Written Answers Nos. 151-172
151. Deputy Brendan Griffin asked the Minister for Finance when a person (details supplied) will receive a value-added tax rebate in respect of a work van; and if he will make a statement on the matter. [15331/16]
View answerI am advised by Revenue that the person in question submitted a VAT repayment claim amounting to €4,085 on 11 June 2016.
A portion of the repayment was offset against outstanding Income Tax liabilities in accordance with Section 960H(2) of the Taxes Consolidation Act 1997. The balance is available for repayment but can not be processed until the person submits an outstanding tax return.
Revenue has written to the person on three occasions requesting him to file the outstanding return but to date he has failed to do so. I am assured that the repayment will be processed as soon as the return is received.
152. Deputy Michael D'Arcy asked the Minister for Finance the protection available for persons who have loans with non-banking financial companies based outside Ireland; and if he will make a statement on the matter. [15377/16]
View answerI assume that the Deputy is referring to the protections in place for persons whose loans have been sold to non-bank entities based outside Ireland and will answer accordingly.
The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 was enacted in July 2015 and is designed to protect consumers whose loan portfolios are sold onto unregulated entities.
The Act introduces a regulatory regime for a new type of entity called a 'credit servicing firm'. These are firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities. Under the Act, purchasers of loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank.
The Central Bank is now the competent authority for the authorisation and supervision of credit servicing firms. Credit servicing firms must comply with all relevant requirements of financial services legislation, including under the various statutory codes (such as the Consumer Protection Code, Code of Conduct on Mortgage Arrears, Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which comes into operation on 1 July 2016.
The Consumer Protection (Regulation of Credit Servicing Firms) Act also includes a statutory obligation on an authorised credit servicing firm not to perform any action that a regulated lender would not be allowed to do. This additional protection seeks to ensure that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale.
In addition to compliance with Central Bank codes of conduct, the Central Bank have confirmed that credit servicing firms will have to demonstrate to the Bank that they have:
- Robust governance and adequate resources to ensure compliance;
- Agreements with loan owners that enable the credit servicing firm to fully comply with its obligations under Irish financial services legislation; and
- Adequate and effective control of loan servicing in the State to enable Central Bank oversight.
153. Deputy Michael D'Arcy asked the Minister for Finance if a person (details supplied) can transfer funds from an approved minimum retirement fund to an approved retirement fund; and if he will make a statement on the matter. [15380/16]
View answerBefore Finance Act 1999 people with defined contribution pension savings had no option but to buy a pension income (called an annuity) with their savings after taking the allowable tax-free retirement lump sum. Changes since then have given people more choices for what to do with their pension savings. This is called the flexible options at retirement regime. These choices include taking a cash payment, subject to income tax, investing in an approved retirement fund (ARF) or investing in an approved minimum retirement fund (AMRF).
Until he or she is 75, a person can only take the whole amount of their savings as cash or put it in an ARF if he or she has a guaranteed pension income of €12,700 or more. If these conditions are not met then he or she can buy an annuity or put a certain amount of the funds, called the "set aside" amount into an AMRF. The maximum "set-aside" is €63,500 or the remaining value of the pension funds, after taking the tax-free retirement lump sum, if less than €63,500. These requirements have been in place since the introduction of the flexible options at retirement regime and are therefore of long standing.
The funds in an AMRF can be used at any time, in full or in part, to buy an annuity. This includes the option to buy an annuity which is large enough to give the owner a guaranteed income of €12,700. If the owner does this he or she will then have access to the rest of the funds, as their AMRF can then be converted into an ARF with discretionary access to the funds, subject to tax at their marginal rate.
The purpose of the AMRF is to ensure that a person without the minimum guaranteed pension income for life has a pension "safety net" to provide for the latter years of his or her retirement. However, every year to age 75, the owner of an AMRF can access 4% of the funds in the AMRF.
