Pension auto-enrolment to commence 30 September 2025

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The long-awaited pension auto-enrolment scheme for workers is finally set to launch on 30 September 2025. This date was confirmed by Social Protection Minister Heather Humphreys as part of Budget 2025.

In the recent Budget, it was announced that Finance Bill 2024 will provide for the taxation of the Automatic Enrolment Retirement Savings Scheme (referred to as AE). According to the Budget publications, the tax treatment

“Aligns as much as possible with that of Personal Retirement Savings Accounts (PRSAs), other than for employee contributions.”

Under the scheme, employer contributions will qualify for tax relief. The growth in the AE funds will also be exempt from tax, and taxed upon drawdown, apart from a 25% tax-free lump sum.

The lump sum having a tax free threshold up to €200,000, will be taxed at 20% between €200,000 and €500,000 and taxed at 40% above €500,000.

It is important to note that while the State will make direct contributions for employees under the AE scheme, no tax relief will be available for employee contributions to AE.

If you have any questions or concerns about how the scheme will impact you or your business, please don’t hesitate to reach out to us here at EcovisDCA. We are here to help and provide you with the latest updates.

Don’t Miss the Income Tax Return Deadline!

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The income tax return filing deadline is fast approaching! While the normal filing date is October 31, 2024, you have until November 14, 2024, if you file and make the appropriate payment through ROS. This extension applies to:

  • Income tax liability balance due for 2023.
  • Preliminary income tax due for 2024 based on the 2023 liability.

It is crucial to file your return, calculate your liabilities, and pay on time to avoid interest and penalties. Gathering documents can take time, so we advise that companies start now to ensure you meet the deadline.

Penalties for Missing the Deadline:

Missing the October 31st deadline can result in daily interest charges and a surcharge. If you submit your 2023 return after October 31, 2024, but before December 31, 2024, the surcharge will be the lesser of:

  • 5% of the tax due, or
  • €12,695

If submitted after December 31, 2024, the surcharge will be the lesser of:

  • 10% of the tax due, or
  • €63,485

These surcharges are calculated on the full tax payable for the year and do not account for any payments on account. For proprietary directors, the surcharge is calculated before deducting PAYE paid during the year.

Get Expert Help

At EcovisDCA, we ensure your tax affairs are handled efficiently and on time. For guidance on preparing your return and calculating the correct liabilities, reach out to us. We’re here to help you meet deadlines and stay stress-free!

Tax Implications of Offshore Funds

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As the landscape of tax legislation continues to evolve, it can be increasingly difficult to navigate the tax treatment of various investment types.

At EcovisDCA, we are here to help clarify the intricacies of offshore funds and their tax implications.

What is an Offshore Fund?

An interest in an offshore fund can be identified as an interest in any of the following:

  • A company outside of Ireland.
  • A unit trust scheme, the trustees of which are not resident in Ireland.
  • Any other arrangements taking effect under foreign law which create rights in co-ownership.

Any investments that do not fall under the above categories will not be classified as an offshore fund.

What is a Material Interest?

Determining whether you have a material interest in an offshore fund depends on two main criteria:

  • Access: Can you expect to access the investment’s value within 7 years?
  • Link to Assets: Is the value of your investment directly tied to underlying assets within the fund?

If these criteria are not met, the investment will also not be classified as an offshore fund.

Where is the Fund Located?

The location of your fund has significant tax implications. To qualify for “favourable” tax treatment, the offshore fund must be:

  • Similar in all material respects to an Irish investment limited partnership.
  • Comparable to an Irish Part XIII investment company.
  • Similar to an Irish regulated unit trust.
  • A UCITS (Undertaking for Collective Investment in Transferable Securities) fund.

Funds not meeting the above criteria, will not be treated as offshore funds.

What is a “Good” Offshore Fund?

“Good” offshore funds are taxed at 41% income tax rate with no PRSI or USC on income. There are however restrictions:

  • There is a deemed disposal every 8 years, meaning the profit is subject to income tax even if no actual disposal takes place.
  • On death, a material interest in a “good” offshore fund is treated as disposed of and immediately reacquired, triggering income tax.

It is important to keep abreast of all changes within the tax landscape. Recently, the Tax Appeals Commissioner ruled in favour of Revenue in two cases where the investments should have been self-assessed under the offshore fund regime. This highlights that offshore fund taxation is becoming more of a focus for Revenue.

Should you require any further advice on business or financial matters, please do not hesitate to contact us here at Ecovis DCA, where we are always happy to help.

