Finance Bill 2020 published on 22 October includes the legislative provisions for the tax measures announced as part of Budget 2021 as well as introducing new measures and amendments to the Irish tax code.  Here we focus on the measures not announced as part of Budget 2021 and the more significant measures contained in the Bill and proposed amendments introduced at Committee Stage and Report Stage of the Bill.


Finance Bill was signed into law on  19 December 2020 and enacted as Finance Act 2020 (Act No. 26 of 2020).

Corporation Tax

  • The Bill provides the legislation to amend the IP allowance regime. This change means that IP falls within normal balancing charge rules, so that if a company sells the IP any allowances claimed to date will be clawed back, depending on consideration received.
  • A new controlled foreign company (“CFC”) anti-avoidance provision whereby any of the following exemptions will not apply to the extent the CFC is resident in a country listed on the EU list of non-co-operative jurisdictions for tax purposes:
    • low profit margin exemption
    • low accounting profit exemption
    • effective tax rate exemption

This is to take effect for accounting periods commencing on or after 1 January 2021.

  • There are a number of technical changes to the anti-hybrid legislation, such as ensuring there is no economic mismatch as a result of a CFC charge to tax.
  • On the transfer pricing side, there are a number of changes to the provisions. The documentation requirements have been updated to link into the definition of a relevant person.  Some further technical changes have been introduced around definitions of qualifying resident persons and how actual results of arrangements tie in with chargeable profits, gains or losses from a transfer pricing perspective.
  • Committee Stage amendments provide for technical changes to transfer pricing rules including amendments to the revised domestic exemption. The amendments were necessary to include certain bona fide non-domestic trading arrangements within the exclusions from transfer pricing rules. The law as currently proposed will bring many typical group arrangements between Irish companies into the scope of transfer pricing.
  • A proposed Report Stage amendment is to change the effective date of new transfer pricing legislation from January 2021 to a date subject to Commencement Order.
  • There is an amendment to the emissions based capital allowances related to business cars acquired from 1 January 2021. The definitions pertaining to CO2 and categories of cars have been updated in line with the new EU emissions testing system. 
  • Proposed Report Stage amendments include a new accelerated wear and tear allowances on farm safety equipment. A list of qualifying equipment is provided in the new section along with the relevant conditions in order for equipment to qualify for accelerated wear and tear allowances. This measure is subject to a Commencement Order.

Income tax

  • New exemptions for payments by the HSE to a carer in respect of a Home Sharing Host Allowance and payments by the HSE in respect of mobility allowance are included.
  • A temporary enhancement to the Help to Buy Scheme was included in the July Stimulus plan and the enhancement was due to expire end Dec 2020, the Bill provides for a 12-month extension to that enhancement.
  • Amendments to the reporting requirements for employers with regard to certain share incentive plans to include for examples cases where a cash equivalent or discount is provided. The Bill also provides for mandatory electronic reporting of convertible securities, restricted share and forfeitable share plans.
  • The tax treatment of the Pandemic Unemployment Payment (PUP) which essentially means that such payments are to be treated like employment income is confirmed in the Bill.
  • The Professional Services Withholding Tax (PSWT) regime is to be modernised to allow the submission of payments and other information electronically. This is subject to Ministerial Commencement Order.

