and individual pay into a PRSA plan for that
Employee share schemes lifetime pensions
Employees, on theirlimit, the exempt
part, are excess isfrom where individuals and
occupational their employers
pension schemesboth employee. For certain specified occupations
chargeable
Income to exit
Tax, PRSI andtax at 40% (previously
Universal Social Charge pay into
the a Personal Retirement
maximum pensionSavings allowed and professions a minimum rate of 30%
PRSI 41% where
(USC) on or before
those 31 December
employer 2014)
contributions Account (PRSA):
Where an employer establishes an applies for individuals aged under 50.
are made to an occupational pension
in addition, the pension payable to the scheme. individuals pension
can make pension
Universal Social Charge occupational scheme to contributions
provide
Previously, a liability to USC arose
individual, net of the 40% exit tax above,where the based on their annual earnings
pension benefits to its employees at Pension accumulation rules
Pension schemes employer made pension contributions
may be further liable to marginal rate on (employment
retirement, or self-employed
the following income)
is the maximum the lifetime pensions limit
behalf
incomeof employees to a Personal
tax etc, leading to penalRetirement<