Unlocking the Benefits of the R&D Tax Credit: Key Updates for 2024

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For businesses investing in innovation and research, the R&D tax credit can be a game-changer. Whether you’re developing new products, experimenting with cutting-edge technologies, or improving existing processes, this credit offers a valuable opportunity to reduce your tax burden and reinvest in your growth.

What is the R&D Tax Credit?

The R&D tax credit was designed to encourage innovation by helping companies recover a portion of their investment in research and development. It applies to qualifying expenditure related to systematic, investigative, or experimental activities that aim to achieve scientific or technological advancement. This could include activities like developing new software, engineering new products, or resolving technological uncertainties.

Are You Eligible?

To be eligible for the R&D tax credit, companies must meet several key criteria:

  1. Company Structure: The applicant must be a company within the charge of Irish Corporation Tax.
  2. Qualifying R&D Activities: The R&D activities must be systematic, investigative, or experimental in nature and should aim to resolve scientific or technological uncertainties.Qualifying activities can be classified into three categories:
    • Basic research
    • Applied research
    • Experimental development
  1. Location: R&D activities must take place within Ireland, the European Economic Area (EEA), or the UK.
  2. Expenditure: Expenses must be directly related to the R&D activities. Qualifying costs typically include:
    • Staff salaries
    • Subcontracted R&D work
    • Materials
    • Plant and machinery used for R&D

Indirect costs such as recruitment fees, insurance, or travel do not qualify.

How It Works

When your company qualifies for the R&D tax credit, the next step is to claim it. The credit can be claimed through the Revenue Online Service (ROS) on your Corporation Tax Return.

Under the new rules introduced in Budget 2023, companies can opt to have their credit refunded or offset against tax liabilities, offering greater flexibility. If you choose the refund option, the R&D tax credit will be paid out in instalments over three years:

  1. First Instalment: The first €50,000 of your claim will be paid in full in year one (for accounting periods beginning on or after January 1, 2024).
  2. Second Instalment: Three-fifths of the remaining balance will be paid in year two.
  3. Third Instalment: The remaining balance will be paid in year three.

This staged repayment schedule allows companies to benefit from the credit over a period of time, providing a steady cash flow to support ongoing R&D projects.

Additionally, you can choose to offset the credit against other tax liabilities, such as VAT or PAYE, to further optimize your tax position. This flexibility ensures that the credit can be used in a way that best suits the needs of your business.

In summary, the R&D tax credit offers a powerful incentive for businesses to invest in innovation. By understanding the new rules and taking the necessary steps to prepare, your company can unlock significant tax savings and fuel its growth in the year ahead.

Should you require any further assistance on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA.

Participation exemption for Foreign Dividends

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In September 2023, Ireland’s Minister for Finance, Michael McGrath T.D., announced an intention to introduce a participation exemption for foreign dividends in Finance Bill 2024. This change aims to streamline the tax landscape in Ireland and is due to come into effect on January 1st, 2025. As the Department of Finance seeks feedback, it’s crucial for businesses to understand the implications of the Proposal and how it could impact international trade.

Here at EcovisDCA, we have analysed the key elements of the proposal and believe that there are several areas that need consideration by interested companies.

1.     Geographic Scope: A Need for Flexibility:

The current proposal restricts the participation exemption to dividends received from companies that are tax resident within the EU/EEA or countries with which Ireland has a double taxation agreement (DTA). This is rather restrictive as it excludes dividends from key global trading partners that don’t fall under these categories.

For Ireland to maintain its competitive edge in the global market, we recommend that the participation exemption be applied on a global basis. This broader approach would support fostering stronger international business relationships. If policymakers are concerned about the risk of double non-taxation, a “subject to tax” test could be introduced as an additional safeguard.

2.     Qualification – Simplifying the Process:

The participation exemption should be straightforward and automatic when the necessary conditions are met, much like the current provisions under section 626B TCA 1997. However, it is equally important to offer flexibility. Taxpayers should have the option to elect out of the exemption for any given accounting period, ensuring the regime can be adaptable. Moreover, we recommend that provisions under section 959V TCA 1997 should continue to apply. This adaptability would ensure that businesses aren’t boxed into a rigid framework.

3.     Anti-Avoidance – Avoiding Unnecessary Complexity:

Ireland’s tax code already includes robust protections against base erosion. Introducing an additional general anti-avoidance provision within this legislation seems redundant and could add unnecessary complexity. We believe that maintaining clarity and simplicity should be a priority, ensuring businesses can navigate the regime with confidence and certainty.

4.     Timing – Clarity and Consistency:

Under the current proposal, the exemption would apply to dividends received in accounting periods commencing on or after January 1st, 2025. However, we recommend that it be implemented for any dividends received from January 1st, 2025 onwards, regardless of the accounting period. This adjustment would provide greater clarity and ensure a seamless transition.

The Road Ahead:

The introduction of a participation exemption for foreign dividends is a step in the right direction. However, it is vital that the proposed measures are flexible, clear, and inclusive.

We would encourage stakeholders to voice their insights so that we can shape a regime that truly supports Ireland’s position as a central hub for international business.

If you need any guidance or wish to discuss how these changes might impact your business, reach out to us here at EcovisDCA.

Budget 2025 – Key Updates

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It’s that magical time of year again. No, not quite Christmas and something sometimes scarier than Halloween. The 1st of October saw the announcement of Budget 2025 by Minister for Finance Jack Chambers.

Here we will explore the main points of interest to you and your business. Whilst there was talk of this Budget being one of the most “pro-business” in years, there was sadly not a vast amount to speak of in terms of businesses.

Tax Credits and Incentives:

  • R&D Tax Credit: This credit will be increased from €50,000 to €75,000 in the first year to allow greater support for companies investing in research and development.
  • Tax Rates:
    • The standard rate cut-off point is to be increased to €44,000 with proportionate increases for married couples and civil partners.
    • USC to be reduced to 3%
  • BIK: Temporary universal relief for company cars will be extended for another year.
  • Rent Tax: Rent Tax Credit to be increased by €250, bringing this to €1,000 for individuals and €2,000 for couples.
  • Introduction of a Partial Exemption for Foreign Dividends: This change will be beneficial for companies with overseas income.
  • Employment Investment Incentive: In order to support the growth of businesses, the maximum investment qualifying for this incentive is doubled from €500,000 to €1m.
  • Non-Cash Benefits: The Tax-free limit for non-cash benefits has increased by €500 to €1,500.
  • Help to Buy: Extended to end 2029.
  • Mortgage Interest Tax Relief: Extended for another year.

SMEs:

  • VAT: The VAT registration thresholds on the supply of goods and services will be raised to €85,000 and €42,500.
  • Stamp duty exemption: To support SME’s to grow and scale, Budget 2025 signalled an intention to introduce a stamp duty exemption for Irish small and medium businesses in the coming year. This is intended to enhance access to funding via financial trading platforms and its introduction is subject to EU State Aid considerations. Further detail on this relief/exemption is forthcoming in the next few months / year.

Climate:

  • Carbon Tax: Carbon Tax rate per tonne of CO2 emitted on fossil fuels to increase to €63.50 per tonne of CO2 emissions.
  • EVs: The installation of EV chargers by employers at their workers’ homes to be exempt from Benefit in Kind (BIK).
  • Heat Pumps: VAT on heat pump installation to be reduced from 23% to 9%.
  • Energy Subsidy Scheme: A €170m energy subsidy scheme was announced which will benefit 39,000 firms.

CAT Thresholds increase

The following increases in the tax-free thresholds are to be effective for gifts/inheritances taken on or after 2 October 2024:

  • The group A category which relates to inheritance by children from their parents will increase to €400,000 (from €335,000).
  • The group B threshold which relates to inheritances involving grandchildren, siblings, nieces and nephews will increase to €40,000 (from €32,500).
  • The group C threshold which relates to all other inheritances will increase to €20,000 (from €16,250).

This marks the first update in capital acquisition tax thresholds since Budget 2020.

 

Amendments to retirement Relief

The relief currently provides for a clawback of capital gains tax relief payable by a child if they dispose of the relevant assets within 6 years of the transfer by the parent. The 12-year clawback announced by the minister doubles this time period in respect of transfers worth over €10 million.

 

CGT relief for angel investors

Budget 2025 announced that the lifetime cap available to individuals is being increased from €3m to €10m in connection with the lower rate of CGT of 16% for investors in innovative start-up companies, or 18% where an individual invests via a partnership.

As always, we here at EcovisDCA are committed to helping our clients navigate through  the financial and business landscapes, so should you have any concerns or queries, please don’t hesitate to reach out to us at any time.

 

Tax Implications of Convertible Loan Agreements – New Case Law

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In the ever-changing landscape of tax legislation, staying informed is crucial for professionals advising clients on financial matters. A recent determination by the Tax Appeals Commission, case 70TACD2024, provides valuable insights into the interpretation of “debt on security” under Section 541 of the Taxes Consolidation Act 1997.

The case involved an appellant who had provided loans to a company via Convertible Loan Agreements (CLAs). Upon selling his shareholding and assigning the rights under the CLA, a significant loss was claimed. However, Revenue contested the claim, arguing that the CLA did not meet the criteria for a “debt on security” as the conversion into shares was not a viable option due to the company’s limited share capital.