COVID-19 measures

  • Enhancements to the rates of subsidy available under the Employment Wage Subsidy Scheme (EWSS), announced earlier this week, are provided for in the Bill.
  • Details on the Covid Restrictions Support Scheme (‘CRSS’) are included. The scheme first announced on Budget Day will provide financial support to certain businesses. To qualify under the scheme, a business must be able to demonstrate that, because of the Covid restrictions, the turnover of the business in the period for which restrictions are in operation, and for which a claim is made, will be no more than 25% (increased from 20% as announced on Budget Day) of an amount equal to the average weekly turnover of the business in 2019.   We expect detailed guidance from Revenue on this scheme in the coming days.
  • Committee Stage amendments include an appeals mechanism under the CRSS which will enable a business refused entry to the scheme to make an appeal to the Tax Appeals Commission. Such appeal must be made within 30 days of the Revenue’s notice. A simplification measure is proposed for partnerships making a claim for CRSS. The precedent partner can make a claim on behalf of the partnership, previously each partner was required to make a claim individually.
  • A mechanism for dealing with the early lifting of restrictions which may result in a CRSS over claim is included in the Bill. Report Stage amendments include a warehouse provision for over claimed amounts and potential interest accumulating on overpayments after the end of the specified period – 31 March 2021.
  • A number of amendments are proposed at Report Stage to the CRSS. One of the key amendments will allow businesses to claim for an additional one-week payment to assist them in the reopening after a period of Covid restrictions. This extra payment will be paid the week after the restrictions have lifted to assist with re-opening costs. It is payable if Covid restrictions are in place for 3 weeks or more and can be claimed at the end of the restriction period. 
  • Eligibility for the EWSS from 1 January 2021 will be based on a 30% decline in turnover or customer orders in the period 1 January 2021 to 30 June 2021 compared to the same period in 2019. Special rules apply where the business commenced after 1 May 2019.
  • The enhanced EWSS rates from 20 October 2020 to 31 January 2021 are provided for in the Bill.
  • The date for payment of EWSS has been brought forward to be as soon as practical after the payroll is notified to Revenue, generally within 2 working days in order to ease the cash flow burden on employees.
  • Amendments have also been made to the EWSS to allow for an appeals procedure for a taxpayer aggrieved by Revenue’s determination. The appeal must be made to the Tax Appeals Commission within 30 days after Revenue issue an assessment.


  • Revenue will have the power to require a non-established trader to appoint a tax representative who can be held jointly and severally liable for the non-established trader’s VAT liabilities. This will apply where there is no provision for mutual assistance with the country in which the trader is established similar to that which applies between the EU member states. There is an exclusion for non-EU established businesses which use MOSS to account for VAT on TBE supplies.
  • The EU VAT Directive contains exemptions for supplies to NATO forces and the Irish VAT legislation is to be amended to include these exemptions. With effect from 1 July 2022 these exemptions will also apply to supplies to member state forces engaged in a common defence effort under the EU’s Common Security and Defence Policy.
  • The temporary zero-rating of personal protection equipment, thermometers, hand sanitiser, and other equipment supplied to the HSE and other health facilities for use in the delivery of Covid-19 related health care services is provided for in the Bill. This measure is extended to 30 April 2021.
  • Certain technical amendments in the areas of restaurant and catering services and the provision of guest and holiday accommodation to align Irish VAT legislation with the Principal VAT Directive. The definition of immovable goods is to be amended so that is now aligned with the EU definition of immovable property.
  • Extension of the VAT zero-rating to include services meeting the direct needs of certain sea-going vessels and aircraft.
  • Clarification that the reduced rate of VAT on admission fees to amusement parks/fairgrounds is confined to such admissions.
  • Report stage amendments propose a deferral in the change to the VAT rate on candles and similar products. Such products will no longer qualify for the zero rate of VAT from 1 January 2022 (was 1 January 2021). 
  • Supplies of menstrual cups, sponges and pants will be subject to the 13.5% reduced rate.

Capital taxes

  • There are no additional capital gains tax measures. The measures announced on Budget Day are provided for in the Bill.
  • When Business Asset Relief and Agricultural Relief, two capital acquisitions tax (CAT) reliefs are claimed, a CAT return will have to be filed with Revenue. Previously this was not required where the taxable value after relief was less than 80% of the relevant class threshold.
  • From next year the annual stamp duty levy on financial institutions is to increase from 170% to 308% of DIRT paid in the 2019 base year.
  • At Committee Stage amendments new Stamp Duty measures have been introduced to deal with the transition from Crest to Euroclear following Brexit.

Tax appeals

The procedures to be followed when a Tax Appeals Commissioner vacates the offices are provided for in the Bill.

Mandatory Disclosure Regime

There is a technical change to the domestic mandatory disclosure regime to confirm the application of penalties. There are several amendments to the EU mandatory disclosure regime to clarify operational aspects of the regime. 

Next step

The Bill is scheduled to be debated in the Dáil from early November and is due to pass to the Seanad in early December.  A common budgetary timeline applies to all EU Member States which means that this Bill will be enacted by the end of the year.  In recent years the president has signed the Bill into law close to Christmas Day.

Further details on Finance Bill 2020 including Committee and Report Stage amendments [ 1057 kb ]