VAT Rate Application

Questions (63)

Brendan Griffin

Question:

63. Deputy Brendan Griffin asked the Minister for Finance the reason swimming lessons attract the highest rate of VAT at 23%; if he will consider reducing or abolishing this in view of the health benefits and as a measure to help tackle Ireland's very high drowning death statistics; and if he will make a statement on the matter. [45380/13]

View answer

Written answers (Question to Finance)

The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. Sports related coaching, such as swimming lessons are generally chargeable to VAT at the standard rate, currently 23%, in accordance with section 46(1)(a) of the Value Added Tax Consolidation Act 2010, as amended, and is in compliance with Article 96 of the EU VAT Directive (Council Directive 2006/112/EC).

Swimming lessons provided to children of pre-school and school-going age qualify for exemption from VAT in circumstances where the lessons delivered meet the requirements of the aquatics strand of the physical education curriculum for primary and post-primary schools, as set out by the Department of Education and Skills. In such instances, swimming lessons are regarded as "education" thereby qualifying as an exempt activity for the purposes of paragraph 4(3) of Schedule 1 of the VAT Consolidation Act 2010, as amended.

Tax Code

Questions (64)

Brendan Griffin

Question:

64. Deputy Brendan Griffin asked the Minister for Finance if he will consider putting in place a DIRT free limit per person on small savings; and if he will make a statement on the matter. [45381/13]

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Written answers (Question to Finance)

I have no plans to put in place a Deposit Interest Retention Tax (DIRT) free limit on savings. Such a measure could be difficult to administer in the event of individuals opening a number of accounts to keep the interest payment on individual accounts below a certain level. This happened prior to the introduction of DIRT to avoid the provision that interest payments above a threshold were reported to Revenue. Such an exemption would also affect the yield projection from the proposed DIRT increase. It is not possible to forego this income given current budgetary constraints.

Tax Code

Questions (65)

Brendan Griffin

Question:

65. Deputy Brendan Griffin asked the Minister for Finance if he is concerned that the DIRT increase would impact on persons who have savings put away for major life phases such as college or nursing home care; if he will examine ways of exempting such cases; and if he will make a statement on the matter. [45382/13]

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Written answers (Question to Finance)

As I announced in Budget 2014, the rate of Deposit Interest Retention Tax (DIRT), and the rates of exit tax that apply to payments from life assurance policies and investment funds, are being increased and will now be 41% whether payments are made annually or more frequently (previously 33%) or are made less frequently than annually (previously 36%). The increased rates will apply to payments, including deemed payments, made on or after 1 January 2014. DIRT and exit taxes are deducted only from the interest or return from savings and investments; they are not deducted from the principal sum invested.

In certain cases, deposit interest can be paid without deduction of DIRT or individuals can get a refund of DIRT deducted. These cases are:

- Individuals aged over 65 years: Since the enactment of the Finance Act 2007, individuals can have their interest paid without deduction of DIRT, or can have a refund of DIRT deducted, provided they or their spouse or civil partner are aged 65 years or over, and their total income in a year, including the interest, is below the relevant annual exemption limit. The limits for 2014, are €18,000 for single or widowed persons or surviving civil partners, and €36,000 for married couples and civil partners;

- Permanently incapacitated individuals: an exemption from DIRT also applies where an individual, his or her spouse or civil partner:

(i) is permanently incapacitated by reason of physical or mental infirmity from maintaining himself or herself; and

(ii) is not liable to pay income tax because of the level of his or her income.

These exemptions may benefit some of the people mentioned by the Deputy in his question. I have no plans to widen the exemptions or reliefs from DIRT.

IBRC Mortgage Loan Book

Questions (66, 69, 80)

Arthur Spring

Question:

66. Deputy Arthur Spring asked the Minister for Finance if persons with mortgages with the Irish Bank Resolution Corporation are being offered the opportunity to purchase the mortgages at a discount. [45389/13]

View answer

Brendan Griffin

Question:

69. Deputy Brendan Griffin asked the Minister for Finance his views on correspondence (details supplied) regarding the sale of a loan to a third party; and if he will make a statement on the matter. [45425/13]

View answer

Heather Humphreys

Question:

80. Deputy Heather Humphreys asked the Minister for Finance with regard to the pending sale of the Irish Bank Resolution Corporation mortgage loan books, if individual mortgage holders of the former Irish Nationwide Building Society will be permitted to buy out their mortgages; if there are any legislative barriers for such individual mortgage holders to do so; the process of the sale of such mortgages; and if he will make a statement on the matter. [45517/13]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 66, 69 and 80 together.

The Special Liquidators have given significant consideration to and have sought independent advice from PWC in relation to how the residential mortgage portfolio and other loans in IBRC are to be dealt with. Following that independent advice, the Special Liquidators have decided that the residential mortgage book would be split into four segments consisting of performing, non-performing, owner occupier and buy to let mortgages. The Special Liquidators have confirmed that all Borrowers are permitted to buy-out their mortgage at par value and that there are no legislative barriers for such Borrowers to do so. The Special Liquidators have also confirmed that the residential mortgage customers of IBRC Limited (in Special Liquidation) continue to enjoy the protection of the Central Bank Code of Conduct on mortgage arrears and other protections in Irish consumer law.

I am advised by the Special Liquidators that the decision to offer the residential mortgage book for sale in this way was arrived at having regard to the scale of the process and size of the IBRC loan book. Furthermore the Special Liquidators have confirmed that the decision to sell these loans as part of a portfolio is the most efficient method of disposal and the one which is most likely to maximise ultimate sales realisations for the Special Liquidators having regard to the public interest. The decision concerning how the loans will be packaged for sale and what bidders constitute qualifying bidders for the purposes of the sales process is to be made by the Special Liquidators and I will not intervene in this matter.

Tax Code

Questions (67)

Pearse Doherty

Question:

67. Deputy Pearse Doherty asked the Minister for Finance with regard to each measure of the ten point tax reform plan to help small business, if he will detail the impact including levels of take-up, cost to the State, and the number of additional jobs created. [45395/13]

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Written answers (Question to Finance)

In the November 2012 Medium Term Fiscal Statement, the Department of Finance published a paper on the importance of small business to the Irish economy. This paper highlighted that small and medium sized businesses make up over 99% of businesses in Ireland and account for almost 70% of people employed. Despite Ireland's reputation as one of the world's most globalised economies, 64% of private sector workers are employed by indigenous non-exporting firms, with 56% working for indigenous, non-exporting small businesses. These numbers highlight the importance of domestic demand for sustaining and generating employment in Ireland, and suggest that our recovery strategy needs to give some additional support to small businesses.

To that end, the 10 Point Tax Reform Plan contains measures to assist small business in a number of ways by:

- Helping their cash flow position;

- Helping them access funding;

- Reducing the costs associated with the administrative burden of tax compliance;

- Boosting demand for their products in new markets; and

- Incentivising them to create jobs.

The measures are as follows:

- Reforming the 3 Year Corporation Tax Relief for Start Up Companies to allow unused credits to be carried forward to help create jobs and improve cash flow;

- Amending the Close Company Surcharge by increasing the de minimis level to €2,000 to reduce the administrative burden and assist cash flow;

- Increasing the amount of expenditure eligible for the R&D Tax Credit on a full volume basis (without reference to the 2003 base year) to €200,000 to encourage innovation and help cash flow;

- Increasing the VAT cash receipts basis accounting threshold from €1m to €1.25m to help cash flow;

- Extending the Foreign Earnings Deduction for work related travel to Algeria, Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal & Tanzania to help boost demand for Irish goods and services abroad;

- Extending the Employment and Investment Incentive scheme to 2020 to help companies access funding;

- Extending the general rate and Young Trained Farmers rate of stock relief and amendments to the definition of registered partnerships for stock relief to give a targeted assistance to the farming sector;

- Introducing a Capital Gains Tax relief for Farmers for land restructuring to give a target assistance to the farming sector;

- Reviewing the 'carried interest' provision in the tax code to help small businesses to access funding;

- Announcing a joint Revenue and Department of Finance public consultation: 'Taxation of Micro Enterprises: Reduction in Compliance Costs' to identify ways to ease the administrative burden.

Measures 1 to 9 above were implemented in Finance Act 2013 which was enacted in March 2013. Revenue data on take-up of the various measures will not be available until the 2013 income and corporation tax returns of relevant businesses are filed with Revenue. The exact filing date will depend on individual circumstances but in the main will arise in Q4 2014.

To elaborate on some of the specific items in the plan, I would note that in relation to Measure 4, the annual turnover threshold for eligibility for the cash basis of accounting for VAT was increased from €1 million to €1.25 million in Budget 2013 with effect from 1 May 2013. While there are no direct statistics available, it is expected that over 800 businesses will have benefitted from this Budget change.

In relation to Measure 5, the Foreign Earnings Deduction was extended in Finance Act 2013 to include for work related travel to Algeria, Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal & Tanzania to help boost demand for Irish goods and services abroad. This relief is available to all qualifying persons travelling to these countries for work-related travel for the tax years 2013 and 2014.

In respect of Measure 6, the EII was extended to 2020 to help companies access funding. This is a state aid scheme and accordingly, the approval of the European Commission is required. An application was made to the European Commission in June to extend the EII until 2020. Officials have been assured by the Commission that the necessary approval will be received shortly.

In respect of Measure 7, extending the general rate and Young Trained Farmers rate of stock relief and amendments to the definition of registered partnerships for stock relief to give a targeted assistance to the farming sector.

