Finance Bill 2016 was published today, the first step in bringing into legislation the changes announced last week by the Minister in his Budget Statement. See our Budget 2017 analysis.
In addition to what was announced in the Budget, new measures were also introduced in the Bill today.
Some of the more interesting amendments include:
- Section 110 companies - As previously announced, changes have been introduced for Section 110 companies. The use of profit participating loans will be restricted where they are used by qualifying companies in relation to Irish property transactions. To ensure that bona fide securitisations are not restricted by the amendment, the legislation provides that defined Collateral Loan Obligation transactions, defined Commercial Mortgage Backed Securities/Residential Mortgage Backed Securities transactions and defined loan origination businesses are excluded from the amendment.
- Exemptions are also provided in relation to payments made to individuals within the charge to income tax or companies within the charge to corporation tax; Irish or EEA pension funds, or EEA citizens or companies who will pay tax on receipt of the interest, without any deduction for profit participating interest, provided that the payment of the coupon to the EEA citizen or company is not for tax avoidance purposes.
- Irish Real Estate Funds (IREFs) - A new taxation method for fund structures holding Irish real estate has been proposed. IREFs are investment undertakings (excluding UCITS) where 25 per cent of the value of that undertaking is made up of Irish real estate assets. IREFs must deduct a 20% withholding tax on certain property distributions to non-resident investors.
- Help to buy scheme - There have been amendments to the “help to buy” scheme such that the minimum loan to value has been reduced from 80% to 70% to avail of the scheme.
- Country by Country reporting - There is detailed updated legislation around “Country by Country” reporting, which pertains to mandatory automatic exchange of information in line with the EU DAC 4 Directive.
- Offshore tax defaults - As noted in the Budget, there will be no mitigation of penalties or protection against publication in settlements relating to offshore tax defaults, regardless of whether a disclosure is made. There is, however, a window of six months up to 30 April 2017 where the disclosure facility and related mitigation of penalties may apply.
- Tax defaulters - With regard to publication of tax defaulters, the rule has been clarified such that any amounts included within a qualifying disclosure will be excluded from the amounts to be published. The limit for publication remains at €33,000.
- Bank levy - The bank levy has been extended for five years to 2021. For 2017, the levy will be computed at 59% of DIRT paid by liable financial institutions.
- Carbon tax - Fuel inputs in highly efficient combined heat and power plants are now fully exempt from carbon tax.
- VAT - There have also been changes to the primary method of apportionment to calculate the deductible VAT where goods and services are used for Vatable and exempt purposes. The primary method should be turnover based with alternatives available where this primary method does not offer a true reflection of the split.
- Anti-avoidance - There has been a tightening of various anti-avoidance provisions, including bringing non-domiciled individuals within the scope of the “transfer of assets” abroad provisions.
Grant Thornton will publish a detailed analysis of all the provisions in the Finance Bill following enactment, expected to be in December 2016.
Please see below a link to documents published today by the Department of Finance in relation to Finance Bill 2016.
If you have any queries in relation to any of the Finance Bill 2016 changes, please give your usual Grant Thornton contact a call.