Dealing with Revenue’s Level 1 Interventions Correctly

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For businesses operating in Ireland, it is crucial to understand how to effectively handle Level 1 interventions initiated by Revenue. It has recently been announced by Revenue that many businesses are failing to deal with these in the correct manner, which can become problematic for both Revenue and the businesses themselves.

Level 1 interventions are preliminary inquiries that Revenue conducts in order to ensure compliance with tax obligations. This is another effort by Revenue to clamp down on non-compliance and usually takes the form of requests for information, clarification or documents. These requests can be randomly selected, and do not necessarily indicate any discrepancies being found in your information.

Here, we will run through the most important tips for dealing with Level 1 interventions correctly.

  1. Prompt Response:
    Timing is crucial in terms of Level 1 Interventions. Revenue set specific deadlines to avoid potential penalties or the escalation of the issue, which both parties will want to avoid.
  2. Understanding:
    Reading the communication from Revenue in detail is vital. Ensure that you fully understand the requests being made of you, before beginning your data gathering or response.
  3. Professional Advice:
    If you are unsure of how to respond, there are a great number of professional entities who are qualified and happy to assist you in order to ensure compliance. EcovisDCA being just one of these.
  4. Double Check Information:
    We would always advise clients to double and triple check the information before sending it on to Revenue, as any discrepancies will be picked up on and may cause issues down the line.
  5. Honesty is the Best Policy:
    In the event of a delay in your data gathering, we would always advise that Revenue be informed ASAP in order to inform them of the issue and to request an extension of the deadline if needed.
  6. Evidence:
    Always keep copies of all documents issued as well as your correspondence with Revenue. In the event of any issues, it is always wise to have a paper trail to look back on.

Dealing with these interventions may seem like a time-consuming and difficult task, but by employing the tactics listed above, you can condense the experience into a manageable task which can be completed with ease.

Benefits of Establishing a Holding Company in Ireland

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Ireland is renowned as an attractive location for groups/companies looking to set up holding company structures due to its competitive tax regime and favourable business environment. Ireland is usually the location of choice for businesses seeking to minimise their tax liability while setting up or expanding their operations in Europe. This has become even more prevalent post Brexit.

We set out below the main benefits of setting up such a structure and operating in Ireland.

  • Dividends received by Irish resident companies from Irish resident companies are exempt from taxes – withholding and corporate.
  • Foreign dividend income received by Irish resident companies from trading subsidiaries in either an EU member state or a country with which Ireland has concluded a double tax treaty, and where that dividend has been paid out of trading profits, is taxed at the 12.5% trading rate of corporation tax.
  • A system of foreign tax credits exist so that, with appropriate planning, it may be possible to ensure that no Irish tax arises on foreign dividends received.
  • Favourable tax and capital allowances regimes relating to Research & Development and intellectual property.
  • Group structure benefits – transfer of assets within an EU Group, surrender and claims of losses, where relevant, cross charges, among others.
  • Access to a skilled workforce/manpower.
  • Stable economic climate as well as transparent legal and regulatory frameworks.
  • CGT exemption (Participation relief) on qualifying subsidiary disposals (domestic and foreign). The exemption will apply to the disposal of shares in trading companies where the companies are resident in an EU member state or in countries with which Ireland has concluded a double taxation agreement – see above.

The above features, coupled with Ireland’s investment friendly policies make it an ideal location for companies seeking to enhance their financial efficiency and presence in the EU.

Our team can provide you with comprehensive advice on the establishment of a holding company in Ireland, including tax implications, regulatory compliance, and other legal requirements.

CRO Changes

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In recent years, there have been a great many changes introduced to the various procedures involved with employment. From the removal of the old P45 system to changes to PAYE procedures, there have been many changes for employers to become accustomed to. To continue this trend, there will soon be a new requirement for all company Directors from the Companies Registration Office (CRO).

From April 23rd 2023, the CRO will be requiring company Directors to disclose their PPSNs for Forms B1 (Annual Return), B10 (Updating Director Details), A1 (Incorporating a new Company) and B69 (Declaration that a person has ceased to be a director or secretary of a company which has failed to send notification). All Company Directors will be required to file their PPSN with the CRO when submitting these forms and they will also be required to be entered each and every time these forms are submitted.

