Help to Buy Scheme & more in Finance Bill
Are you a first time buyer/Self-Build? See new announcements released in the Finance Bill
The help-to-buy scheme has changed so that one condition is that homeowners must have a mortgage of at least 70 per cent of the value of the property. The budget had said the figure would be 80 per cent, but the Central Bank warned this would encourage people to borrow too much. For the moment the €600,000 limit on house prices that qualify remains, though there are suggestions that this may be lowered as the bill goes through committee stages.
See further announcements below:
Irish real estate funds
The budget had indicated that new tax arrangements would be put in place for Irish real estate funds, which have been used to legally avoid tax on Irish property transactions. In future the fund will have to deduct a 20 per cent withholding tax on certain payments relating to property transactions made to non-resident investors. There are a variety of exemptions, so tax accountants will be pouring over the details to see how significant this is. For example the withholding tax will not apply to pension funds, life assurance companies and other collective investments. However deals involving individual investors or small groups will be caught by the charge.
Section 110 companies
Before the budget, Minister for Finance Michael Noonan outlined the main features of a new tax regime for so-called section 110 companies. Vulture funds buying Irish assets used these structures in a way that avoided them paying tax on earnings and profits. The bill proposes to limit how these companies use inter-company loans to reduce their tax bill. Exemptions have been made and it remains to be seen how much will be raised. Interestingly the bill forbids companies from revaluing their assets on September 5th 2016, the day the original announcement was made, which would have allowed them to arrange for profits to flow out of the country before the tax change.
The bank levy has, as expected, been extended for another five years to 2021. A review is looking at the basis on which the levy should be charged. It is expected to bring €750 million in to the exchequer over the next five years. For 2017 the levy will be calculated at a rate of 59 per cent of Dirt paid by liable financial institutions – in order to maintain the annual yield of €150 million next year.
EU transparency directive
The bill has a provision to allow the sharing of information about tax rulings between the Irish tax authorities and those in other EU states, under the terms of an EU transparency directive. More limited information is given to the European Commission. The directive also has a look-back element under which the competent authorities of each member state exchange information on certain past tax rulings.
Tax defaulter list
There are changes to the rules on publishing names of tax defaulters. The list will distinguish between defaulters who pay and those who do not pay.
Offshore income clampdown
From May 1st the opportunity to make a voluntary disclosure about a tax default will be withdrawn from those whose liabilities involve offshore income or assets. Anyone failing to make a disclosure before that date will no longer have access to the penalty mitigation arrangement and protection from publication in the quarterly defaulters’ list and may leave themselves open to criminal prosecution.
There are some small amendments on excise tax including a ruling that fuel inputs in Highly efficient combined heat and power plants are fully exempted from carbon tax.
Vat for farmers
There is a restriction on the Vat flat-rate scheme for unregistered farmers to try to ensure that excessive amounts of Vat are not collected.
There are changes to PRSA legislation to ensure that all PRSA benefits are deemed to commence on the PRSA owner’s 75th birthday, regardless of whether benefits commence on that day or not. This will limit tax planning by PRSA holders.
If you have questions on any of the above, please contact our Tax Director Francis Moriarty at firstname.lastname@example.org or phone 066 7126333.