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Tuesday, 8 Sep 2020

Written Answers Nos. 282-301

Tax Collection

Questions (282)

John McGuinness

Question:

282. Deputy John McGuinness asked the Minister for Finance if matters raised in correspondence (details supplied) will be addressed; and if he will make a statement on the matter. [21522/20]

View answer

Written answers

I previously referred to this matter in my reply to Parliamentary Question 14153-20.

Revenue has updated me on the matter and has confirmed that the refunds and tax liabilities in question relate to the person’s sole-trader status only.

Revenue has also confirmed that it has engaged extensively with the person’s tax agent to conclude matters as quickly as possible. The tax agent has committed to follow up with the person on the issues that require clarification but to date the required information has not been received by Revenue. It is not possible for Revenue to advance matters until the necessary clarifications are received.

Revenue Commissioners

Questions (283)

Gerald Nash

Question:

283. Deputy Ged Nash asked the Minister for Finance when the Revenue Commissioners will complete and publish its review of the operation of section 114 of the Taxes Consolidation Act 1997 regarding the deduction for tax purposes for valid expenses incurred in the performance of the employment duties of certain categories of PAYE workers; and if he will make a statement on the matter. [21545/20]

View answer

Written answers

Revenue conducted a comprehensive review of the administratively based Flat Rate Expenses (FRE) regime in 2018 and 2019. Revenue has advised that the purpose of the FRE review, which involved engagement with relevant representative bodies, was to ensure that the expenses granted to each employment category remain justified and appropriate to modern day employments and work practices. Each category of FRE allowance was examined separately in light of the legislative requirements of section 114 of the Taxes Consolidation Act (TCA) 1997, which provides that expenses are tax deductible only if they are wholly, exclusively and necessarily incurred by the employee in the performance of the duties of his or her employment and are not reimbursed by the employer.

Outside of the FRE regime, all employees retain their statutory right to claim a deduction under section 114 of the TCA 1997 in respect of an expense incurred wholly, exclusively and necessarily in the performance of the duties of their employment, to the extent which the expenses are not reimbursed by the employer.

Revenue agreed to defer the implementation of any planned changes to the FRE regime, pending the outcome of an examination of a number of policy issues that arose during its review relating to the tax deductibility of expenses of employment. This latter examination was to be carried out by the Tax Strategy Group (TSG), which is overseen by my Department. I understand that a TSG paper that sets out the consideration of the policy matters that arose during Revenue's FRE review is likely to be published in the coming weeks as part of the regular Budget process.

Covid-19 Pandemic Supports

Questions (284)

Gerald Nash

Question:

284. Deputy Ged Nash asked the Minister for Finance the way in which the pandemic stabilisation and recovery fund will operate; the nature of the investment the fund has undertaken to date; the criteria applied to inform investment decisions; and if he will make a statement on the matter. [21546/20]

View answer

Written answers

The Pandemic Stabilisation and Recovery Fund (PSRF), is a €2 billion sub-portfolio within the Ireland Strategic Investment Fund (ISIF). The ISIF is managed and controlled by the National Treasury Management Agency.

The initial focus of the PSRF will be on enterprises with over 250 employees or with an annual turnover of in excess of €50million, which have been materially impacted by the COVID-19 pandemic. Such enterprises must demonstrate that the enterprise was viable pre COVID-19, and that it is expected to return to viability and to contribute to the Irish economy. Further, it should also be clear that ISIF investment, either alone or with co-investment, will be critical to supporting the enterprise in its return to financial viability.

ISIF has engaged extensively with a broad range of businesses in Ireland to date, primarily across sectors impacted by the COVID pandemic such as tourism, aviation and retail, and has a current pipeline in excess of 30 transactions. Many of these companies are currently availing of existing government supports and/or bank forbearance and are therefore seeking investment targeted towards the end of 2020 and into 2021. ISIF will continue to support such medium to large Irish businesses with commercial equity and debt based investment.

