Bank Charges

Questions (147)

Pearse Doherty

Question:

147. Deputy Pearse Doherty asked the Minister for Finance his views on whether banks should be compelled to charge all transaction fees at the point of purchase in the interest of transparency; and if he will make a statement on the matter. [16143/19]

View answer

Written answers (Question to Finance)

I understand this to mean that the cost of a transaction would be notified to a customer at the time of the transaction rather than being notified to them at the end of the two or three month billing period.

The European Communities (Payment Services) Regulations 2009 (PSR) and the Consumer Protection Code 2012 contain certain requirements in relation to the information to be provided about charges to ensure that the customer is aware in advance of the amount of a charge for the provision of certain services.

The PSR require that payment service providers:

- provide information on all charges payable by the user to the provider and, where such charges can be broken down into components, a statement of those components.

- agree, between the payment service user and the payment service provider, any charges imposed. These charges shall be appropriate and in line with the payment service provider’s actual costs.

- provide information on all charges applicable before a user uses a payment service.

The Consumer Protection Code 2012 (the Code) contains a number of provisions relating to charges which regulated entities including credit institutions must comply with, except when providing a payment service and/or issuing electronic money. Under the Code regulated entities must:

- make full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer.

- provide consumers with a breakdown of all charges, including third party charges prior to providing a product or service to the consumer. Where such charges cannot be ascertained in advance, notify the consumer that such charges will be levied as part of the transaction.

- display a schedule of fees and charges in public offices, in a manner that is easily accessible to consumers. If the regulated entity has a website, its schedule of fees and charges must also be made available on the website.

- notify affected consumers of increases in charges, specifying the new charge and the old charge, or the introduction of any new charge, at least 30 days prior to the change taking effect.

- where charges are accumulated and applied periodically to accounts and amount to €10 or more, notify the consumer at least 10 business days in advance of the deduction of the charges and give each consumer a breakdown of such charges.

I can see how the premise of the question could operate for a cash withdrawal from the specific bank's ATM when the transaction is taking place. However, I am not clear how this could operate in the case of for example a debit card purchase where the bank's technology is not necessarily being used. Nor am I clear on how it would operate when another ATM network is being used or in the case of an internet transaction on a third party website.

I am satisfied that consumers are in a position to inform themselves of the charges that they are likely to incur but there is always room for greater transparency. For example, I am aware of certain financial service providers who use technology to provide additional information to customer by sending a text message when they are in danger of becoming overdrawn. If customers are unhappy with their financial service provider for any reason, including cost or information provided, they have the right to switch to a different provider.

In this regard, I would encourage customers to look at my Department's website www.switchyourbank.ie which provides useful information on switching financial products.

Bank Charges

Questions (148)

Pearse Doherty

Question:

148. Deputy Pearse Doherty asked the Minister for Finance the reason certain banks are allowed discriminate in their fee structures against customers with less than a certain amount in their account by imposing fees; and if he will make a statement on the matter. [16144/19]

View answer

Written answers (Question to Finance)

In fulfilling its statutory role under Section 149 of the Consumer Credit Act, 1995 (the Act), I understand that the Central Bank assesses each notification received from a credit institution pursuant to the Act, where they wish to introduce any new customer charge or increase any existing customer charge in respect of certain services, in accordance with the specific assessment criteria set out in the Act.

Approvals are issued in the form of a letter of direction and the entity is legally bound to comply with this letter of direction. The letter of direction sets out the maximum amount the credit institution is allowed to charge. Credit institutions are free to impose any pricing differentials for the service up to the permitted maximum and are free to waive fees at their discretion. If customers are unhappy with their current account provider for any reason, including cost, they have the right to switch to a different provider.

In this regard, I would encourage customers to look at my Department's website www.switchyourbank.ie which provides useful information on switching financial products.

Financial Transactions Tax

Questions (149, 150)

Brendan Howlin

Question:

149. Deputy Brendan Howlin asked the Minister for Finance the position of Ireland with regard to the financial transaction tax proposed by France and Germany as a measure to bridge the EU budget gap due to Brexit and to provide for a specific eurozone budget; and if he will make a statement on the matter. [16170/19]

View answer

Brendan Howlin

Question:

150. Deputy Brendan Howlin asked the Minister for Finance the yield that would arise from a financial transaction tax based on the French model on Irish transactions levied at a rate of 0.1% on share and bond transactions and 0.01% on derivative products; the way in which the French proposal differs from the Irish stamp duty regime that applies only to share transactions on Irish incorporated companies; and if he will make a statement on the matter. [16171/19]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 149 and 150 together.