Non-Compliance will result in a Category 4 Offence under the Companies Act 2014. A Category 4 Offence generally constitutes a failure to file or incorrect filing of information, and results in a Class A Fine (fine of under €5,000).

It is worth noting that Directors names and dates of birth must exactly match that listed on the Department of Social Protection’s database. As always, we would encourage all companies to begin confirming the PPSN’s of all Directors before the date that this becomes mandatory. This is to ensure that future forms don’t incur any late fees.

We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help.

Amendment to Benefit-in-Kind

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In this current time of unease amidst the Cost-of-Living crisis as well as the Energy crisis, any news that results in an easing of financial burdens is welcome for all business owners and employees alike.

It was announced this week that the Government had made an unusual and temporary U-Turn to controversial tax changes which were introduced earlier this year. These changes were intended to encourage the use of Electric Vehicles (EVs), but received massive backlash from the approx. 150,000 motorists utilising company cars in Ireland. These changes saw the Benefit-In-Kind system become more CO2 based in order to facilitate the move towards lower emissions in Ireland. Unfortunately this meant that motorists whose vehicles were within the standard emission brackets were seeing a drastic increase in their income tax liabilities with their benefit-in-kind almost doubling in some cases. This, combined with the exponential price increases across the board were unsustainable for many employees.

Minister for Finance Michael McGrath has stated that the U-Turn on this will be temporary, as the move towards EVs is still very much a push that the government intend to make. The changes will only be applicable until December 31st, 2023. This change is set to be published in the coming days as part of the Finance Bill 2023 which is designed to assist businesses, employees and families alike in managing amidst the current rising energy prices and the cost of living crisis.

This change will involve a temporary relief of €10,000 to be applied to the Original Market Value (OMV) of cars within the A-D Categories to reduce the amount of BIK payable. In order to further facilitate the push towards Renewable Energy sources, this will also apply to EVs. In the case of EVs the reduction will be in addition to the existing €35,000 relief. It is important to note that vehicles in the E category will not be included here as these are vehicles with the highest emissions.

Of the changes, the Department of Finance has said; “In effect, this means that, for the purposes of calculating BIK liability, employers may reduce the OMV by €10,000 […] This treatment will also apply to all vans and electric vehicles. For electric vehicles, the OMV deduction of €10,000 will be in addition to the existing relief of €35,000 that is currently available for EVs, meaning that the total relief for 2023 will be €45,000.”

This U-Turn will be a welcome one as it was reported that some employees had either bought their company car for use as a private vehicle or handed the car back to avoid these increasing costs. The changes will be applied retrospectively to January 1st, 2023. It is not currently known if any measures will be in place in future years to safeguard company car drivers.

Updated BIK Mileage Bands for Cars:

Business Mileage Vehicle Categories
Lower limit (1) Upper limit (2) A (3) B (4) C (5) D (6) E (7)
Kilometres Kilometres Per cent Per cent Per cent Per cent Per cent
– 26,000 22.5 26.25 30 33.75 37.5
26,001 39,000 18 21 24 27 30
39,001 48,000 13.5 15.75 18 20.25 22.5
48,001 – 9 10.5 12 13.5 15

 

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New Statutory Sick Pay Scheme

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New Statutory Sick Pay Scheme

There have been a number of changes to working life in recent years, and that’s without factoring in the upheavals of the last number of years. Everything from the usual PAYE system, to the removal of the P45 system points us in the direction of a seismic change in the way we do business these days.

Some of these changes may not have a noticeable effect on the day-to-day working life of an employee, but there are some which will be immediately noticed and likely leaned upon. Among these, is the newly introduced sick pay scheme.

Since January 1st, 2023, employees will now have a right to 3 days’ sick pay per year as the legal minimum “Statutory Sick Pay Scheme”. Before January 1st, employees had no legal right to be paid by their employer while on sick leave from work. Any allotted sick leave payments were fully at the discretion of the employer and dependent on what was listed in your employment contract.