ISIF’s normal investment criteria also apply, in particular appropriate commercial return and economic impact remain core to the ISIF mandate. Further details have been published by the ISIF on the operation of the PSRF, these can be found on the ISIF website at https://isif.ie/

Gambling Sector

Questions (285)

Willie O'Dea

Question:

285. Deputy Willie O'Dea asked the Minister for Finance if he will consider extending the licence for on-course bookmakers by year in view of the large loss in income they have sustained as a result of the Covid-19 pandemic; and if he will make a statement on the matter. [21560/20]

View answer

Written answers

The licensing period for bookmakers is over a two year fixed period, with a licensing fee of €500. The current licence period runs from 1 December 2019 to 30 November 2021. As licences are not up for renewal until the end November next year, at this point in time there is no requirement to consider their extension.

Help-To-Buy Scheme

Questions (286)

Francis Noel Duffy

Question:

286. Deputy Francis Noel Duffy asked the Minister for Finance if a person who was approved for the help-to-buy scheme in 2019 can retrospectively apply for the recently expanded help-to-buy initiative in cases in which their mortgage has not yet been drawn down and completion of their property has been delayed due to Covid-19. [21573/20]

View answer

Written answers

The Help to Buy incentive (HTB) is a scheme to assist first-time purchasers with a deposit they need to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to limits outlined in the legislation.

Section 477C of the Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to HTB. A claimant under the scheme must make an application confirming that he or she meets various conditions specified in the section, including that he or she is a first-time purchaser and that he or she has completed a tax return form and is tax compliant for each of the tax years for which a claim is being made. Also, the new property must be occupied as the sole or main residence of a first time purchaser. The legislation is very specific as to the definition of a qualifying residence. It must be a new building which was not, at any time, used or suitable for use as a dwelling.

The definition of “first-time purchaser” for the purposes of the scheme is an individual who, at the time of making a claim under the scheme, has not, either individually or jointly with any other person, previously purchased or previously built, directly or indirectly, on his or her own behalf a dwelling.

HTB operates by way of a payment being made at deposit stage (following the signing of a contract to purchase) or, in the case of a self-build, following the drawdown of the first tranche of the relevant mortgage. Therefore, the intention of the scheme is that the house would not have been completed when applying for HTB.

The enhanced level of support announced last month applies to applicants who, on or after 23 July 2020 (and up to 31 December 2020) sign a contract for the purchase of a new house or who make the first draw down of the mortgage in the case of a self-build.

Revenue advise me that it is not clear from the details provided whether the retrospective claim relates to a purchase of a new home or the self-build of a new home. If an applicant is purchasing a house (rather than self-building) and has entered into a contract to purchase his or her first home prior to 23 July 2020, he or she will not satisfy the conditions to avail of the temporary enhanced HTB relief. However, if an applicant is self-building a new home, and he or she draws down the first tranche of the mortgage between 23 July and 31 December 2020, then he or she may be able to avail of the temporary enhanced HTB relief.

However, Revenue also advise me that, if there are unique circumstances which has prevented an individual from claiming the HTB scheme, the taxpayer should contact Revenue with the relevant circumstances and each case will be considered on a case by case basis. Notwithstanding this, Revenue does not have discretion to vary the statutory conditions for qualification for relief under the HTB scheme.

Employment Data

Questions (287)

James Browne

Question:

287. Deputy James Browne asked the Minister for Finance the number of persons over 66 years of age who declare as self-employed; the number of persons over 66 years of age working in companies while earning wages through the temporary wage subsidy scheme; and if he will make a statement on the matter. [21597/20]

View answer

Written answers

I am advised by Revenue that the number of taxpayer units (couples who are jointly assessed are counted as one taxpayer unit) over 66 years of age who filed a Form 11 tax return and declared an income from a trade or profession was approximately 21,000 in 2018, the latest year for which data are available. In the case of jointly assessed couples, the age is based on the assessable spouse.

The Central Statistics Office has published detailed breakdowns by age of the employees being supported by the Temporary Wage Subsidy Scheme, which are available at:

https://www.cso.ie/en/media/csoie/statistics/lrdetailedcovid-19tables/TWSS_WebTable_Week_35.xls.

