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Provisions Added To Irish Finance Bill 2017

by Jason Gorringe,, London

25 October 2017

A number of provisions have been added to Ireland's Finance Bill 2017 and further tax policies announced, having not been announced on Budget day.

Ireland's Finance Minister, Paschal Donohoe, has announced that officials from the Departments of Finance and Agriculture will commence work on assessing progress on the review of tax measures in the agriculture sector, which was last completed in 2014. This assessment will also concentrate primarily on the issue of income stabilization and the issue of information collection and management to comply with EU state aid reporting requirements.

In addition, a number of technical changes are being introduced in the Finance Bill due to the introduction of a real-time pay as you earn (PAYE) system from January 2019, as part of the Government's PAYE Modernisation project.

Next, the Bill provides for a number of amendments to the Taxes Consolidation Act 1997 (TCA 1997), Stamp Duty Consolidation Act 1999 (SDCA 1999), and Capital Acquisitions Tax Consolidation Act. The Bill provides for amendments relating to: the new Mergers and Divisions procedures; new company types and their legal requirements; and outdated references to the Companies Acts (after the Companies Act 2014 came into effect in June 2015 consolidating and amending previous company law statutes).

The Bill also includes provisions on Interest Relief. Section 247 of the TCA 1997 provides for tax relief for companies in respect of interest paid on funds borrowed to invest in or lend to other companies. The Bill legislates for an existing Revenue practice and will allow for interest relief to be claimed where a purchasing company acquires shares in a holding company that holds shares indirectly in a trading company but also where the purchasing company on-lends to a holding company that holds shares indirectly in a trading company.

Legislative changes are also proposed in respect of stamp duty. Presently, residential leases for a term not exceeding 35 years and where the rent does not exceed EUR30,000 (USD35,300) per year are exempt from stamp duty. In previous years the threshold was increased in response to rising rents, with the last such increase taking place in 2008. The Finance Bill increases the threshold for the application of stamp duty to residential leases to EUR40,000 per annum, which should ensure that the majority of renters are under the threshold.

TAGS: Finance | tax | holding company | Ireland | interest | law | stamp duty | Tax

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