Both questions appear to refer to the model of Financial Transactions Tax (FTT) proposed by the European Commission, initially in 2011 and then revised under the EU’s enhanced cooperation procedure in February 2013. The proposed rate on exchanges of shares was 0.1% and the proposed rate for derivative transactions was 0.01%.

Since it was first mooted, Ireland has had concerns in relation to the FTT proposals, which are widely shared amongst other Member States, including some of the countries participating in enhanced cooperation. In line with those concerns, I continue to believe that the tax only makes sense if it covers many countries or else transactions will shift toward those financial centres which are not covered by it.

If however Ireland were to participate in an EU wide FTT, this would necessitate the abolition of our current tax, a stamp duty, on financial transactions. I am advised by Revenue that the yield from the Irish stamp duty of 1% on transactions in shares, stocks and marketable securities was €420.7m in 2018 and €425.3m in 2017. Instruments used in the financial services industry such as derivatives are generally exempt from stamp duty, unless they relate to immovable property in Ireland or shares in Irish registered companies.

The FTT proposal is still being discussed by Eurogroup Finance Ministers and by the ten Member States involved in the enhanced cooperation process, which formed following the failure of the 2011 proposals to gain sufficient support. As I have already noted, Ireland, which is not one of the ten, has not changed its position.

Notwithstanding this, we are not inclined to stand in the way of any other EU Member States that may wish to work together to implement a Financial Transactions Tax.

It is not possible to accurately estimate from data held by Revenue or my Department the yield of an FTT modelled on the proposed EU one, i.e. a tax of 0.1% on share and bond transactions and 0.01% on derivative products.

Finally, I am informed by my Department that the FTT has not been formally tabled in the discussions on the EU Budget’s Own Resources to date.

Tax Code

Questions (151)

Jan O'Sullivan

Question:

151. Deputy Jan O'Sullivan asked the Minister for Finance the status of the probe carried out by the Revenue Commissioners into reports that cost of living increases due to those holding private pensions were not paid by some insurance companies under schemes, including those for which an annuity was paid and which required such cost of living increases to be paid to those pension holders; and if he will make a statement on the matter. [16195/19]

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Written answers (Question to Finance)

The legislation governing the tax treatment of pensions is contained in Part 30 of, and Schedules 23 to 23C to, the Taxes Consolidation Act 1997. In addition, the Revenue Pensions Manual gives general guidance on, among other things, how this legislation is to be applied.

Revenue rules in relation to “Increases of Pensions in Payment” are set out in Chapter 6.8 of the Revenue Pensions Manual. Guaranteed increases of a pension in payment may be made by using either of the following formulae-

- a fixed increase of not more than 3% per annum compound, or

- an increase linked to the Consumer Price Index, or another similar agreed index.

The purpose of these rules is to maintain the real value of pension payments and consequently these rules allow for the real value of pensions in payment to be maintained over the course of a pensioner’s lifetime. The rules in question have been in existence for over 30 years.

In 2018 reports emerged to the effect that some pension providers are not “paying out” on what are known as 5pc escalators (that is, a fixed yearly increase of 5% in the amount of pension payments) in cases where the increase had been paid for at the time the pension was purchased.

I am informed that Revenue has made enquiries into this matter and can confirm there are 1,080 such policies in existence of which 160 policies are currently being restricted and additional policies may be restricted in future. Revenue is engaging with the insurance industry in relation to this matter and will meet the representative body, Insurance Ireland, later in April where this matter will be raised.

VAT Rebates

Question No. 153 answered with Question No. 146.

Questions (152)

Peter Burke

Question:

152. Deputy Peter Burke asked the Minister for Finance if the option of granting the VAT refund to persons buying disability aids in advance of purchase will be examined (details supplied); if the barrier the post-purchase refund has on persons with disabilities will be examined; and if he will make a statement on the matter. [16202/19]

View answer

Written answers (Question to Finance)

Value Added Tax (Refund of Tax) (No. 15) Order 1981 provides for payment of VAT to a “disabled person”, as defined in the Order, in respect of VAT on qualifying goods which are supplied to or imported by the person. To qualify for this payment, the disabled person must provide an invoice in respect of the goods supplied or a receipt for VAT paid on importation of those goods.

There are no provisions in the Order which would allow for such a payment to a disabled person prior to the supply or importation of the qualifying goods.

Question No. 153 answered with Question No. 146.

Tax Code

Questions (154)

Richard Boyd Barrett

Question:

154. Deputy Richard Boyd Barrett asked the Minister for Finance if it is a legal requirement for the Revenue Commissioners to issue P60s by 15 February; and if he will make a statement on the matter. [16217/19]

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Written answers (Question to Finance)

I am advised by Revenue that, for tax years up to and including 2018, Regulation 27 of the Income Tax (Consolidated) Employments Regulations 2001 imposes a statutory obligation on employers to issue a P60 certificate to all employees who are in employment on 31 December in the tax year. The P60 for a tax year contains details of annual pay, tax, USC and PRSI deductions and is required to be issued by the employer before 15 February in the following tax year. Thus, employers were obliged to issue 2018 P60s before 15 February 2019.

With the introduction of PAYE Modernisation from 1 January 2019, employers will no longer be obliged to issue a P60 certificate to their employees. Instead, Revenue will make available to employees an annual statement providing details, as reported to Revenue, of their pay and tax for all their employments in the year. This statement will be available through Revenue’s online service for employees, myAccount. The first end of year statements will be as respects the tax year 2019 and will be available from 15 January 2020.

Revenue Commissioners

Questions (155)

Tom Neville

Question:

155. Deputy Tom Neville asked the Minister for Finance if the files of persons (details supplied) will be reviewed; and if he will make a statement on the matter. [16240/19]

View answer

Written answers (Question to Finance)

I am advised by Revenue that it has recently reviewed the tax affairs of the persons in question to ensure they have received their full tax credit entitlements.

The review identified some underpayments of tax, which Revenue has agreed to collect over an extended number of years to minimise the financial burden on the persons. Revenue has also confirmed that it has been in direct contact with the persons to explain how the underpayments occurred and to clarify how the amounts involved would be collected.

Brexit Preparations

Questions (156)

Peadar Tóibín

Question:

156. Deputy Peadar Tóibín asked the Minister for Finance the amount he expects to spend in each of the next ten years on making Ireland Brexit ready; the estimated financial implications of Brexit for the next ten years; and if he will make a statement on the matter. [16383/19]

View answer

Written answers (Question to Finance)

I, as Minister for Finance, will focus on the latter part of the question. The joint ESRI and Department of Finance estimates of the potential macroeconomic impacts of Brexit on the Irish economy was published on 26th March. Given both the political and economic uncertainty, a range of alternative scenarios are considered.

This new study finds that, compared to a no Brexit baseline, the level of GDP in Ireland ten years after Brexit would be around 2.6 per cent lower in a Deal scenario and 5.0 per cent lower in a Disorderly No-Deal scenario respectively. This assessment shows that all Brexit scenarios will imply a slower pace of growth with negative consequences throughout the economy.

The study emphasises the negative impact Brexit will have on the Irish labour market. The results from the study show that, in the long-run, employment would be 1.8 per cent lower in a Deal scenario, and 3.4 per cent lower in a Disorderly No-Deal scenario respectively, compared to a situation where the UK stays in the EU.

The impact would be significant with employment growth slowing sharply and unemployment rising. Tax revenue would be lower, and expenditure would rise. The general government balance would worsen by an average of ½ a percentage point of GDP over the medium-term, and by nearly 1 per cent over the long-term, in the disorderly no-deal Brexit scenario.

The deterioration in the fiscal balance would be structural, not cyclical in nature. This would reflect a permanent reduction in the size of the economy and consequently in the amount of tax revenue it generates. The implication of such an adjustment would require detailed reflection and this will be addressed in the Stability Programme Update and the Summer Economic Statement in the coming months.

It is important to recognise that such estimates may not capture the full impact, and the figures may be conservative. Indeed, the impact in certain exposed sectors and regions will be worse than the average.

It has always been clear from the published studies, including those by the Department of Finance, that Brexit, in whatever form it takes, will have a negative impact on our economy and our living standards, and that this impact increases with the harder Brexit scenarios.

It is imperative to boost the resilience of the Irish economy in order to minimise, in so far as is possible, any future disruption. Since the UK referendum in 2016, all of our national Budgets have been framed to prepare for the challenge of Brexit. The economic and fiscal policies, which we have pursued, mean that the economy is now in a better position to weather the impacts of Brexit.

Retail Sector

Questions (157)

Tom Neville

Question:

157. Deputy Tom Neville asked the Minister for Finance the regulation under which retailers are able to charge a fee if a credit card transaction is under approximately €5 in some instances; and if he will make a statement on the matter. [16433/19]

View answer

Written answers (Question to Finance)

Article 62 of the revised EU Payment Services Directive (PSD2) contains a prohibition on surcharging - the practice where a merchant charges an extra fee for receiving a payment made using a payment card. That Article provides that a payee shall not request charges for the use of a payment instrument for which interchange fees are regulated under Chapter II of the EU Interchange Fee Regulation (Regulation (EU) 2015/751.

PSD2 was transposed into Irish law by the European Union (Payment Services) Regulations 2018 (S.I. No. 6 of 2018) and Regulation 86 of the transposing Regulations gives effect to this prohibition, meaning that a merchant cannot surcharge on the vast majority of consumer credit and debit cards including Visa and Mastercard branded cards. The legislation does not allow for exceptions on the basis of the value of the card transaction.

It should be noted that the prohibition on surcharging does not cover transactions with commercial cards or transactions with payment cards issued by three-party payment card schemes. Where surcharges are allowed, the European Union (Payment Services) Regulations 2018 provide that they must not exceed the direct costs borne by the payee to accept the card.

VAT Rate Application

Questions (158)

Thomas P. Broughan

Question:

158. Deputy Thomas P. Broughan asked the Minister for Finance the economic sectors that continue to avail of a reduced VAT rate of 9%; the estimated revenue that would be generated from the restoration of the VAT rate to 13.5% for those sectors; and if he will make a statement on the matter. [16455/19]

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Written answers (Question to Finance)

As the Deputy will be aware, Budget 2019 increased the VAT rate from 9% to 13.5% with effect from 1 January 2019 for the majority of tourism goods and services. This was on the basis of economic analysis which indicated these goods and services were driven by income growth more than price.

However, I decided to retain newspapers at the 9% VAT rate in order to assist national and regional newspapers to remain competitive and meet the challenges of the modern media landscape. I also decided to apply the 9% VAT rate to newspapers, periodicals and books supplied electronically, including digital subscriptions, with effect from 1 January 2019. Previous to this change, electronically supplied newspapers and books were charged to VAT at the 23% standard rate. However, changes at EU level meant it was possible to align the VAT rates for digital and printed publications and apply reduced VAT rates to e-publications.

I also decided to retain the 9% rate for sports facilities to encourage healthy activity.

An estimate of the revenue that would be generated from increasing the VAT rate from 9% to 13.5% on these goods and services is in the region of €40m in a full year.

Tax Reliefs Abolition

Questions (159)

Thomas P. Broughan

Question:

159. Deputy Thomas P. Broughan asked the Minister for Finance the estimated amount that could be raised by abolishing the special assignee relief programme introduced in 2014 to provide a tax reduction to high earners that locate here for work purposes; and if he will make a statement on the matter. [16456/19]

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Written answers (Question to Finance)

The Special Assignee Relief Programme (SARP) was introduced in Budget 2012 as part of a strategy to promote Foreign Direct Investment into Ireland, and to allow us to compete internationally to attract highly skilled and mobile executives who act as key decision makers within organisations.

The measure provides income tax relief on a portion of income earned by employees, who are assigned by their employer to work in Ireland, and who previously worked abroad for that employer for a minimum of six months. There is no exemption or relief from USC and PRSI is payable where the individual is not liable to social insurance contributions in their home country.

The 2016 annual Revenue report on SARP shows that for the years 2012 to 2016 (the most recent year for which data are available) the annual cost of the measure was as follows:

Tax Cost 2012

Tax Cost 2013

Tax Cost 2014

Tax Cost 2015

Tax Cost 2016

€0.1 million

€1.9 million

€5.9 million

€9.5 million

€18.1 million

The incentive has been subject to a number of amendments during the course of its existence, with the intention of ensuring adequate uptake and also the efficiency and effectiveness of its operation.

As such, the costs represented in the above table are reflective of the eligibility criteria that applied in each year, particularly with regard to the quantum of relief that was available in a given year.

For the tax years 2012, 2013 and 2014, SARP provided relief from income tax on 30% of salary between €75,000 and €500,000. In 2015, the upper salary threshold of €500,000 per annum was removed to encourage senior decision makers to come to Ireland.

Following on from concerns I had regarding the increasing cost of the incentive, I amended the SARP legislation in Finance Bill 2018 to reinstate an upper salary threshold at the level of €1 million. This change came into effect for new entrants to the programme from 1 January 2019 and for existing beneficiaries of the programme from 1 January 2020.

I do not believe it is possible to accurately estimate the amount that could be raised by abolishing SARP. While the annual cost of the incentive, as outlined in the table above, could be represented as a saving to the Exchequer were SARP abolished, there would likely be losses resulting from lower SARP related employment levels (reduced tax receipts) and other indirect effects within the activities that are supported by the Programme.

Finally, as the Deputy may be aware, SARP will be fully reviewed in 2019 ahead of Finance Bill 2019. This review will afford an opportunity to look at all elements of the relief. It will also include consultation with all relevant stakeholders.

Tax Credits

Questions (160)

Thomas P. Broughan

Question:

160. Deputy Thomas P. Broughan asked the Minister for Finance the estimated amount that could be raised from eliminating the refundable nature of the unused element of the research and development tax credit for corporations; and if he will make a statement on the matter. [16457/19]

View answer

Written answers (Question to Finance)

I am advised by Revenue that information in respect of the annual cost of the Research and Development (R&D) tax credit is available for all years up to 2016 at link, https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx.

The publication includes information on the cost of payable tax credits for each of these years. Information in respect of 2017 should be available later in 2019.

Where a company has insufficient Corporation Tax against which to claim the R&D tax credit in a given accounting period, the tax credit may be credited against the Corporation Tax for the preceding period, may be carried forward indefinitely or, if the company is a member of a group, allocated to other group members. The R&D credit can also be claimed by the company as a payable credit. Where a company has offset the credit against the Corporation Tax of the current and preceding accounting periods and an excess amount still remains, the company may make a claim to have the amount of that excess paid to it by Revenue in three instalments over a period of 33 months.

It is not possible to accurately predict the yield from eliminating the payable element of the R&D credit. Sums in respect of the credit are generally set off against Corporation Tax in the first instance and are only carried forward as a payable credit where there is insufficient tax liability in a year to absorb the full amount. The future cost of the payable element is therefore dependent on both the profitability of claimant companies as well as their level of qualifying R&D activity.

Revenue Commissioners

Questions (161)

Eamon Scanlon

Question:

161. Deputy Eamon Scanlon asked the Minister for Finance the reason the office of the Revenue Commissioners in Sligo will not accept customer appointments; if he will investigate same; and if he will make a statement on the matter. [16461/19]

View answer

Written answers (Question to Finance)

I am advised by Revenue that it operates an appointments service at many of its public offices, including the Sligo office.

The appointments service facilitates taxpayers in meeting Revenue officials at a time that best suits individual circumstances and removes the potential for delays or queueing. Revenue has also assured me that the circumstances of elderly taxpayers or those with long distances to travel are always taken into account when scheduling appointments. So far this year the Sligo office has dealt with 60 such appointments.

Revenue has confirmed that the telephone message in respect of appointments at the Sligo office malfunctioned for a short period of time and incorrectly informed callers that ‘Sligo appointments service is not available’. This error led callers to assume the service had ceased. The error has now been corrected and the Sligo service is fully functional.

If the Deputy is aware of any taxpayer who encountered difficulties and has still not been contacted, he can provide the details to Revenue at direct telephone number 01 6474222. Revenue has assured me that it will quickly contact any such persons to resolve their issues.

Property Tax Data

Questions (162)

Michael McGrath

Question:

162. Deputy Michael McGrath asked the Minister for Finance the number of properties exempt from the local property tax, by each exemption type; if the exemptions are time limited in legislation; when the exemptions are set to expire; his plans to extend the exemptions in 2019; if legislation will be required in each case to extend the exemption; the number of properties that are now exempt but will no longer be exempt by the end of 2019; and if he will make a statement on the matter. [16497/19]

View answer

Written answers (Question to Finance)

I am advised by Revenue that the number of properties for which exemptions have been claimed are set out in the table by exemption type and show the latest data available at 31 December 2018.

EXEMPTION TYPE

To end 2018 - No. (000s)

Charitable bodies (recreational activities)

0.2

Charitable bodies (special needs accommodation)

7.7

Registered nursing homes

0.3

Properties vacated because of long-term medical/physical infirmity

7.6

Residence of severely incapacitated person

2.0

Properties fully chargeable to commercial rates

2.3

Unfinished housing estates

3.3

Significant pyrite damage

1.4

Certain properties purchased between 1 January 2013 and 31 December 2013

11.7

Trading stock of builder/developer unsold at 1 May 2013 (6,600), or sold in the period 1 January 2013 to 31 October 2019 (5,200)

11.8

TOTAL

48.3

The various exemption types are generally open-ended. However, there are two that have a fixed statutory end date of 31 December 2019; i.e. certain properties purchased between 1 January 2013 and 31 December 2013 and trading stock of builder/developer sold in the period 1 January 2013 to 31 October 2019. The number of exemptions claimed is 11,700 and 5,200, respectively. These exemptions have their statutory basis in sections 8 and 9 Finance, respectively, (Local Property Tax) Act 2012 (as amended). In line with my decision to defer the revaluation date to 1 November 2020, all exemptions will be further extended to this date and any necessary legislative provisions will be introduced in due course in an amending LPT Bill.

Statutory Instruments

Questions (163)

Peadar Tóibín

Question:

163. Deputy Peadar Tóibín asked the Minister for Finance the location in which the original version of S.I. No. 125 of 2009 is kept. [16502/19]

View answer

Written answers (Question to Finance)

The original version of S.I. No. 125 of 2009 is stored securely in the Compliance Unit of the Department of Finance.

Financial Services Sector

Questions (164)

Catherine Murphy

Question:

164. Deputy Catherine Murphy asked the Minister for Finance if his attention has been drawn to a House of Lords inquiry that concluded the accounting profession has given illegal advice on the application of the international financial reporting standards; if he has been briefed or sought consultation regarding the implications for Irish banks in the context of them revising their published accounts to reflect the fact that some Irish banks may be accounting for non-performing loans incorrectly; and if he will make a statement on the matter. [16631/19]

View answer

Written answers (Question to Finance)

Regulation (EC) No. 1606/2002 of the European Parliament (the Regulation) requires all listed European companies to prepare their consolidated financial accounts in accordance with EU adopted International Financial Reporting Standards (IFRS) - formerly known as International Accounting Standards (IAS) - for accounting periods commencing on or after 1 January 2005. The accounting standard "IFRS 9" has been effective since 1 January 2018.

In respect of the relevant accounting standards, I note that a previous accounting standard, International Accounting Standard 39, required the use of an incurred loss approach for the calculation of impairment provisions resulting in impairment provisions being recognised only when losses are incurred and not before then. Under the expected loss approach (“expected loss model”) set out in IFRS 9 (which is applicable for accounting periods starting on or after 1 January 2018) it is no longer necessary for there to be a loss event to occur before an impairment loss is recognised.

The Office of the Director of Corporate Enforcement (ODCE) is responsible overseeing compliance with obligations imposed by the Companies Acts in respect of the maintenance of proper books of account and the preparation and publication of accounts.

Furthermore, the Irish Auditing and Accounting Supervisory Authority (IAASA) is the independent body responsible for the enforcement of accounting standards including the examination and enforcement of certain listed entities’ (entities whose securities have been admitted to trading on a regulated market situated, or operating, within the EU) periodic financial reporting.

As both the ODCE and IAASA are within the remit of the Companies Acts, any queries in relation to them should be addressed to my colleague the Minister for Business, Enterprise and Innovation.