This new Statutory Sick Pay Scheme allows for 70% of your normal pay to be paid to you up to a maximum of €110 per day and the employer will be legally required to pay no less than this amount, but they may have their own sick leave payment schemes which allows a greater amount. The scheme is set to increase steadily over the course of 4 years culminating with 10 days of statutory sick pay being allocated to each employee in 2026:

  • 2023 – 3 days covered
  • 2024 – 5 days covered
  • 2025 – 7 days covered
  • 2026 – 10 days covered

To avail of this scheme, the employee must be working at least 13 weeks, and be certified as unable to work by their GP from day 1 of your sick leave. Your annual leave will continue to be built up as normal during this time.

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Significant Changes to Benefit in Kind (BIK) on Company Vehicles from 1 Jan 2023

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Significant Changes to Benefit in Kind (BIK)

As part of the government’s climate action plan to lower emissions, there are some changes to the rules for calculating BIK on motor vehicles which are due to come into effect from January 1, 2023. These changes may increase costs for both employers and employees where the vehicles are in the higher CO2 emission bracket

The new rules will apply to all motor vehicles (including electric vehicles) whether the vehicle is acquired in 2023 or made available to employees in earlier years of assessment

Changes to BIK on Company Cars
Currently, the BIK on company cars is based on the OMV (original market value) of the car and the mileage.
From January 1 2023 BIK on company cars will be determined by the business mileage undertaken and the vehicle’s CO2 emissions.

Table 1:

 Vehicle Category (1)  CO2 Emissions (CO2/g/km) (2)
 A  0g/km up to and including 59g/km
 B  More than 59g/km up to and including 99g/km
 C  More than 99g/km up to and including 139g/km
 D  More than 139g/km up to and including 179g/km
 E  More than 179g/km

Table 2:

Business Mileage Vehicle Categories
Lower limit (1) Upper limit

(2)

 A

(3)

 B

(4)

 C

(5)

 D

(6)

 E

(7)
Km Km Per Cent Per Cent Per Cent Per Cent Per Cent
0 26,000 22.5 26.25 30 33.75 37.5
26,001 39,000 18 21 24 27 30
39,001 52,000 13.5 15.75 18 20.25 22.5
52,001 9 10.5 12 13.5 15

Where an employee has the use of a car provided by his/her employer on 01/01/2023, the OMV (original market value) of the car is €35,000. The car produces 130g/km in CO2 emissions (per Manufacturer). The actual business kilometres in the year were €42,000 kilometres, 130g/km in CO2 emissions puts the car in vehicle category C as per Table 1. As the employee drove 42,000 kilometres in the year, the case equivalent is equal to the OMV x 18% (Table 2)

BIK Calculation from January 2023:

€35,000 x 18% = €6,300

Changes to Benefit in Kind (BIK) on Electric Vehicles

The Benefit In Kind (BIK) regime is also changing for electric Vehicles. Under the current rules if the electric vehicle’s OMV (Original market value) does not exceed €50,000, then no BIK arises. Where the electric vehicle costs more than this, the OMV is reduced by €50,000 to calculate the BIK

However from 01/01/2023, this will be changed for an electric vehicle made available for an employee’s private use during the years 2023-2025, the OMV of the vehicle is reduced by €35,000 in 2023, €20,000 in 2024 and €10,000 in 2025. The threshold will gradually reduce to zero by 2023.
If the reduction reduces the OMV to Nil, a BIK charge will not arise. Any portion of OMV remaining, after the reduction is applied, is chargeable to benefit in kind at the prescribed rates

Example

An employee has the use of an electric company car on January 1, 2023. The OMV of the car is €80,000. The car produced 50g/km in co2 emission. The actual business kilometres in the year were 24,000 kilometres. 50g/km in CO2 emissions puts the car in vehicle Category A as per Table 1 above.

