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Budgeting for the Budget

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As the Budget announcement approaches, conversation has turned largely to conjecture over what changes may be made to safeguard against Brexit related issues. As you will all be aware, we here at EcovisDCA are massive supporters of Small and Medium Enterprises (SMEs). These vital businesses are enormously important to Irish business in general and due to their size are vulnerable during this uncertain time.

Recently Dublin Chamber Chief Executive Mary Rose Burke spoke out about the importance of safeguarding these businesses and enabling them to not only survive but to thrive in  a post-Brexit world and suggested that Burget 2020 must endeavour to help SMEs to compete with larger, more economically attractive companies. In order to face Brexit head on, Burke suggests that Capital Gains Tax may be the first port of call as the current set up of an overall 33% rate is damaging to small companies and favours attracting larger companies. It is suggested that this be reduced to 20% for all unlisted trading firms and should take into account the level of risk taken by entrepreneurs in order to protect these important business owners.

“We need to foster an entrepreneurial environment and strengthen Ireland’s indigenous business base.”

Given that SMEs form over half of all Irish business operations, it would be wise to begin investing heavily in the entrepreneurial spirit that exists in our country. The Dublin Chamber has stated that the UK is ahead of Ireland in terms of supporting Irish SMEs, and proposes that we follow suit. The current taxation system which applies across the board actively encourages investment in larger multinationals over SMEs. As these large companies are such a small fraction, it is easy to see how smaller businesses may suffer further blows following Brexit, as Burke suggests;

“[Large multinationals] are already more attractive for entrepreneurs. We need to look to improve our competitiveness in ways that are under our control. […] with Brexit on the horixon, it is vital that we react and fight back.”

There is a concern that if changes are not made in the coming Budget, the UK may eclipse our small island in terms of attractiveness to foreign trade which could see significant damage dealt to our economy. As such a long term plan in the coming Budget would be a welcome safety net for Irish SMEs

As always, we will be reporting on this year’s budget as it happens and keeping you up to date on what these changes will mean for you and your business. Should you have any concerns or queries on any business or financial issues, please don’t hesitate to contact us here at EcovisDCA where we are always happy to assist.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

VAT Increases for the Hospitality Sector

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Room with a View?

As discussed in last week’s Budget post, Budget 2019 snuck up almost unannounced and whilst it did not seem like much of a big news day for many, there were some who were hit by an utterly unexpected blow that could have far reaching consequences for many Irish business, particularly in the uncertain atmosphere surrounding Brexit.

One of the hardest hit sectors in this Budget, and the first to speak out against it is the tourism sector. It goes without saying that Ireland thrives massively on our culture of tourism and being the well-known “land of a thousand welcomes” so in the current uncertain Brexit climate it has come as quite a shock to this sector to receive the cutting blow of the removal of their special 9% VAT rate, to be replaced with the standard 13.5% rate going forward. It is estimated that this will cost the sector up to €500million a year, and that this is where the funds have been accessed to make the rest of the Budget’s announcements possible.

The idea for the removal of this rate was originally floated by Finance Minister Paschal Donohoe ahead of Budget 2018, but with Brexit looming this did not come to pass. The change comes following last July’s critical Department of Finance report which heavily suggested the special rate be scrapped, believing it to have served its purpose and to no longer be worth the cost to The State. In hindsight, glancing at the report now, the writing has been on the wall for this change for some time. Unfortunately for our tourism and hospitality sector, this does not make the pill any easier to swallow.

One of the most severe problems with this change is that Dublin has already been experiencing soaring hotel room rates in recent months. Chief Executive of the Irish Hotels Federation Tim Fenn has said that there has been widespread shock among the hotel industry.

“While we recognise that there was a need to raise revenue, in doing so it was incumbent on the Government to nurture growth in the economy. Tourism is growing. It is giving over €2billion a year to the Exchequer. 9% VAT was about the right rate, it brought us into line with our competitors in Europe, now 26 countries in Europe have a lower VAT rate. We are expected to compete with that”.

It remains to be seen what lasting effects this change will have on Ireland’s vital tourism sector and we hope that our clients and friends in this sector will find themselves weathering the storm to come out on the other side stronger.

As always, should you require any help or guidance on any financial or business matters, please don’t hesitate to contact us here at Ecovis DCA, where we are always happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Budget 2019

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We constantly hear about how fast Christmas comes around each year and already selection boxes are appearing in our grocery stores and social media posts are being put up about how many weeks remain until Christmas. However, does anything really come around quicker than the Government’s yearly budget? It seems like only yesterday that we were giving you the main points on last year’s budget and now here we are again to break down the key points of this year’s budget. Indeed this year’s budget seems to have entirely crept up on us all, and slid into the world without much of a fanfare. So, what does Budget 2019 have in store for us all in the coming year?

SMEs

As you are aware, we are huge supporters of Irish Small and Medium Businesses so there was some welcome news announced in the budget.

A future Growth Loan Scheme for SMEs and those in the agriculture sector will be launched.

€110million in Brexit measures will be put in place.

Taxes and Wages:

  • There will be a reduction in the third rate of Universal Social Charge (USC) from 4.75 to 4.5%
  • The second rate band threshold for USC will increase from €19,372 to €19,874
  • An increase in the tax free threshold on transfers between parents of children will take the threshold from €310,000 to €320,000.
  • Weekly threshold for higher rate of employer’s PRSI will increase from €376 to €386.
  • Minimum wage to increase to €9.80 from January 1st.
  • VAT to increase from 9 to 13.5%.
  • Self-Employed individuals will receive a further €200 to their earned income tax credit.

Housing:

This has been a hot topic this year and something that has hit the headlines on numerous occasions. What action are the government implementing?

  • There will be €2.3billion allocated to the housing programme.
  • An additional €121million will be allocated to the Housing Assistance Payment.
  • €60million allocated to funding emergency accommodation and €30million allocated to homelessness services.
  • There will be funds allocated to a ‘Serviced Sites Fund’ which will aim to have local authorities begin to provide affordable housing.
  • Mortgage interest relied to be increased to 100% for landlords.

Social:

  • All weekly social welfare payments will increase by €5 from next March.
  • Christmas bonus to be fully restored this year.
  • From November 2019 a new parental leave scheme will offer 2 extra weeks leave to all parents in the first year of the child’s life. The aim will be to increase this to 7 weeks over time to bring Ireland more in line with other European countries.

The government have come under fire for this budget as it has been suggested that it doesn’t go far enough on crucial matters from climate change to tourism and national debt. This is however the first time that we have seen the national books balanced since 2007 so it is hopefully a step in the right direction.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY