Today the Government published its draft Brexit Bill, ‘Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019’.
This Bill covers a diverse range of areas and attempts to address the problems posed by a No-Deal Brexit, whereby the UK would no longer be within the framework of EU Law and leaving the Single Market and Customs Union.
The Bill addresses issues across nine Government departments with a view to protecting Irish citizens, supporting businesses and jobs and securing ongoing access to essential services and products. Some of the areas covered include: health services, electricity regulation, student support, social welfare and taxation.
Taxation Measures
The taxation sections provide for the amendment of Income Tax, Capital Gains Tax, Corporation Tax, Value Added Tax and Stamp Duty legislation in order to ensure continuity for businesses and taxpayers in relation to their current access to certain taxation measures including reliefs and allowances.
A large proportion of Ireland’s tax reliefs and allowances are designed in such a way as to provide symmetry of treatment between taxpayers based in Ireland and other EU/EEA Member States. Post Brexit, taxpayers in or transacting with the UK would no longer be entitled to such reliefs and allowances.
Consequently, this Bill will provide for equivalent treatment for the UK in respect of certain tax measures, as for other EU/EEA Member States.
Examples of some of the principle tax areas covered include:
Income Tax
- key employee engagement programme:definitions amended to extend the definition of qualifying company to entities established in the UK- S128F, TCA1997;
- pensions: provisions extended to allow for the continuation of Irish tax relief for certain contributions to UK based pension schemes;
- offshore anti-avoidance: provisions amended to ensure anti-avoidance provisions currently in place dealing with offshore income and gains also cover the UK – S806; and
- artist’s exemption: the income tax exemption (currently up to €50,000) in relation to certain artists will be extended to include relevant artists resident in the UK as well as those resident in EU/EEA Member States, S195.
Corporation Tax
- group loss relief: provisions amended to include UK resident companies - S410, S411; and
- research & development relief: qualifying area extended for purposes of R&D tax credit claims – S766.
Capital Gains Tax
- definition amended of qualifying company for asset transfers under a scheme of reconstruction or amalgamation - S615; and
- relief from CGT for property purchased between 2011 and 2014. Rules amended to specifically include UK property, S604A.
Value Added Tax
- postponed accounting scheme for import VAT: VAT registered importers will be able to account for the import VAT in their VAT returns. This applies to imports from all third countries including the UK; and
- section 56B authorisations: changes to the conditions to qualify for S56B, including that the 75% turnover test must now be met for 12 months prior to application for S56B authorisation.
Stamp Duty
- relief from stamp duty extended for UK brokers/intermediaries acquiring Irish securities – S75 SDCA 1999;
- definition of qualifying company changed for asset transfers and mergers under a scheme of reconstruction or amalgamation – S80; and
- extension of 1% levy (life) and 3% levy (non-life) on assurance/insurance policies issued by UK based insurers, S124B, S125.
Next Steps
The Bill is scheduled to be fast tracked through the Dail and Seanad over the coming weeks in order to be ready to be signed into law by March 29th should a no deal Brexit be the outcome of the current impasse.
