Execution of Wills

Questions (130)

Robert Troy

Question:

130. Deputy Robert Troy asked the Minister for Finance his plans to amend the deed of family arrangement (details supplied); and if he will make a statement on the matter. [51705/18]

View answer

Written answers (Question to Finance)

I am advised by the Revenue Commissioners that the Capital Acquisitions Tax Consolidation Act 2003 allows for the re-distribution of assets that are to be transferred in a will or under the rules of intestacy in limited circumstances. Before receiving an asset to which a person is entitled, the person may disclaim or refuse the asset. However, a disclaiming beneficiary cannot choose who will then get the disclaimed asset which becomes part of the residue of the deceased person’s estate and is distributed accordingly. A recipient of the disclaimed and re-distributed asset is then treated as having received a taxable inheritance from the deceased person. 

In contrast, a re-distribution of assets received by family members under a deed of family arrangement gives rise to two potential charges to capital acquisitions tax; i.e.

1. a potential inheritance tax charge for the original beneficiary on his or her inheritance from the deceased person, and

2. a potential gift tax charge for the beneficiary receiving the asset under the deed of family arrangement from the original beneficiary.

As far as capital gains tax is concerned, deeds of family arrangements do not give rise to a charge to tax if certain conditions are met. Section 573 of the Taxes Consolidation Act 1997 provides that any variation made by deed of family arrangement in respect of the deceased person’s assets between family members within 2 years after the date of death (or such longer period as the Revenue Commissioners may allow) is to be regarded as made by that person at the time of his or her death.

It is worth noting that the tax treatment of gifts and inheritances in this State and in the U.K. is not directly comparable. The U.K. tax authorities apply a different basis of taxation whereby it is the value of the estate of the deceased person that is taxed and not the recipients of the assets as happens in this State. A further difference between the tax treatment in both jurisdictions is that the receipt of gifts is not generally taxable in the U.K.

I have therefore no plans to make any changes to the current tax treatment for CAT or CGT in this regard.

Tax Agreements

Questions (131)

Micheál Martin

Question:

131. Deputy Micheál Martin asked the Minister for Finance the status of the EU proposal to introduce digital taxation; and if he will make a statement on the matter. [51635/18]

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Written answers (Question to Finance)

The Deputy is aware that the European Commission proposal for an interim Digital Services Tax, which imposes a 3% levy on the turnover of certain companies’ digital activities, has been debated among Member States at both a technical and political level for some months.  

The Digital Services Tax proposal was included as an item for policy agreement at ECOFIN on 4 December, where Finance Ministers were asked to agree the scope of the proposal.  The debate was held in public session.   

An agreement was not reached, with several Member States, including Ireland, expressing reservations about the proposal. An amended Franco-German proposal was tabled at ECOFIN which seeks to narrow the scope of the digital tax to online targeted advertising only. Subsequent to the discussion the Presidency proposed that Member States consider the Franco-German proposal in the coming months.

Technical discussions will now commence on this proposal.  It will be for the Romanian Presidency to determine whether and when this proposal will next be discussed by Ministers. Ireland will of course engage constructively in this debate as we have throughout this process. 

I have always been clear that I fully recognise that further change is coming to the international tax environment. I remain convinced that global agreement at the OECD offers the most appropriate way for delivering these changes. Intensive work is underway at the OECD and it is expected that an update on this work will be published in mid 2019 with a view to reaching agreement before the end of 2020. 

Irish Fiscal Advisory Council Reports

Questions (132)

Micheál Martin

Question:

132. Deputy Micheál Martin asked the Minister for Finance if he will report on the recent Fiscal Council report; and if he will make a statement on the matter. [51636/18]

View answer

Written answers (Question to Finance)

As per my response to the Deputy in Parliamentary Question number 163 of 4 December 2018, I will prepare a formal response to IFAC’s Fiscal Assessment Report which will be published in due course. As is the established practice, this will be published on my Department's website once issued. 