If an individual meets the requirements to be able to access the full amount of the funds in an AMRF (on conversion to an ARF) and chooses to do so then it is taxable in the hands of the recipient as income for the tax year in which it is paid.
154. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank is examining how it presents insurance statistics and data related to the insurance sector and in particular to the motor insurance sector; if it will publish these statistics in a more contemporaneous way and in greater detail; and if he will make a statement on the matter. [15389/16]
View answerThe availability of relevant and timely data is necessary to facilitate an assessment of the insurance market in Ireland.
Since the Solvency II regulatory regime became effective from 1st January 2016 there are increased disclosure requirements on both insurance undertakings and supervisors. These requirements have been put in place to foster a uniform level of transparency and accountability and to ensure that the information is easily accessible and comparable. One of the requirements on the Central Bank of Ireland is the publication of aggregate statistical data relating to the insurance undertakings it supervises, including those companies providing motor insurance.
The Central Bank has informed me that the first year for publication of aggregate statistical data is 2017 and will relate to the calendar year ending in 2016. This publication will replace the annual statistical review carried out the Central Bank and the 2015 Statistical Review (due for publication in Sept 2016) will be the final one published by the Central Bank.
The Central Bank also publishes thematic reviews on elements of the insurance sector on an ad-hoc basis, which provides additional data. For example, in 2015 it published the Bodily Injury Thematic Review.
The work on the review of policy in the insurance sector, currently being conducted by my officials will include the issue of data availability and will identify any shortfalls. The requirement for relevant insurance data to be provided on a timely basis and in a suitable format has been raised by my officials with the Central Bank in the context of the review.
155. Deputy Pearse Doherty asked the Minister for Finance when the working group examining the framework for insurance policy will report; if he will publish its report without delay; and if he will make a statement on the matter. [15390/16]
View answerMy Department's review of policy in the insurance sector is being conducted in consultation with the Central Bank of Ireland and other Departments and Agencies. The objective of the Review is to recommend measures to improve the functioning of the insurance sector. The Review includes an examination of the factors contributing to the cost of insurance.
The first phase of the Review is examining the current motor insurance compensation framework in Ireland. This work is being conducted jointly with the Department of Transport, Tourism and Sport. The joint group is working closely with the Central Bank of Ireland and has met with other stakeholders including the European Commission, Insurance Ireland, the Irish Brokers Association, the State Claims Agency and the Accountant of the Courts of Justice.
The Joint Working Group will report to myself and the Minister of Transport, Tourism and Sport in the coming days with final recommendations for our consideration.
The outcome of this work will feed into the wider review of policy in the insurance sector which I have outlined above. This work will continue over the coming months and a final report will be presented to me in due course.
These reports will be presented to Government in due course and any decision to publish these reports will be a matter for Government.
156. Deputy Clare Daly asked the Minister for Finance the amount of money his Department spent on purchasing copies of the Public Sector Times magazine in 2015; and if he will make a statement on the matter. [15416/16]
View answerMy Department makes no payment in respect of copies of Public Sector Times Magazine supplied to my Department.
157. Deputy Clare Daly asked the Minister for Finance the amount of money spent on daily newspapers in 2015; if this is appropriate expenditure given the available and far cheaper online alternatives; and if he will make a statement on the matter. [15432/16]
View answerMy Department spent €13,917 on daily and weekend newspapers in 2015. It has online subscriptions to the Irish Times and the Financial Times which are provided for use by staff. A mixed model involving the purchase of physical copies and online subscription to specific newspapers is considered to be an appropriate use of resources.
158. Deputy Clare Daly asked the Minister for Finance the number of staff working in his human resources section. [15448/16]
View answerI wish to inform the Deputy that there are eight staff working in the Human Resources Division in my Department's Office in Dublin. There are also five staff in my Department's Office in Tullamore, Co. Offaly who provide a HR transactional service to both the Department of Finance and the Department of Public Expenditure and Reform (including the National Shared Services Office and Office of Government Procurement). The Tullamore Unit is also responsible for the Facilities Management function for the Tullamore building.
159. Deputy Clare Daly asked the Minister for Finance the number of staff who work exclusively on constituency matters for him. [15464/16]
View answerI wish to inform the Deputy that I have 3 staff who work exclusively on constituency matters for me.
160. Deputy Clare Daly asked the Minister for Finance the changes in the numbers employed in his human resources section following the introduction of PeoplePoint. [15480/16]
View answerI wish to inform the Deputy that prior to the transition of my Department to PeoplePoint on 15th April, 2013 there were 19 staff employed in the Human Resources Division, 11 in the Dublin Office and 8 in the Tullamore Office. Currently there are 8 staff working in the Dublin Office and 5 in Tullamore. My Department's HR unit in Tullamore provide a HR transactional service to both the Department of Finance and the Department of Public Expenditure and Reform (including the National Shared Services Office and the Office of Government Procurement). The Unit is also responsible for the Facilities Management function for the Tullamore building.
Since the establishment of PeoplePoint staffing in the Tullamore Office decreased to 3 but has recently increased to 5 to take account of the expansion of services provided to the Department of Public Expenditure and Reform including the National Shared Services Office and the Office of Government Procurement.
161. Deputy Tony McLoughlin asked the Minister for Finance the measures he is considering to tackle the spiralling costs of car insurance; and if he will make a statement on the matter. [15514/16]
View answerAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products. The EU framework for insurance expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. The provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks.
The question of the cost of insurance is a complex one involving a number of Government Departments, State Bodies and private sector organisations and while the provision and the pricing of insurance policies is a commercial matter for insurance companies, this does not preclude the Government from introducing measures that may, in the longer term, lead to a better claims environment that could facilitate a reduction in claims costs.
My Department has embarked on a review of policy in the insurance sector which is being undertaken in consultation with the Central Bank and other Departments and Agencies. The objective of the Review is to recommend measures to improve the functioning and regulation of the insurance sector.
The first phase of the Review is focussed on the motor insurance compensation framework and this work is nearing completion. The next phase of the Review involves examining the factors contributing to the increasing cost of insurance and identifying what short-term measures can be introduced to help reduce the cost of insurance for consumers and businesses. Work on the Review of Policy in the Insurance sector will continue over the coming months.
Finally, Insurance Ireland operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. In the event that a person is unable to obtain a quotation for motor insurance or feels that the premium proposed or the terms are so excessive that it amounts to a refusal to give them motor insurance, they should contact Insurance Ireland, 5 Harbourmaster Place, IFSC, Dublin 1, Telephone +353 1 6761820, quoting the Declined Cases Agreement.
162. Deputy Mattie McGrath asked the Minister for Finance the amount of Value Added Tax refunds over €3,000 still outstanding in the Thurles tax district in County Tipperary; why it is taking so long to refund value added tax of over €3,000 in the Thurles tax district; and if he will make a statement on the matter. [15547/16]
View answerI am advised by Revenue that there are currently 163 Value Added Tax repayment claims, covering 132 separate taxpayers/businesses, for amounts over €3,000 under consideration by Tipperary Revenue District.
Of the 163 claims under consideration by Revenue 108 are the subject of specific enquiry with the taxpayer/business concerned. The balance are under review by Revenue, 87% of which have been received within the last month.
I am assured by Revenue that in general there is no undue delay in considering VAT repayment claims by the Tipperary Revenue District. Enquiries on a specific case can be directed by the taxpayer/business concerned to the Tipperary Revenue District.
163. Deputy Michael McGrath asked the Minister for Finance if a person or organisation buying a commercial loan must be a regulated entity; and if he will make a statement on the matter. [15549/16]
View answerI am informed by the Central Bank that there is no requirement for the purchaser of a commercial loan from a bank to be a regulated entity.
However, as the Deputy will be aware, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes including the Consumer Protection Code, the Code of Conduct on Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code which is being replaced by the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which comes into operation on 1 July 2016.
Under the Act, purchasers of loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank. Furthermore, it is important to highlight that the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract.
164. Deputy Pearse Doherty asked the Minister for Finance the number of annual prosecutions and corresponding tax, interest and penalties levied as a result of the general anti-avoidance rule since it was introduced in the Finance Act 2014, in tabular form; his views on the effectiveness of the rule; and if he will make a statement on the matter. [15558/16]
View answerI am informed by Revenue that section 87 of the Finance Act 2014 inserted sections 811C and 811D into the Taxes Consolidation Act 1997. These sections are replacements for the existing general anti-avoidance rule contained in sections 811 and 811A of the Taxes Consolidation Act 1997. The new provisions reformed and simplified the arrangements Revenue have to follow in order to challenge a transaction as a tax avoidance transaction. The general principles as to what constituted a tax avoidance transaction remain, broadly, the same under both sets of provisions.
Sections 811C and 811D apply to transactions commenced after 23 October 2014. The provisions of sections 811 and 811A continue to apply to transactions commenced before that date.
At this stage, the provisions of sections 811C and 811D have not been applied by Revenue. The reason for this is that tax returns based on avoidance transactions covered by the new provisions will only start to be filed on or after 31 October 2016. There is, theoretically, a very small possibility of a transaction started and finished in the period 23 October 2014 to 31 December 2014 being reflected in a tax return filed on or after 31 October 2015 but the likelihood of this is small.
In any event, the filing of a tax return that reflects an underlying tax avoidance transaction (the tax avoidance transaction itself is not described in the return) is only the start of a process of challenging such a transaction. Once an underlying transaction is identified, it must be thoroughly investigated and all relevant facts (commercial, legal and contractual) relating to the transaction established. Once these facts are established the transaction in its entirety needs to be analysed to establish the precise tax provisions that are being abused or misused. Only at this stage, a process which can take some time, would Revenue be in a position to challenge the transactions under the new rules by issuing tax avoidance assessments under section 811C.
While tax and interest must be paid once a transaction is found to be a tax avoidance transaction under the general anti-avoidance rule, civil tax penalties, as such, do not apply. Instead, a tax avoidance surcharge of 30 per cent of the tax avoided applies in avoidance cases. This surcharge may be reduced if a taxpayer agrees a settlement at an early stage of the process. Tax, interest and the tax avoidance surcharge applies under both the new and old anti-avoidance provisions, but it should be noted that in the case of transactions commenced before February 2006 only the tax avoided is payable where a transaction is found to be a tax avoidance transaction.
I am advised by Revenue that there are no criminal tax offences involving tax avoidance that can be subject to criminal prosecutions.
It should be noted that 452 cases under the general anti-avoidance legislation covering a potential of €168 million in tax are being actively managed currently.
165. Deputy Pearse Doherty asked the Minister for Finance the extent to which motor insurance companies use telematics in determining premiums; if his review of the cost of insurance is examining how telematics could influence prices; and if he will make a statement on the matter. [15583/16]
View answer169. Deputy Pearse Doherty asked the Minister for Finance if he is aware of and his plans to examine issues causing difficulties for returning emigrants in accessing car insurance, including for commercial purposes; and if he will make a statement on the matter. [15738/16]
View answerI propose to take Questions Nos. 165 and 169 together.
As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation but am prohibited from interfering in the provision or pricing of insurance products. The EU framework for insurance expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing, or terms and conditions of an insurance product.
The provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks. These are considered by insurance companies on a case by case basis. Variations in the costs and risks of providing motor insurance cover can vary between different countries.
With regard to the situation of returning immigrants, Insurance Ireland, which represents the insurance industry in Ireland, has informed me that, in general terms, where there has been no motor insurance in an individual's name and there is a gap of cover of two years or more since their last insurance, the no claims discount is deemed invalid. However, Insurance Ireland has further stated that if the individual can produce confirmation that they were continually insured and are claims free in their own name while they were away, this would be taken into consideration.
Insurance Ireland has also informed me that motor insurers in deciding on whether to offer cover and what terms to apply to cover use a combination of rating factors, such as the age of the driver, the type of car, claims record, driving experience, number of drivers, how the car is used, etc. Insurers do not all use the same combination of rating factors, prices vary across the market, and consumers are free to choose. Furthermore, Insurance Ireland has informed me that some insurance companies provide for the use of telematics for customers.
As the Deputy is aware, my Department is currently conducting a review of policy in the insurance sector. The current phase of this review is an examination of the factors which have led to the significant increase in the cost of motor insurance. This work will also aim to identify what short-term measures can be introduced to help reduce the cost for consumers and businesses, which may include telematics. The availability of motor insurance for returning emigrants will also be considered as part of this work.
Insurance Ireland operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. In the event that a person is unable to obtain a quotation for motor insurance or feels that the premium proposed or the terms are so excessive that it amounts to a refusal to give them motor insurance, they should contact Insurance Ireland, 5 Harbourmaster Place, IFSC, Dublin 1, Telephone +353 1 6761820 quoting the Declined Cases Agreement.
166. Deputy Pearse Doherty asked the Minister for Finance the cost of abolishing the universal social charge on all income up to €80,000 per year and applying it only to the amount above that. [15625/16]
View answerI am advised by Revenue that the first and full year costs to the Exchequer of abolishing Universal Social Charge (USC) on all incomes up to €80,000 per year and applying USC to the amount above €80,000 where income exceeds €80,000 are estimated to be in the order of €1,988 million and €2,747 million respectively.
These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.
167. Deputy Noel Rock asked the Minister for Finance his plans to recommend to the Central Bank a change in mortgage rules, specifically in relation to the ratio of 3.5:1 that is set between borrowing and income. [15688/16]
View answerThe existing Central Bank macro prudential measures for residential mortgage lending provides, inter alia, for a principal dwelling mortgage loan limit of 3.5 times gross annual income. It should, however, also be noted that this is a proportionate limit and that lenders have a discretionary flexibility, subject also to compliance with the provisions of the Consumer Protection Code and other relevant regulations including now the provisions of the Mortgage Credit Directive regarding the obligation to assess the creditworthiness of a consumer borrower, to exceed that loan to income threshold by up to 20 per cent of the euro value of all new lending on an annual basis for principal dwelling homes purposes.
As the Deputy is aware, the new Programme for a Partnership Government (PfPG) provides for a range of measures which seeks to improve the supply of housing and to protect and promote home ownership. It also states that the Government will work with the Central Bank in the context of its up-coming review of its mortgage lending limits. The Central Bank will commence this process tomorrow, June 15, and my Department will engage with the Central Bank on this. In addition, as Minister for Finance, I will also need to be consulted in due course on any new revised macro prudential regulations that the Central Bank may decide to be put in place arising from this review. However, in this process it should also be recognised that the Central Bank has a mandate to promote and protect financial stability and that it has an independence in the formulation of macro prudential measures towards the achievement of that objective.
168. Deputy Pearse Doherty asked the Minister for Finance his plans to develop additional models for estimating medium-term potential growth to ensure signs of overheating are detected, as per the fiscal council's suggestion; and if he will make a statement on the matter. [15737/16]
View answerMy Department is in the process of developing alternative models for estimating potential output. Considerable work has been done on this front, and is now nearing completion. An outline of this work is set out in Box 1, page 24, of the 2016 Stability Programme Update, published in April. The intention is to publish the technical work in the short-term. However, I would stress that for the purposes of assessing the cyclical position of the economy, the European Commission's harmonised methodology is still the relevant metric.
170. Deputy Micheál Martin asked the Minister for Finance his involvement and interaction with the fiscal council. [15602/16]
View answerThe Fiscal Council was established under the Fiscal Responsibility Act 2012, and it has a very specific mandate as a watchdog for budgetary planning and execution. While it is under the aegis of my Department, it is a fully independent voice that assesses the fiscal stance and assesses compliance with fiscal rules that Ireland signed up to under both the Stability and Growth Pact and the Fiscal Compact. In accordance with the "two-pack" EU regulations, an amendment to the Fiscal Responsibility Act 2012 in the Ministers and Secretaries (Amendment) Act 2013 assigned the function of endorsing, as it considers appropriate, the macroeconomic forecasts produced by my Department to the Fiscal Council.
The Council publishes two Fiscal Assessment Reports each year, following the Budget in the Autumn and the Stability Programme Update in the Spring. The reports assess the Government's macroeconomic and budgetary forecasts, the appropriateness of the fiscal stance, compliance with the budgetary rule, as well as detailing the Council's endorsement function. Following consideration of these reports by my officials and the Department of Public Expenditure and Reform, I respond publically to each Fiscal Assessment Report. While it is the case that I do not always share the Council's analysis in the Fiscal Assessment Reports, I very much value their expertise and their input as an independent voice in helping the Government to adhere to its own fiscal targets.
There are five members of the Council, including the Chair, and I have a role in appointing the members. In accordance with the "Guidelines for appointments to state boards" published by the Government in November 2014, the Public Appointments Service (PAS) manages an open selection process when a vacancy exists on the Board. Part of the open selection process involves a PAS-appointed advisory panel recommending candidates for appointment that are deemed to meet the published selection criteria. A list of these candidates is then submitted by the PAS for my consideration, following which I make an appointment to the Fiscal Council in accordance with the legislation.
Under the Fiscal Responsibility Act 2012, I approve the numbers of staff and their terms and conditions after consulting with the Minister for Public Expenditure and Reform. My Department facilitates the funding of the Council from the Central Fund in accordance with the Act. The Fiscal Council is required to give a copy of their annual accounts and their annual report to me each year and I am required under the Act to lay these before the Houses of the Oireachtas. I also have the power to appoint a person to examine the accounts of the Fiscal Council but this has not been needed to date.
I value the Fiscal Council's important role as an independent watchdog and, as indicated above, my interaction with the Council is only as required by its legislatively mandated role.
171. Deputy Robert Troy asked the Minister for Finance the changes to legislation surrounding approved minimum retirement fund investments in each of the years 2013 and 2014; his plans to alter the legislation; and if he will make a statement on the matter. [15892/16]
View answerFirstly, I should explain by way of background, that under the flexible options at retirement arrangements (the so-called "ARF option"), where an individual in a Defined Contribution pension savings arrangement is under age 75 at the time of exercising the option and does not meet the guaranteed pension income requirement of €12,700 per annum, that individual must place a maximum "set aside" amount of €63,500 (or the remainder of the pension funds if less than €63,500 after taking the retirement lump sum) in an Approved Minimum Retirement Fund (AMRF) or purchase an annuity with those funds.
Any amount of remaining pension funds in excess of €63,500 can be invested in an Approved Retirement Fund (ARF) with access to those funds at the owner's discretion (subject to tax, at the marginal rate and having regard to the imputed distribution requirements).
Finance Act 2011 increased the guaranteed pension income requirement from €12,700 per annum to an amount equal to 1.5 times the State Pension (Contributory) which at that time would have amounted to €18,000 per annum. That Act also increased the maximum "set-aside" amount required to be placed in an AMRF from €63,500 to an amount equivalent to 10 times the State Pension (Contributory) which at that time would have amounted to €118,900. In Finance Act 2013, I decided to rescind those increases and to return the pension income requirement and the "set-aside" requirement to their original levels (€12,700 and €63,500, respectively). Finance Act 2013 also included provisions to ensure that individuals impacted by the higher limits introduced by Finance Act 2011 were not disadvantaged.
In Finance Act 2014, I introduced changes to allow owners of AMRFs to draw-down up to 4% of the value of the assets in such funds on one occasion in each year instead of the facility to draw-down the accrued income and gains of such funds, as had applied prior to the changes.
The purpose of the AMRF is to ensure that an individual without the minimum guaranteed pension income for life has a pension "nest-egg" to provide for the latter years of his/her retirement. Up to Finance Act 2014, the capital invested in an AMRF could not be accessed until the AMRF owner reached age 75 (or met the guaranteed pension income requirement before then) at which point the AMRF becomes an ARF with unrestricted access to the funds, subject to taxation. While the capital sum in an AMRF could not be accessed, as set out, any income, profits or gains accrued from the investment of the capital could, up to the Finance Act 2014 changes, be withdrawn by the AMRF owner, subject to tax at the marginal rate.
Under the previous access arrangements for AMRFs, the extent of any income, profit or gains would depend on the performance of the investment options taken and could, therefore, be highly volatile with the possibility of little or no gains accruing in certain years. In addition, the scale of the capital allowed for in an AMRF, at €63,500, would not always permit for investment returns of any significant scale to be made using a prudent investment policy.
I decided to change the arrangements for AMRFs so as to allow AMRF owners voluntary, tax-liable access to a maximum of 4% of their AMRF assets each year up to the point at which the AMRF becomes an ARF. This change provides AMRF owners with access to a definitive and certain level of income from their AMRF rather than the uncertain level of income which access to the accrued income, profits and gains in the AMRF provided.
The change allowing access to a specified percentage of the capital in an AMRF is primarily aimed at those individuals whose AMRF constitutes a significant part of their retirement funds and who, while not wishing to purchase a pension annuity with those funds, may require access to a portion of these funds to provide a more certain form of supplementary income prior to reaching age 75. This facility also ensures that an individual will have some remaining funds in the AMRF at age 75 to provide for their remaining years, assuming the individual has not purchased a pension annuity in the meantime.
Individuals whose AMRF represents a less significant part of their retirement funds and whose circumstances would allow for greater investment risk and, therefore, potentially greater investment returns will be limited to the 4% level of asset draw down. However, this draw down will also be available to them for periods when their AMRF investments make losses or returns of less than 4% of the value of their AMRF assets and where, under the previous arrangement, they would not have been able to make a draw down or a drawdown of a lesser value than will now be permitted.
I have no plans at this time for further changes to the legislation dealing with AMRFs.
172. Deputy Pearse Doherty asked the Minister for Finance when the European Union Commission will issue a decision on a case (details supplied); and if he will make a statement on the matter. [15902/16]
View answerIn June 2014, the Competition Directorate of the European Commission announced its intention to open formal state aid investigations into tax rulings provided to a number of companies in various Member States of the European Union.
This announcement is part of a much wider review of tax ruling practice that is currently being undertaken by the European Commission covering all 28 Member States.
Since October 2015, investigations in three other Member States have concluded. In each of these cases the Commission found that the Member States granted an illegal State Aid to the companies in question.
I would like to emphasise that, while the Commission has opened a formal investigation in relation to one particular case involving Ireland, it has not made a final determination in the matter. There is no formal timeline for a when the final decision will be made in our case.
This a priority matter and Ireland has co-operated fully with the process to date and will continue to do so. Detailed and comprehensive responses have been provided to the Commission demonstrating that the appropriate amount of Irish tax was charged in accordance with the relevant legislation, that no selective advantage was given and that there was no State Aid.
I remain of the view that there was no breach of State Aid rules in this case and that the legislative provisions were correctly applied. In the event that the Commission forms the view that there was state aid, Ireland is entitled to challenge this decision in the European Courts. As the Government has already indicated, we will take that course of action, if necessary, to continue to vigorously defend the Irish position.
