Finance Bill 2017
On 19 October 2017, the Minister for Finance and Public Expenditure and Reform Paschal Donohoe introduced into the Dáil Finance Bill 2017.
This year’s Finance Bill held few surprises, providing for the enactment of measures announced in last week’s Budget 2018, which the Government hopes will address a broad array of challenges including stimulating residential housing supply, further “Brexit proofing” the economy and reducing the personal tax burden, all whilst being bound by limited fiscal space and EU budgetary rules.
Please see below some of the key highlights to take note of in the Finance Bill 2017:
- Following on from a recommendation within Seamus Coffey’s recently published ‘Review of Ireland’s Corporation Tax Code’ the Bill provides for the introduction of an 80% cap on the relevant income against which capital allowances for intangible assets (acquired after Budget day) may be deducted in a tax year.
- A range of anti-avoidance measures are included, with a focus on Capital Gains Tax measures and reliefs for share sale transactions.
- There are important changes to the Capital Gains Tax group relief rules, aligning those to the Corporate Tax group rules, as well as technical changes to the s247 Corporate Tax rules for interest relief on qualifying loans.
- The introduction of the Key Employee Engagement Programme (KEEP), designed to assist SME’s attract and retain top talent. Any gain arising on the exercise of qualifying share options will be subject to Capital Gains Tax at the time of disposal of the shares, in place of income tax, USC and PRSI at the time of exercise as is the general treatment for share option gains. The Department has noted that this relief is subject to State Aid approval.
- Amendments to various property related provisions including an increase on Stamp Duty on commercial property transactions and changes to Capital Gains Tax relief on certain land and buildings. The Finance Bill brings clarity on the transitional measures that will apply to contracts signed by Budget Day. An allowance for certain pre-letting expenses has also been introduced, and the Stamp Duty threshold to exempt certain leases from duty has also been increased.
- There are some technical amendments which are a tidy up of the rules that were introduced in last year’s Finance Act focussing on investments in Irish real estate related assets by funds (“IREFs”) and securitisations (“s110”). Many of those changes were already communicated in tax briefings issued by the Irish Revenue and therefore this is just the legislative change needed to bring them into law.
- The 9% VAT rate for the hospitality sector, which was introduced in 2011, will continue to apply. The only VAT increase announced by the Minister is that the VAT rate on the use of sunbeds will increase from 13.5% to 23%. The detail of the sugar tax was also confirmed, and the rate will be 30c per litre where the sugar content is at least 8g per 100ml and 20c per litre where the sugar content is between 5-8 g per 100ml.
For further details on the above and other new measures not included in Budget 2018, we invite you to view our articles analysing the Finance Bill on our website.
If you have any questions on what the Finance Bill means for you, your business or your family, please don’t hesitate to speak with your usual Deloitte tax adviser or any member of the Deloitte tax team.
Finally, as in previous years we will hold our Finance Bill event later in the year (on 5 December 2017) and hope to see many of you there.