Help-To-Buy Scheme

Questions (288, 298)

Niamh Smyth

Question:

288. Deputy Niamh Smyth asked the Minister for Finance if he will address a matter raised in correspondence (details supplied) regarding the LTV rate in the help-to-buy scheme; and if he will make a statement on the matter. [21615/20]

View answer

Niamh Smyth

Question:

298. Deputy Niamh Smyth asked the Minister for Finance his plans to decrease the loan to value scheme (details supplied); and if he will make a statement on the matter. [22084/20]

View answer

Written answers

I propose to take Questions Nos. 288 and 298 together.

The Help to Buy (HTB) incentive, is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four years, subject to limits outlined in the legislation. Section 477C of the Taxes Consolidation Act outlines the definitions and conditions that apply to the Help to Buy scheme.

One such condition is that a qualifying first time buyer must take out a loan in an amount equal to at least 70% of either the purchase price of the property in the case of a purchased house, or the value of the property in the case of a self-build house. The valuation of a self-build is as approved by the lender as determined in accordance with the Central Bank’s macro prudential rules. These rules stipulate the valuation as being the site cost plus the cost of construction. I do not believe that it would be fair or equitable to allow for different eligibility criteria with regard to loan-to-value ratios in respect of self-build properties vis a vis that which applies to all other new build homes. As such, there are no plans to amend the scheme in this regard.

Another requirement of the HTB scheme is that the first-time buyer has entered into a “qualifying loan”. In summary, a qualifying loan means a loan which is:

a. is used by the first-time purchaser wholly and exclusively for

b. (i) the purchase of a qualifying residence, or (ii) the provision of a self-build qualifying residence (including the acquisition of land required for its construction)

c. is entered into solely between a first-time purchaser and a qualifying lender, (but does not exclude a loan to which a guarantor is party), and

d. is secured by a mortgage or a charge on the qualifying residence.

I am advised by Revenue, based on the details outlined in the case by Deputy Smyth involving a Credit Union loan, that case would not satisfy the qualifying loan definition and therefore it may not be included in the loan to value ratio calculation.

I am further advised by Revenue that, as the loan to value ratio for both cases outlined is less than 70 per cent, the applications do not meet the conditions required to qualify for HTB. Revenue does not have discretion to vary the statutory conditions for qualification for relief under the HTB scheme.

Tax Code

Questions (289)

Brendan Howlin

Question:

289. Deputy Brendan Howlin asked the Minister for Finance his plans to review the taxation of index funds and ETFs; if the periodic taxation of ETFs is to be maintained; and if he will make a statement on the matter. [21807/20]

View answer

Written answers

Index funds and Exchange Traded Funds (ETFs) are types of investment funds and are generally traded on a regulated stock exchange. The normal tax treatment afforded to Irish collective investment funds is that the funds invested are allowed to grow on a tax-free basis within the fund. The income is taxed at the level of the investor rather than the fund, as is standard international practice.

The broad rationale for exempting such funds from direct taxation is to facilitate individuals to invest collectively, without suffering double taxation (that is, taxation both within the fund and in the hands of the investor on distribution).

When a fund pays an amount out to an investor it triggers a ‘chargeable event’. There is a charge to tax on Irish residents on the happening of a chargeable event. In addition, a rule applying a deemed disposal every eighth year was introduced in 2006. The purpose of the deemed disposal rule is to prevent the indefinite deferral of tax within the fund. When an actual disposal of an investment subsequently occurs, a tax credit is given for the tax paid on the deemed disposal event.

Income and gains arising from investments into Irish and EU domiciled ETFs are subject to income tax at a rate of 41% on a self-assessment basis. Such income and gains are not subject to Pay Related Social Insurance (PRSI) or Universal Social Charge (USC) liabilities.

The charge to tax does not apply in the case of unit holders who are non-resident. In the case of non-resident investors, their liability to tax on gains from the fund will be determined in their home jurisdiction.

There are no plans to review the taxation of such funds at this time.

Question No. 290 answered with Question No. 256.

Motor Insurance

Questions (291)

Brian Stanley

Question:

291. Deputy Brian Stanley asked the Minister for Finance if he has raised the practice with the motor insurance industry of increasing premiums when persons move home even when this is within the same town. [21928/20]

View answer

Written answers

At the outset you should note that neither I, as Minister for Finance, nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide cover to specific individuals or businesses. This position is reinforced by the EU framework for insurance (the Solvency II Directive) which expressly prohibits Member States from doing so. Consequently, I am not in a position to direct insurance companies as to how they price their policies or what terms and conditions they apply in those policies.

On a general level, my understanding is that insurers will use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. For example, in relation to motor insurance, factors may include those such as the age of the driver and the relevant driving experience, as well as the age and type of vehicle, how and where the vehicle is used, the claims record, the number of drivers, and the location of storage. Insurers also price in accordance with their own past claims experience, and do not all use the same combination of rating factors, so as a result prices vary across the market.

In my view, the issue raised in the questions demonstrates why it is important for consumers to shop around on their insurance policies. The Competition and Consumer Protection Commission (CCPC), on its website, recommends that consumers get quotes from a number of insurance companies, including their current one. Their website also includes a car insurance shopping around checklist and other tips on cutting car insurance costs which may prove useful to consumers.

I would also note that if a consumer has a complaint with the service of their insurance provider, it is advisable that they make a complaint to the firm's internal complaint resolution process. The Consumer Protection Code requires that if after 40 days the complaint has not been resolved to the customer’s satisfaction, the regulated entity must inform the consumer that they may refer their complaint to the Financial Services and Pensions Ombudsman (FSPO). The FSPO is a statutory official who acts as an independent arbiter of disputes which consumers may have with their insurance company or other financial service provider. The FSPO can be contacted either by email at info@fspo.ie or by telephone at 01-5677000.

Finally, Insurance Ireland, the representative body for insurance providers in this country, operates an Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance, which can be accessed at: feedback@insuranceireland.eu.

Carbon Tax Yield

Questions (292, 297)

Darren O'Rourke

Question:

292. Deputy Darren O'Rourke asked the Minister for Finance the estimated amount the carbon tax will raise in view of the proposed increases in the carbon tax as outlined in the programme for Government in each of the years 2021 to 2025; and if he will make a statement on the matter. [21931/20]

View answer

Darren O'Rourke

Question:

297. Deputy Darren O'Rourke asked the Minister for Finance the amount extra an increase of €7.50 per tonne in the carbon tax, as outlined in the programme for Government will raise in 2021; and if he will make a statement on the matter. [22078/20]

View answer

Written answers

I propose to take Questions Nos. 292 and 297 together.

The Programme for Government sets out increases in the carbon tax rate from 2021 to 2030, to reach €100 per tonne CO2 by 2030. This is to be achieved by an annual increase of €7.50 per tonne CO2 in each year from 2021 to 2029 and an increase of €6.50 per tonne CO2 in 2030. The practice to date has been to increase carbon tax rates on auto fuels on budget night but to delay commencement of the increase to other fuels until 1 May in the following year.

Based on the Programme for Government commitments, the estimated carbon tax receipts for the period 2021 to 2025 is set out in the following table:

Carbon Tax

2021

2022

2023

2024

2025

Estimated Gross Receipts (€ millions)

666

823

981

1,138

1,296

These estimates are based on the assumption that demand for fuels on which the carbon tax is levied remains constant at 2019 levels. As such the carbon tax base in 2019 was some 21 million tonnes of CO2 emitted from the combustion of fuels subject to the carbon tax. These estimates are adjusted for additional receipts that will accrue from applying carbon tax increases to auto fuels on budget night and reduced receipts that will arise from the delayed commencement of carbon tax increases to other fuels until 1 May in the following year.

Based on 2019 volume levels and adjusting for both the early and late commencement for certain types of fuels, an increase of €7.50 in carbon tax generates an estimated €120m in 2021.

Employment Data

Questions (293)

Steven Matthews

Question:

293. Deputy Steven Matthews asked the Minister for Finance the number of self-employed persons registered with the Revenue Commissioners who list their profession as musician, sound engineer, lighting engineer and stage production or other related titles within the music industry. [21966/20]

View answer

Written answers

I am advised by Revenue that it uses the European ‘NACE’ classification system for categorising activities and sectors. Based on this classification which assigns taxpayers according to their main activity, in 2018 there were approximately 2,100 self-employed taxpayers in the categories ‘Performing Arts’ and ‘Support Activities to Performing Arts’.

In addition, the following table shows, for 2018, those taxpayers who fall under various other NACE categories, but whose trade description on their tax returns include the following:

Description

Number of self-employed taxpayers

musician

588

sound engineer

131

lighting engineer or stage production

10

Charitable and Voluntary Organisations

Questions (294)

Colm Burke

Question:

294. Deputy Colm Burke asked the Minister for Finance if there will be a reduction in the amount required to be paid to the Revenue Commissioners by voluntary organisations whose premises have been closed for the past six months that wish to renew their club registration public dance licence and gaming lottery licence; and if he will make a statement on the matter. [22003/20]

View answer

Written answers

The Government announced as part of a package of measures to assist the hospitality sector that court fees, excise licence duties and stamp duties relating to the renewal of pub and other liquor licences in 2020 would be waived. The relevant court fees, excise duties and stamp duties are as follows:

- Court certificate for renewal of pub licence (where required) - €150

- Public dancing licence - €490 (€335 court fee plus €155 excise duty)

- Public music and singing licence - €150

- Renewal of registration of registered club - €655 (€150 court fee plus €505 stamp duty)

- Restaurant certificate - €150

These reliefs will apply to voluntary organisations involved in those activities. I am advised that the Courts Service and Revenue are currently in contact in relation to the implementation of the Government decision in this area and that further information will be published shortly.

Tax Collection

Questions (295)

Brendan Griffin

Question:

295. Deputy Brendan Griffin asked the Minister for Finance his views on a matter regarding a taxation rate error in the case of a person (details supplied); and if he will make a statement on the matter. [22039/20]

View answer

Written answers

I am advised by Revenue that the tax overpayment to which the Deputy is referring arose following the early withdrawal of a private pension by the person in question.

Revenue has confirmed to me that the matter has been fully resolved through direct engagement with the person and the overpaid amount was refunded to him on 7 August 2020 through his employer.

Property Tax

Questions (296)

Alan Kelly

Question:

296. Deputy Alan Kelly asked the Minister for Finance when the local property tax will be reviewed and anomalies corrected, which in turn will ensure that local government is properly funded; and if he will make a statement on the matter. [22068/20]

View answer

Written answers

A review of the Local Property Tax was completed by my Department in conjunction with the Departments of the Taoiseach, Public Expenditure & Reform and Housing, Local Government & Heritage and the Revenue Commissioners and the report was published in April 2019 (available at https://www.gov.ie/en/publication/1e5c76-review-of-local-property-tax/). In accordance with its terms of reference, the review focused on the impact of house price movements on LPT liabilities under a series of scenarios involving different rate and tax band structures. The review also included an examination of the outstanding recommendations of the 2015 Thornhill review of the Local Property Tax. It included a consultation process to enable all interested parties and individuals to submit their views on the future of the LPT.

The Programme for Government "Our Shared Future" adopted by the Government on 27 June 2020 includes a commitment to bring forward legislation in relation to the Local Property Tax (LPT) on the basis of fairness and that most homeowners will face no increase in their LPT liability. In addition there is a commitment to bring new homes, which are currently exempt from the LPT, into the taxation system. Further, all LPT funds collected locally will be retained within the local authority concerned. This is to be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer.

My Department is examining options for the implementation of these commitments in conjunction with the Revenue Commissioners and relevant Departments. I hope to be able to bring proposals to Government soon.

Question No. 297 answered with Question No. 292.
Question No. 298 answered with Question No. 288.

Tax Code

Questions (299)

Catherine Murphy

Question:

299. Deputy Catherine Murphy asked the Minister for Finance his plans to conduct a full review of the taxation policy of married persons and cohabitating partnerships in view of the time that elapsed since an examination of the current legal status of cohabiting couples; and if he will make a statement on the matter. [22127/20]

View answer

Written answers

In situations where a couple is cohabiting, rather than married or in a civil partnership, each partner is treated for the purposes of income tax as a separate and unconnected individual. Because they are treated separately for tax purposes, credits, tax bands and reliefs cannot be transferred from one partner to the other.