This case highlights the often-intricate details that can determine the tax treatment of financial instruments and underscores the importance of thorough documentation and understanding of legislative nuances. For tax professionals, it serves as a reminder to continually update their knowledge and review the latest legal interpretations to provide accurate advice to their clients.

This case offers several key takeaways for tax professionals:

1. Definition of “Debt on Security”: The case provides clarity on what constitutes a “debt on security” under Section 541 TCA 1997, emphasizing the importance of the potential for conversion into shares as a qualifying factor.

2. Revenue’s Interpretation: Revenue’s stance in this case illustrates how the interpretation of tax legislation can significantly impact tax treatment, particularly in situations where the conversion possibility is deemed non-viable.

3. Impact on CGT Claims: The determination underscores the need for careful consideration when claiming capital gains tax losses that may not meet the strict definitions set forth in tax legislation.

4. Advisory Implications: For advisors, this case serves as a reminder to diligently review and understand the nuances of tax law to ensure accurate guidance is provided to clients, especially in complex financial scenarios.

5. Continual Learning: Staying abreast of recent determinations and legislative changes is essential for tax professionals to navigate the complexities of tax law effectively.

This determination is a testament to the dynamic nature of tax law and the need for meticulous analysis in financial advising.

For a deeper understanding of the case and its implications for capital gains tax treatment, the full determination can be accessed through the Tax Appeals Commission’s website.

Navigating the Risks of AI: How to Protect Your Business from Deepfake Fraud and AI-Driven Scams

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In the digital age, the innovation of artificial intelligence (AI) has brought about significant advancements in many sectors of business. However, it has not been without its controversies and issued. From the fear of roles being replaced by AI to the ongoing argument regarding the use of AI art and the associated copyright issues, this continues to be a contentious issue.

As well as these issues, AI has unfortunately also opened up new avenues for fraudsters to exploit. This can be seen in the recent case of ARUP, where deepfake technology was used to deceive an employee into transferring a substantial sum of money to criminals. This incident serves as a stark reminder of the potential risks associated with AI and identity fraud.

The rise of AI-powered scams, such as so called “deepfakes”, poses a significant threat to personal and corporate security. Deepfakes are hyper-realistic audio or video forgeries created with AI, capable of impersonating individuals with alarming accuracy. The ARUP case exemplifies the level of sophistication these scams have reached, with fraudsters successfully mimicking senior company officers to orchestrate a £20 million fraud.

For businesses, the implications are clear: there is an urgent need to enhance security protocols and educate employees about the dangers of AI-facilitated fraud. staying informed about the latest fraud trends and implementing robust measures, companies can build a resilient defense against these evolving threats.

The ARUP case is a cautionary tale that underscores the importance of vigilance in the face of AI-driven online fraud. It is imperative for businesses to stay abreast of latest changes and innovations in order to navigate the complexities of digital security and protect their assets and reputation in this ever-changing landscape. As AI continues to advance, so too must our strategies to counteract its malicious use.

So, what can companies do to combat this level of sophistigated fraud?

To combat AI-driven fraud, companies can adopt a multi-faceted approach.

  • Quality: Investing in quality data is crucial. Having access to comprehensive and accurate data sets is essential for training effective AI models.
  • Management: Establishing a cross-functional fraud management team can ensure that various perspectives are considered when addressing fraud risks.
  • Monitoring: Continuous monitoring and updating of AI systems is necessary to keep up with evolving fraudulent tactics.
  • Early Detection: Developing a comprehensive fraud detection strategy that includes investing in the right tools and practicing ethical data usage is also important.
  • Simulation: Additionally, simulating attacks can help test the robustness of fraud prevention systems.

Finally, fostering a culture of security within the organization can raise awareness and improve the overall response to fraudulent activities. These steps, when implemented effectively, can significantly reduce the risk of AI-driven fraud, adding an extra layer of protection for your business and your employees.

Revenue’s New Code of Practice for Compliance Interventions

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As of September 2, 2024, The Revenue eBrief No. 233/24 “Failure to Co-Operate fully with a Revenue Compliance Intervention” is now obsolete. This manual has been superseded by the Code of Practice for Revenue Compliance Interventions, consolidating all relevant guidelines into a single authoritative document.

This development marks a streamlined approach by Revenue to ensure clarity and consistency in compliance procedures. The Code of Practice sets comprehensive guidelines that businesses must adhere to during Revenue interventions. It provides a structured framework detailing the expectations and obligations for both Revenue officials and businesses involved in compliance checks.