As regards Measure 8, Section 48 of Finance Act 2013 provides for relief from capital gains tax on disposals of farm land for farm restructuring, subject to a Commencement Order, which I made on 6 June 2013 (due to the need to obtain EU State Aid approval for the measure). The relief applies to a sale, purchase or exchange of agricultural land in the period from 1 January 2013 to 31 December 2015 where Teagasc has certified that a sale and purchase or an exchange of agricultural land was made for farm restructuring purposes. The initial sale or purchase, or the exchange, must occur in the relevant period and the subsequent sale or purchase must occur within 24 months of that sale or purchase.

Measure 9 relates to reviewing the 'carried interest' provision in the tax code to help small businesses to access funding. Following a review of the carried interest provisions in the tax code, Finance Act 2013 made a number of changes with the aim of making the provisions operate as intended. Firstly, it extends the scope of the relief so that it is not limited to carried interest derived from investment in trading companies at the start-up phase only. Secondly, it links the relief to the overall performance of the investment portfolio of the qualifying venture capital fund. Thirdly, it reduces the duration of the period for which the investment in the target companies must be held from 6 years to 3 years. Lastly, it extends the relief that is currently available to companies and partnerships to individual venture fund managers. These amendments are designed to assist companies engaging in innovation activities to access investment from venture capital funds.

As yet, no information is available on the number of people who have availed of CGT farm restructuring relief and/or availed of the revised carried interest provisions because they will be applied for via personal income tax returns for 2013 which will not be submitted until late in 2014. It is not anticipated that these returns will include a provision for the separate capture of specific information in relation to these incentives.

Finally, in respect of Measure 10 - 'Taxation of Micro Enterprises: Reduction in Compliance Costs', the public consultation closed in February 2013, and only a small number of submissions were received (7 in total). The results of the consultation are being considered by the Department of Finance and the Revenue Commissioners at present, with a view to identifying next steps. The Deputy will also be aware that I announced enhancements to some of these measures in my recent Budget speech.

Property Taxation Collection

Question No. 69 answered with Question No. 66.

Questions (68, 73, 98, 99, 100)

Barry Cowen

Question:

68. Deputy Barry Cowen asked the Minister for Finance if he will provide a breakdown by local authority of the amount of revenue collected from the property tax to date in 2013; and total estimated revenue on a local authority basis in 2014. [45404/13]

View answer

John Halligan

Question:

73. Deputy John Halligan asked the Minister for Finance in relation to the local property tax, if he will confirm since its collection the percentage of those persons considered to be the responsible person who have registered for the tax; the percentage who have actually made arrangements to pay the tax; if he will confirm the figure that has been collected to date per county; of the figure collected, the amount that has been distributed to the relevant local authority; the amount that has been retained by the Exchequer of the figure collected; the amount that has been allocated to paying off the national debt; and if he will make a statement on the matter. [45472/13]

View answer

Michael McGrath

Question:

98. Deputy Michael McGrath asked the Minister for Finance the number of properties registered for the local property tax where the registered value is higher than the estimate placed on the property by Revenue; and if he will make a statement on the matter. [45576/13]

View answer

Michael McGrath

Question:

99. Deputy Michael McGrath asked the Minister for Finance the number of properties registered for the local property tax where the registered value is lower than the estimate placed on the property by Revenue; and if he will make a statement on the matter. [45577/13]

View answer

Michael McGrath

Question:

100. Deputy Michael McGrath asked the Minister for Finance the revenue that will be raised in 2014 from properties valued at greater than €1 million for the local property tax; and if he will make a statement on the matter. [45578/13]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 68, 73, and 98 to 100, inclusive, together.

I am advised by the Revenue Commissioners that yield and compliance data for the Local Property Tax (LPT) for 2013 are compiled on the basis of the number of properties and is available broken down by city and county councils nationally. The most up to date figures, which are published on the Revenue Commissioners website at: http://www.revenue.ie/en/tax/lpt/lpt-stats-0913.pdf, include the percentage distribution of properties per value band and show that 0.2% of properties are valued at over €1 million. I am further advised that by the end of September 2013 approximately €200m had been transferred by Revenue to the Exchequer.

In the Budget which I presented to the House last week, I indicated an estimated revenue of €550 million for 2014 from LPT. However, the Commissioners advise that it is not possible to state at this point the precise amount of LPT which is expected to be collected for 2014 for each local authority, nor the expected revenue from properties valued at over €1m. There are a number of factors which could affect these figures including the continuation of the very strong level of voluntary compliance that was achieved in 2013, the impact next year of Revenue's national compliance programme to follow-up on those liable persons who have failed to meet their LPT obligations for 2013, and the level of deferrals of LPT staying constant.