As the cars which will be made available are electric cars, they will generally be Category A vehicles
The below examples detail the effect of the tapering relief and change in BIK changes for employees over the next 4 years

Year 2023 2024 2025 2026
Original Market Value 80,000 80,000 80,0000 80,0000
Tax-Free Threshold of OMV 35,000 20,000 10,000 0
Taxable OMV 45,0000 60,000 70,000 80,000
BIK Rate to be used 22.5% 22.5% 22.5% 22.5%
Cash Equivalent of use of Electric Car €10,125 €13,500 €15,750 €18,000

Changes to Benefit in Kind (BIK) on Company Vans

For the tax year 2023 and onwards, the cash equivalent for vans will increase from 5% to 8% of the original market value (OMV)

Employers who provide cars or vans to their employees will need to review the treatment of these benefits in advance of the first pay dates in 2023. It would also be a good idea for employers to make their staff aware that there will be changes and they will notice this in their payslips. If the company vehicle falls into the higher emission bands, it may be time to consider purchasing smaller cars or electric cars

We provide best-in-class accounting, bookkeeping and taxation services in Dublin 2. We are a firm of highly qualified chartered accountants, business advisors and tax consultants with over 20 years of experience.

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Happy Christmas from ECOVIS DCA

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Here at ECOVIS DCA, we would like to thank all our clients for partnering with us in 2022 and we look forward to sharing a successful year ahead.

Wishing you all a very Happy Christmas &
Wishing you and your business a prosperous 2023!

We will be closing for business on Thursday the 22nd of December and reopening on Tuesday the 3rd of January 2023.

We provide best-in-class accounting, bookkeeping and taxation services in Dublin 2. We are a firm of highly qualified chartered accountants, business advisors and tax consultants with over 20 years of experience.

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Energy Grants, Supports & Tools Available

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Who Has the Energy for Another Crisis?

These days, it seems that we have a new crisis every week to add to the pile of stresses of day-to-day life. Following on from the Covid-19 emergency we now find ourselves in the midst of a cost-of-living crisis as well as an energy crisis. As always, we here at EcovisDCA we want to provide our clients and friends with a roadmap to their continued success, so today we have compiled a list of energy supports for businesses, to assist you in making your business as energy efficient as possible so that you can save money as you assist in saving the planet.

Luckily, given the current situation. there are currently a number of government supports available to assist companies in mitigating the exponential rise in energy costs.

Grants & Schemes:

TBESS (Temporary Business Energy Support Scheme):
The most recently published support available to help businesses manage in this energy crisis is the Temporary Business Energy Support Scheme (TBESS). This scheme was introduced in late November as a way to support businesses with increases in energy costs. Qualifying businesses will be entitled to claim 40% of the increases in their energy bills if they have experienced an increase of 50% or more. It is important to note that VAT can not be included as an eligible cost and that all costs must be exclusively for the purposes of the business. If your business operates from the home as many now do, personal usage must be deducted. You can register for TBESS via Revenue Online Services

Energy Audit Support Scheme:

The first step towards Energy Efficiency will often be an Energy Audit. This audit will give a complete overview of the current energy efficiency of your business (including everything from building fabric to the kettles in your staff room) as well as offering suggestions on how this can be improved, and the expected cost benefit of doing so. There are a number of SEAI registered and recommended companies available to complete this audit in order to outline the ways in which your business can become more energy efficient. It is important to ensure that a reputable auditor completes the audit as energy efficiency will naturally become increasingly important in future years. The SEAI currently offer a €2,000 voucher to SMEs towards the cost of an energy audit. https://www.igbc.ie/

Communities Energy Grant:

In terms of the physical implementation of these energy upgrades one of the most beneficial grant avenues may be SEAI’s Communities Energy Grant. There are a number of grant coordinators registered with SEAI who will take on your project from start to finish, as well as engaging with SEAI on your behalf. It is worth noting that you can also utilise the Energy Audit Support Scheme as well as the Community Energy Grant at the same time.
These costs may be somewhat prohibitive to you as a first step in the process, so with this in mind, there are several online digital tools available at your disposal outlined below.

EVs (Electric Vehicles):

SEAI provides funding towards the purchase of Electric Vehicles, as well as funding towards the purchase of EV chargers on a domestic basis. It is worth noting that at present, EVs can also be included in a Communities Energy Grant Scheme application.

EXEED Grant Scheme

The EXEED Grant Scheme – SEAI offers up to €1,000,000 per project for companies planning Energy Efficiency Upgrades.