Economic and Monetary Union

Questions (133)

Micheál Martin

Question:

133. Deputy Micheál Martin asked the Minister for Finance if he will report on future economic and monetary integration in the EU; the developments on same; his views on proposals from France and Germany; and if he will make a statement on the matter. [51638/18]

View answer

Written answers (Question to Finance)

At the June 2018 Euro Summit, EU Leaders asked Finance Ministers to work on the terms of reference for the operation of the common backstop to the Banking Union’s Single Resolution Fund, which exists to assist in the resolution of systemically important banks that are failing or deemed likely to fail. We were also directed to develop a term sheet for our ongoing work on reform of the European Stability Mechanism, which is the euro area’s crisis lending body.

In addition to these issues, the Eurogroup has also been discussing possible new budgetary instruments aimed at strengthening the euro area. This has included proposals put forward by the European Commission and by France and Germany for the establishment of instruments for competitiveness, convergence and stabilisation. A proposal was put forward by France and Germany in the joint Meseberg Declaration released in June. This was followed by an outline of the proposal for a euro zone budget, to be part of the EU budget, which was released in November.

At the Eurogroup meeting on the 3 December, my colleagues and I were able to agree a comprehensive package of measures to be put forward to Leaders at the 14 December Euro Summit. The Report to Leaders on EMU Deepening outlines what we have agreed. This includes a comprehensive terms of reference for the common backstop to the Single Resolution Fund and reforms to the European Stability Mechanism’s toolkit of financial instruments and its role within programmes of financial assistance. In addition, Leaders are asked for guidance on the way forward on the French-German proposals, which are at a very early stage of discussions between Finance Ministers, relative to our work on completing Banking Union and ESM reform. 

Revenue Commissioners

Questions (134)

Michael McGrath

Question:

134. Deputy Michael McGrath asked the Minister for Finance his plans for the restructuring and realignment of the internal structure of the Revenue Commissioners; the estimated impact on staff and the location in which services are provided; and if he will make a statement on the matter. [51664/18]

View answer

Written answers (Question to Finance)

The Deputy will be aware that Revenue operates independently from Ministerial direction and matters relating to its internal structure are the responsibility of the Commissioners.

I have been advised by Revenue that it continually develops its structure to ensure optimum alignment of resources with the management of risk and the delivery of high-quality service to support voluntary and timely taxpayer compliance. For example, the Revenue Statement of Strategy for the period 2017-2019 indicates that Revenue will continue to ensure its structure accommodates and reflects changes in the customer base, the evolving national and international tax and customs environment, and the impact of significant changes for tax administration such as the PAYE Modernisation programme.

In the last three years Revenue has reorganised its legislation divisions to set up an International Division, established  a stand-alone Customs Division, reorganised its Investigation and Prosecutions Division and established teams in Planning, ICT and the Revenue Solicitor’s Divisions outside Dublin. 

The current phase of structural realignment involves moving from what was previously a single Large Cases Division and four geographically based Regions (Border Midland West Region, Dublin Region, East South-East Region and South West Region) to a new structure comprising of five new Divisions based on a nationally segmented customer base.

The new national Divisions are Large Corporates Division, High Wealth Individuals Division, Medium Enterprises Division, Business Division and Personal Division. As part of Revenue’s workforce planning framework, the realignment includes additional resources being assigned to manage the risks in larger cases, including high wealth individuals.

Revenue also advises me that it will continue to maximise the benefit of its geographic spread across the country and provide opportunities for diversity of roles, responsibilities and opportunities across the organisation. The realignment project will, over time, involve changes in roles and responsibilities for staff and I understand that Revenue continue to engage in a comprehensive programme of employee engagement to embed the changes throughout the organisation.

I would like to commend Revenue for its proactive approach in aligning its resources in order to continue to meet the myriad of challenges it faces on both the national and international fronts.