Key Highlights of the Code of Practice:

  • Clear Standards: The Code establishes clear standards for communication, cooperation, and procedural conduct during compliance interventions. This clarity aims to reduce ambiguity and ensure fair treatment of taxpayers.
  • Defined Procedures: It outlines step-by-step procedures that Revenue officials will follow when conducting interventions. Businesses can expect a more structured and predictable process, enhancing transparency and understanding.
  • Mutual Responsibilities: Both Revenue officials and taxpayers have specified responsibilities under the Code. This includes providing accurate information, facilitating access to relevant records, and maintaining open communication throughout the intervention process.
  • Compliance Expectations: By consolidating all compliance-related guidelines into one document, the Code simplifies the compliance landscape for businesses. It ensures that all relevant information pertaining to cooperation expectations is easily accessible and up to date.

Implications for Businesses:

For businesses, understanding and complying with the Code of Practice is crucial. Non-compliance or failure to fully cooperate with Revenue interventions can lead to penalties or additional scrutiny. Therefore, staying informed about these changes and integrating them into internal compliance practices is essential.

This update from Revenue signifies an ongoing move towards more compliance practices. By replacing outdated manuals with a comprehensive Code of Practice, businesses are encouraged to maintain a proactive approach to compliance.

How Ecovis DCA Can Help:

At Ecovis DCA, we understand the importance of staying ahead in regulatory matters. Our team of experts can assist businesses in navigating these changes effectively. We offer tailored advisory services to ensure that your business meets its compliance obligations while minimizing risks.

For further guidance on how these changes affect your business or any queries on business and financial matters, contact Ecovis DCA today.

Minimise Tax Liabilities in Your Succession Planning

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At EcovisDCA, we understand that effective succession planning goes beyond merely passing assets to the next generation. It involves thoughtful consideration of how to minimise tax liabilities such as Capital Acquisitions Tax (CAT), ensuring your loved ones inherit as much as possible. Here’s a comprehensive guide to navigating CAT in your estate planning strategy.

 

1. CGT/CAT Offset:
When gifting assets during your lifetime, both Capital Gains Tax (CGT) and CAT may apply. The good news is that you can offset CGT paid against CAT liabilities arising from the same gift, avoiding double taxation. However, this offset isn’t applicable for inherited assets, as CGT isn’t triggered upon inheritance.

2. Insurance Policies:
Consider taking out insurance policies to cover potential CAT liabilities upon your death. The proceeds from such policies used to settle CAT are themselves exempt from further CAT. This strategy ensures that your beneficiaries aren’t burdened with unexpected tax bills.

3. Direct Payment of CAT:
You can opt to pay the CAT liability arising from a gift or inheritance on behalf of the recipient. While this adds to the total value considered for CAT calculations, it can be a strategic way to reduce the financial impact on your beneficiaries.

4. Utilizing Small Gift Exemption:
The small gift exemption allows for tax-free gifts of up to €3,000 per annum from any individual. Leveraging this exemption early and regularly can accumulate significant sums over time, reducing future CAT liabilities. For instance, parents can gift €3,000 annually to each child, building a tax-efficient legacy.

5. Group Tax-Free Thresholds:
Maximize the use of Group Tax-Free thresholds by strategically directing assets. For example, consider gifting assets directly to grandchildren after children have maximized their €335,000 threshold. This approach optimizes tax efficiency and ensures assets pass smoothly through generations.

6. Special Reliefs: Business and Agricultural Relief:
For clients involved in family businesses or farms, special reliefs like Business Relief and Agricultural Relief can substantially reduce CAT liabilities. However, these reliefs come with stringent conditions and require careful planning to fully utilize. Proper structuring and compliance with regulatory requirements can safeguard these valuable reliefs.

 

The Importance of Early Planning:

Succession planning should start early to maximize tax efficiencies and minimize surprises. Unplanned estates can lead to unexpected CAT liabilities, affecting the financial well-being of your heirs. At EcovisDCA, our expertise in estate planning ensures that your succession plan is not only tax-efficient but also aligned with your long-term goals.

 

Expert Guidance for Your Succession Plan:

Navigating CAT and other tax implications requires expert advice. Whether you’re planning to gift assets or pass on a family business, we’re here to help you achieve the best possible outcome for your loved ones.

 

Contact Us Today:

Don’t wait until it’s too late. Start planning your succession strategy with EcovisDCA to secure a prosperous future for your family. Reach out to our experienced advisors for a consultation tailored to your needs. Together, we’ll create a roadmap that preserves your legacy while minimizing tax burdens.