Online Tools:

IGBC – Irish Green Building Council:

The Irish Green Building Council is a fantastic resource for Irish Businesses aiming to learn more about sustainability in business. The website Irish Green Building Council offers a number of free learning courses as well as grant information and incredibly useful resources.

Climate Toolkit 4 Business:

Climate Toolkit 4 Business allows SMEs to get an estimate of their carbon footprint as well as creating a personalised action plan on a very basic level to address this footprint and begin to find methods to offset it.

SEAI Energy Academy

The SEAI Energy Academy offers a number of learning modules free of charge which will help in educating businesses on the importance of sustainability and renewable energies, as well as methods of implementation.

Long-Term Sustainability Planning:

ESG (Environmental, Social and Governance) Plans:

ESG (Environmental, Social and Governance) Policies and Plans are becoming increasingly important to business life and are now a requirement for some forms of bank financing. These are a great method of showing your company’s dedication to sustainability in the long term.

LEED (Leadership in Energy and Environmental Design):

Gaining LEED certification is an intensive process which explores all aspects of a building or neighbourhood. This is a rating system used to certify sustainable buildings and neighbourhoods and buildings with LEED certification are considered to be the gold standard of sustainability in the built environment.
There are a great many supports available to assist you in taking your business to the next level in terms of energy efficiency and sustainability, and given the current climate, this will become increasingly important going forward.

We provide best-in-class accounting, bookkeeping and taxation services in Dublin 2. We are a firm of highly qualified chartered accountants, business advisors and tax consultants with over 20 years of experience.

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The Small Benefit Exemption – Gift Cards

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As the weather begins to finally take a turn towards the colder, darker Winter mornings, thoughts naturally begin to turn towards the big man in red visiting at Christmas. As recent times have been so “unprecedented” and we now find ourselves in the midst of a cost of living crisis it is easy to overlook the positive emotions of this upcoming season and find yourself awash in a sea of concerns.

As we discussed recently in our note on Budget 2023, there is one new way that employers can assist employees financially without either party incurring tax issues. The Small Benefit Exemption has been a long-standing benefit offered from employers to their staff which allowed staff to be gifted a €500 gift card on which neither party would be taxed.

In the recent Budget, it was announced that the limit on this gift would be increased to €1,000 and there would be an allowance of 2 gifts not exceeding the combined €1,000 per year tax-free. If more than 2 gifts are given over the course of a year, only the first two gifts will qualify for tax-free status. This gift is required to be in the form of a gift card and is not permitted to be converted into cash, and any unused allowance cannot be carried over into the following year.

This change will be a welcome one for employees who receive these gifts each year, and will likely go a long way towards offering some relief over the Christmas period during this current financial crisis, while also offering employers taxation relief. It is worth noting that if the given gift exceeds the €1,000 limit, the total amount will be subject to PAYE, USC and PRSI, and not just the exceeding amount.

We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help. Please do not hesitate to contact us.

Local Property Tax Surcharge

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As the Pay & File deadline of November 16th has just slipped by, we wanted to provide our clients and friends with an urgent reminder on a possible issue that may have slipped notice in the haze of the approaching deadline.

Those who have not yet complied with their Local Property Tax (LPT) obligations may find themselves facing a nasty shock in that they may incur a 10% surcharge on their income tax liability as well as Capital Gains Tax (CGT) liabilities.

With this in mind, it is essential to bear this in mind when filing tax returns and to keep LPT at the forefront of your mind during this time. There is also an option to enter into a payment plan to pay any outstanding LPT or associated Household charges. Being involved in such a payment plan will also ensure that you do not find yourself facing this additional surcharge, which as well as being an unpleasant and unexpected cost, can be somewhat of a headache to solve and/or figure out a solution to.

It is important to note that no surcharge will apply if you are liable for no LPT or if your existing liability is due only to a late filing charge. The charge will, however, apply if your other tax is filed on time, but you have defaulted on a LPT payment.

Full details on this can be found at: www.revenue.ie/en/tax-professionals/tdm/local-property-tax/part-07/07-02.pdf

We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help. Please do not hesitate to contact us.