Tax Code

Questions (135)

Pearse Doherty

Question:

135. Deputy Pearse Doherty asked the Minister for Finance his views on whether legislative changes are required to the tax code in view of a Tax Appeals Commission ruling (details supplied); and if he will make a statement on the matter. [51690/18]

View answer

Written answers (Question to Finance)

I am advised by Revenue that in accordance with section 114 of the Taxes Consolidation Act 1997, where an employee is necessarily obliged to incur and defray out of the emoluments of the employment expenses of travelling in the performance of the duties of the employment, or otherwise to expend money wholly, exclusively and necessarily in the performance of those duties, there may be deducted from the emoluments of the employee to be assessed to income tax the expenses so necessarily incurred and defrayed.

Arising from an employee’s entitlement to a tax deduction under that provision in respect of certain expenses, there exists a long-standing Revenue practice under which employers may reimburse tax-free to employees the expenses of travel (and subsistence relating to that travel), subject to certain conditions being fulfilled.  I am advised by Revenue that the conditions under which the reimbursement to employees of the expenses of travel and subsistence may generally be made without deduction of tax are as follows:

(a) firstly, the employee must be temporarily away from his/her normal place of work in the performance of the duties of his/her employment;

(b) secondly, the travel expenses must be necessarily incurred in the performance of the duties of the office or employment, and

(c) thirdly, arising from a long-accepted position, supported by tax case law, the expenses of subsistence must attach to travelling necessarily incurred in the performance of the duties of the office or employment.

Moreover, provided the employee bears the cost of all expenses of travel necessarily incurred in the performance of the duties of his/her employment (and bears the cost of subsistence relating to such travel), Revenue will disregard for income tax purposes the reimbursement of expenses of travel and subsistence, where such reimbursement is made by way of:

(a) a flat rate up to, but not exceeding, the prevailing Civil Service rates for travel and subsistence, or

(b) a flat rate based on any other schedule of rates and related conditions of travel and subsistence, which do no more than reimburse the employee for actual expenditure necessarily incurred.

Revenue noted the comments of the Appeal Commissioner in the case mentioned above (Tax Appeals Commission Determination 20TACD2018).

Revenue has published extensive guidance on the Tax Treatment of the Re-imbursement of Expenses of Travel and Subsistence to Office Holders and Employees – Part 05-01-06 of the Tax and Duty Manual refers – and, notwithstanding the Appeal Commissioner’s comments,  has no plans to alter its practice or published guidance on this matter.

VAT Exemptions

Questions (136)

Richard Boyd Barrett

Question:

136. Deputy Richard Boyd Barrett asked the Minister for Finance if the drugs Nivolumab and Pembrolizumab will be made VAT exempt and tax allowable in circumstances in which a patient has no option but to self-fund these drugs; and if he will make a statement on the matter. [51695/18]

View answer

Written answers (Question to Finance)

The VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In accordance with Irish VAT legislation, oral medicines (for human consumption), licensed or authorised by the Health Products Regulatory Authority, are liable to VAT at the zero rate. Non-oral medicines (products such as injections and infusions) are liable to VAT at the standard rate, currently 23%. There currently is no provision under existing VAT law that would make it possible to apply a reduced rate or zero rate to the supply of such products.

Under the EU VAT Directive, any changes to VAT rates outside of what is currently permitted by the EU VAT Directive must be negotiated at EU technical working groups and ultimately agreed by the EU Council of Finance Ministers.

Waterways Ireland Staff

Questions (137)

Anne Rabbitte

Question:

137. Deputy Anne Rabbitte asked the Minister for Finance if the flat rate allowance for Waterways Ireland personnel who perform their duties on the River Shannon was included in the review of flat rate allowances by the Revenue Commissioners in 2018; and if he will make a statement on the matter. [51701/18]

View answer

Written answers (Question to Finance)

I am advised by Revenue that their review of the flat rate expenses regime is ongoing and that it is intended to have the review of all flat rate expense categories completed by the end of 2019. Revenue have indicated that the effective date for implementation of any changes to particular flat rate expense categories will be 1 January 2020.  

Revenue have also confirmed that all 53 employment categories which benefit from the regime are being reviewed.

NAMA Social Housing Provision

Questions (138)

Róisín Shortall

Question:

138. Deputy Róisín Shortall asked the Minister for Finance the number of properties that have been transferred to the National Asset Residential Property Service, NARPS, since 2014 by year and dwelling type, that is, apartments, houses and so on in relation to property sales in County Dublin, that is, the four Dublin local authorities; the number of estate homes and apartments completed by NAMA since 2014 including Q1 and Q2 2018, by year; and the number of new units that have been completed by NAMA that remain unsold. [51707/18]

View answer

Written answers (Question to Finance)

As regards the first part of the Deputy’s question, I am advised that NARPS (National Asset Residential Property Services D.A.C.) was established by NAMA in 2012 in order to expedite the provision of much needed social housing. NARPS operates by purchasing properties from its debtors and receivers, at full market value, and making them available to Local Authorities or Approved Housing Bodies by way of a standardised long term lease. Since its establishment, NARPS has completed the purchase of 587 units located in Co. Dublin from NAMA debtors and receivers. The breakdown of these units by year, Local Authority and unit type is shown in Table 1.

 Table 1:

NARPS Completed Purchases (Dublin Only)

Year

Dublin

DCC

Fingal

DLRD

SDCC

Apartments/   Duplexes

Houses

2013

20

-

20

-

-

19

1

2014

133

133

-

-

-

133

-

2015

198

133

-

-

65

198

-

2016

84

6

30

30

18

54

30

2017

147

-

15

132

-

132

15

2018

5*

-

-

-

5

 

5

 

587

272

65

162

88

536

51

* a further 18 units are scheduled to complete prior to end-2018.

 As regards the second part of the Deputy’s question, I wish to point out that NAMA does not itself develop new residential units. Rather, subject to commercial viability, NAMA provides funding to its debtors and receivers to enable them to construct residential properties on sites which they control and which are secured to NAMA. The number of new residential units delivered through NAMA funding since 2014 in the whole of Ireland is set out in Table 2.

 

Table 2:

Year

Units

Houses

Apartments

2014

1,502

514

988

2015

1,029

825

204

2016

2,117

1405

712

2017

2,503

1,764

739

2018   (Q1-Q3)

862

640

222

Total

8,013

5,148

2,865

I am advised that 9% (306) of all units which have been launched for sale are currently unsold. This equates to about six unsold units per active development. The figure for unsold units includes show houses that are held back for marketing purposes and units that were launched to the market only recently but which are expected to be sold in due course.

Tax Code

Questions (139, 140, 147)

John Lahart

Question:

139. Deputy John Lahart asked the Minister for Finance his views on the fact that the employees of a company (details supplied) are having their health insurance entitlements taxed; and if he will make a statement on the matter. [51739/18]

View answer

Brendan Ryan

Question:

140. Deputy Brendan Ryan asked the Minister for Finance the rationale behind taxing a scheme (details supplied); if an analysis has been undertaken of the ultimate cost if members leave the scheme due to the taxation measures planned; and if he will make a statement on the matter. [51757/18]

View answer

Clare Daly

Question:

147. Deputy Clare Daly asked the Minister for Finance if the Revenue Commissioners have taken a decision to collect tax on the medical service provided by a company (details supplied) to its 3,000 pensioners from January 2019; and if he will make a statement on the matter. [51915/18]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 139, 140 and 147 together.

The Deputies will be aware that the administration of the tax code is a matter for Revenue. The Deputies will also be aware that, in accordance with the provisions of the Taxes Consolidation Act 1997 as regards the confidentiality of a taxpayer’s affairs, Revenue does not comment on the tax affairs of individual taxpayers.

The position in tax law is that where an employer provides free access to medical services to employees or provides refunds to employees in relation to medical services paid for by the employees, the employees are subject to tax on the services or refunds received. However, Revenue does not seek to apply benefit-in-kind where employees have free access to a general practitioner employed or retained by their employer. In addition, one medical check-up per year, and check-ups that are mandatory for work purposes, may also be provided. These exceptions are set out in published Revenue guidelines, and they apply as appropriate to all employers.

Where free access to medical services is provided to retired employees by their former employer, these services are not taxable. If retired employees are reimbursed by their former employer for medical services, the amounts reimbursed are taxable.

The relevant tax legislation applies to all employers equally and there are no exceptions to the aforementioned rules for particular employers, employees or retired employees.  The manner in which any company provides services to its employees or retired employees is entirely a matter for that company to agree with their employees and retired employees.

Insurance Industry

Questions (141, 142, 143, 144)

Michael McGrath

Question:

141. Deputy Michael McGrath asked the Minister for Finance the consequences for consumers of the collapse of a company (details supplied); the number of policy holders affected; the recourse open to those consumers; and if he will make a statement on the matter. [51803/18]

View answer

Michael McGrath

Question:

142. Deputy Michael McGrath asked the Minister for Finance the position for customers that had latent defects insurance and structural guarantee insurance, or both, with a company (details supplied); if his attention has been drawn to the significant consequences for these consumers; if these consumers will be transferred to another firm; and if he will make a statement on the matter. [51804/18]

View answer

Michael McGrath

Question:

143. Deputy Michael McGrath asked the Minister for Finance the consequences for consumers here of the collapse of a company (details supplied); the number of policy holders affected; the recourse open to those consumers; and if he will make a statement on the matter. [51806/18]

View answer

Michael McGrath

Question:

144. Deputy Michael McGrath asked the Minister for Finance the position for persons that had latent defects insurance and structural guarantee insurance with a company (details supplied); if his attention has been drawn to significant consequences for these persons; if they will be transferred to another company in view of the collapse of the company; and if he will make a statement on the matter. [51807/18]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 141 to 144, inclusive, together.

The Central Bank of Ireland has advised me that it was notified by the Danish Financial Supervisory Authority on 7 March 2018 that it had ordered Alpha Insurance A/S to cease writing new business including renewal of existing contracts and business with immediate effect. It was further notified on 9 May 2018 that the liquidators of the insurance company Alpha Insurance A/S had filed a petition for bankruptcy.

The Central Bank has indicated that as Alpha Insurance A/S is a Danish based insurance firm, it is subject to prudential supervision by the Danish Financial Supervisory Authority, and therefore it had no role in this decision. The Central Bank has also informed me that Alpha Insurance A/S was selling non-life insurance policies, including structural warranty insurance, in Ireland through the broker network on a freedom of services basis and that it also operated in Denmark, France, Germany, Greece, Italy, Norway, the United Kingdom and Spain. 

The Central Bank has been informed by the Danish insolvency administrators that Alpha Insurance A/S had just under 12,000 customers in Ireland (11,931):

Insurance line

No. of policies

Pet insurance 

9,316

 Latent defect/structural warranty insurance

1,595

 GAP insurance

509

 Mortgage protection

357

 Income protection

148

 Loan protection

6

 Total

 11,931

Alpha Insurance a/s has published country specific information for policyholders, including Ireland, on their website www.alphagroup.dk/ireland. While full compensation from the bankruptcy estate is unlikely, partial refunds may be available. The website gives information on how to claim premium refunds and other claims.  The Danish Guarantee Fund may also cover premium refunds for some private insurances depending on the specifics of each case.

In terms of structural warranty/latent defects insurance, in many cases this would have been initially purchased by the developer of a property or properties. Therefore, the owners of any impacted properties may wish to get in contact with the developer in the first instance to see if alternative cover can be arranged.

Ultimately, should there be a claim on a policy, there may be assistance available from the Danish Insurance Guarantee Fund in the first instance. If such an application were unsuccessful, there may then be recourse to the Irish Insurance Compensation Fund to recover 65% of the cost of a claim, up to a ceiling of €825,000 per claim subject to the particular circumstances of the claim and the relevant provisions of the Insurance Act 1964.

Tax Avoidance

Questions (145)

Michael McGrath

Question:

145. Deputy Michael McGrath asked the Minister for Finance his plans to review the changes made in the Finance Act 2017 to section 135 of the Taxes Consolidation Act 1997; if he is satisfied as to the way in which it is operating; his views on whether it is preventing bona fide commercial transactions from taking place; and if he will make a statement on the matter. [51823/18]

View answer

Written answers (Question to Finance)

Arising from information brought to my attention by Revenue concerning avoidance schemes, a number of amendments to the tax code were made in the Finance Act 2017. One of the amendments to which the Deputy refers was an amendment to section 135 TCA. This amendment nullified a cash extraction scheme whereby shareholders extracted distributable reserves from their corporate entities but avoided an income tax charge on the receipt of these funds. In essence, the scheme sought to substitute a capital gains tax charge for an income tax charge and where those individuals could also avail of retirement relief under the capital gains tax provisions in many instances no tax was paid on the receipt of these funds.

The amendment passed by the Oireachtas only applies where an arrangement was entered into by a shareholder disposing of shares or securities in a company and the consideration is to be met directly or indirectly from the assets of that company. Revenue has published guidance which makes clear that bona-fide transactions are not affected as such transactions do not entail shareholders entering into arrangements to secure that the proceeds from any share sale are met from their company.

Neither my Department nor Revenue is aware of any instance where a bona-fide transaction did not proceed arising from this amendment.

Brexit Issues

Question No. 147 answered with Question No. 139.

Questions (146)

Lisa Chambers

Question:

146. Deputy Lisa Chambers asked the Minister for Finance if he has formally met with his UK counterpart to discuss Brexit and its impact on east-west trade reciprocal arrangements and all other Brexit related matters that fall within the remit of his Department; the number of times they have formally met to discuss Brexit; and if he will make a statement on the matter. [51887/18]

View answer

Written answers (Question to Finance)

As the Deputy will be aware, the negotiations on both the EU-UK Withdrawal Agreement and political declaration on the framework for the EU-UK future relationship, both of which we were endorsed by the European Council on 25 November, were conducted on behalf of the EU27 by the EU's Chief negotiator, Michel Barnier, and the Commission's Article 50 Taskforce. 

Brexit is a priority issue for this Government, and the Taoiseach, my cabinet colleagues and I have taken every opportunity to engage with EU partners and the UK to advance Ireland’s priorities. I have engaged regularly with Chancellor Hammond during the 2018 Ecofin meetings. I also met directly with Chancellor Hammond in London on 5 March 2018.

The Government has already taken a number of key decisions on measures to support East – West Trade. These include staffing, ICT and infrastructure measures to implement necessary checks and controls at our ports and airports.  To support businesses, the Government provided dedicated Brexit support measures in Budgets 2017, 2018 and 2019. Ireland is working closely with the EU and fellow Member States to discuss and to facilitate the use of the UK as a landbridge post Brexit.

Question No. 147 answered with Question No. 139.

Home Renovation Incentive Scheme

Questions (148)

James Lawless

Question:

148. Deputy James Lawless asked the Minister for Finance if the home renovation incentive will be finished in December 2018; if so, if contracts must be paid in advance of 31 December 2018 if the contract has commenced before Christmas 2018 but is not completed until January 2019 which may occur due to adverse weather condition; and his views on whether this is acceptable. [51919/18]

View answer

Written answers (Question to Finance)

The Home Renovation Incentive (HRI) is provided for in section 477B of the Taxes Consolidation Act 1997.  As the Deputy will be aware, the HRI provides a tax relief by way of an income tax credit in respect of expenditure on qualifying work. Qualifying work is any repair, renovation or improvement works carried out on principal private residences or rental properties by tax compliant contractors. The relief is granted in the two tax years following the tax year in which payment for the qualifying work is made.

Revenue advise me that to qualify for relief under the incentive, the qualifying work must be carried out no later than 31 December 2018, which is the expiry date for the incentive.  However, where planning permission is required for the qualifying work, then provided planning permission has been granted no later than 31 December 2018, any qualifying work carried out between 1 January 2019 and 31 March 2019 will be deemed to have been carried in 2018 and can qualify for the relief.  Where planning permission is not required for the qualifying work, any work carried out after 31 December 2018 will not qualify for relief.