LPT Returns are still being filed and work is on-going to refine the LPT Register. More detailed data and analysis, including analysis in relation to a comparison of the Revenue Estimates with self-assessed valuations will be published in due course. The Deputies will be aware that Revenue has just commenced the Pay and File campaign for LPT 2014, which is their current priority in relation to LPT.

Section 157 of the Finance (Local Property Tax) Act 2012, as amended, provides that, in each financial year commencing with 2014, the Minister shall pay from the Central Fund or the growing produce thereof into the Local Government Fund an amount equivalent to the Local Property Tax, including any interest paid thereon, paid into the Central Fund during that year. Accordingly, receipts from the Local Property Tax received in 2013 will remain in the Exchequer and will be used to meet the many expenditure obligations faced by the State. The allocation to the Local Government Fund for 2013 had already been decided before the Local Property Tax commenced.

Question No. 69 answered with Question No. 66.

Tax Residency Issues

Questions (70)

Pearse Doherty

Question:

70. Deputy Pearse Doherty asked the Minister for Finance if he or his Department has received from the French Government or any other government a list of suspected tax evaders; and if he will make a statement on the matter. [45437/13]

View answer

Written answers (Question to Finance)

Information on Irish residents who derive income from sources outside the State is received on a regular basis under the provisions of the exchange of information article in our double taxation treaties and, in the case of EU Member States, information can also be received under the provisions of Council Directive 2011/16/EU on administrative assistance in the field of taxation. The taxes covered by Ireland's double taxation treaties and Council Directive 2011/16/EU are income tax (including the universal social charge), corporation tax and capital gains tax. Some of Ireland's more recent double taxation treaties enable exchange of information relating to "taxes of every kind and description".

The most commonly used methods by which information is exchanged are:

- On request, i.e. where the Revenue Commissioners identify a particular case and request information from the Competent Authority of the other country;

- Spontaneously, i.e. where a tax official of the other country becomes aware of information, for example during an audit, which could relate to loss of Irish tax;

- Automatically, i.e. information covering many cases of a similar kind that can be transmitted systematically on a regular basis, e.g. refunds of withholding tax to persons with addresses in Ireland.

In relation to France, information is received by the Revenue Commissioners regularly from the French Ministry of Finance under the provisions of the Exchange of Information Article in our double taxation treaty with France and under the provisions of Council Directive 2011/16/EU. This has included information provided spontaneously in relation to a list of 33 Irish residents. Settlements in 19 of these cases, following investigation by Revenue, amount to €4.3 million. Enquiries are on-going in 6 other cases, and 8 cases have been closed as it was established that there were no tax issues. A prosecution is before the Courts in 1 case, and 3 other cases are under investigation for prosecution.

The Deputy may also wish to note that I am informed by the Revenue Commissioners that other treaty partner countries, namely Australia, United Kingdom and the United States have advised them that they have obtained a very significant amount of data revealing complex offshore structures and that they intend to use this data to share information with partners, including with Ireland. They have also indicated that in view of the complexity of the data, this is likely to take some time and they will make such information available to Revenue via the Competent Authority.

Tax Reliefs Abolition

Questions (71)

John O'Mahony

Question:

71. Deputy John O'Mahony asked the Minister for Finance the effect the changes in budget 2014 abolishing top slicing in 2014 will have on the tax liability of a person (details supplied); and if he will make a statement on the matter. [45450/13]

View answer

Written answers (Question to Finance)

The Government's decision to abolish top slicing relief will only apply in respect of ex-gratia termination lump sum payments made on or after 1 January 2014. Recipients of payments made prior to that date will continue to be entitled to claim the relief. Based on the information provided, it is not possible to estimate the tax liability due in respect of the redundancy package for the individual in question. Full information on the calculation of the reliefs that apply to ex-gratia payments are set out in leaflet IT21 which is available on the Revenue website at http://www.revenue.ie/en/tax/it/leaflets/it21.html.

Credit Unions Regulation

Question No. 73 answered with Question No. 68.

Questions (72)

Jack Wall

Question:

72. Deputy Jack Wall asked the Minister for Finance the position regarding a submission (details supplied) from Newbridge Credit Union; if any meetings have taken place or are planned regarding the submission; and if he will make a statement on the matter. [45451/13]

View answer

Written answers (Question to Finance)

Following on from a meeting with Newbridge Credit Union Action Group on 19 September, it was agreed that on receipt of an alternative proposal from the Action Group, it would be communicated to the Central Bank with a view to examination of the proposal and a meeting being arranged between the Central Bank and the Action Group. The Action Group recently submitted a document entitled 'Alternative Proposal regarding Newbridge Credit Union Limited' and I have referred the proposal to the Governor of the Central Bank for examination as agreed and the Action Group has been informed of this. This matter is currently being considered by the Central Bank.

Question No. 73 answered with Question No. 68.