The basis for the current tax treatment of married couples derives from the Supreme Court decision in Murphy vs. Attorney General (1980). This decision was based on Article 41.3.1 of the Constitution where the State pledges to protect the institution of marriage. The decision held that it was contrary to the Constitution for a married couple, both of whom are working, to pay more tax than two single people living together and having the same income.

To the extent that there are differences in the tax treatment of the different categories of couples, such differences arise from the objective of dealing with different types of circumstances while at the same time respecting the constitutional requirements to protect the institution of marriage. Cohabitants do not have the same legal rights and obligations as a married couple or couple in a civil partnership which is why they are not accorded similar tax treatment to couples who have a civil status that is recognised in law. Any change in the tax treatment of cohabiting couples can only be addressed in the broader context of future social and legal policy development in relation to such couples.

I have been advised by Revenue that from a practical perspective, it would be very difficult to administer a regime for cohabitants which would be the same as that for married couples or civil partners. Married couples and civil partners have a verifiable official confirmation of their status. It would be difficult, intrusive and time-consuming to confirm declarations by individuals that they were actually cohabiting. It would also be difficult to establish when cohabitation started or ceased. There would also be legal issues with regard to ‘connected persons’. To counter tax avoidance, ‘connected persons’ are frequently defined throughout the various Tax Acts. The definitions extend to relatives and children of spouses and civil partners. This would be very difficult to prove and enforce in respect of persons connected with a cohabiting couple where the couple has no legal recognition. There may be an advantage in tax legislation for a married couple or civil partners as regards the extended rate band and the ability to transfer credits. However, their legal status has wider consequences from a tax perspective both for themselves and persons connected with them.

I understand that, as part of the Tax Strategy Group (TSG), which is overseen by my Department, a paper is likely to be published soon setting out the consideration of policy matters that arose during a preliminary review of the tax treatment of married and co-habiting couples. The expectation is that it will be published in the coming weeks as part of the regular Budget process. In 2019, my Department carried out a review of the Home Carer Credit which also examined some of the issues around the current tax treatment of married and co-habiting couples. This was published as part of Budget 2020 and can viewed at the following link:

http://budget.gov.ie/Budgets/2020/Documents/Budget/Report%20on%20Tax%20Expenditures%20Incorporating%20the%20Outcomes%20of%20Certain%20Tax%20Expenditure%20and%20Tax%20Related%20Reviews%20completed%20since%20c.pdf#page=74

Tax Code

Questions (300)

Neasa Hourigan

Question:

300. Deputy Neasa Hourigan asked the Minister for Finance his views on the deemed disposal rule which was introduced in the Finance Act 2006; his plans to revise same; and if he will make a statement on the matter. [22141/20]

View answer

Written answers

Finance Act 2000 introduced the gross roll-up taxation regime for investments in certain investment undertakings and life assurance policies. The regime provides that there is no annual tax on income or gains arising within the investment. Any tax arising applies at the level of the investor.

Finance Act 2006 introduced an 8 year deemed disposal rule in relation to these investments. A deemed disposal occurs 8 years following inception of a policy of life assurance or acquisition of a fund and then every 8 years thereafter. The deemed disposal rules also apply to equivalent offshore funds. Any gain on the investment which arises from the date of inception or the date of acquisition to the date of the deemed disposal is subject to tax. This ensures that income isn’t rolled up indefinitely in life assurance policies or funds without being taxed. On the ultimate disposal of the investment, any tax paid which arose as a result of a deemed disposal is allowed as a credit against any final tax liability on disposal.

There are no plans to review the 8 year deemed disposal rule at this time.

Banking Sector

Questions (301, 303)

Pearse Doherty

Question:

301. Deputy Pearse Doherty asked the Minister for Finance the number of banks that have communicated to the Central Bank an intention to pay dividends in 2020; the actions of the Central Bank in response in each case; and if he will make a statement on the matter. [22205/20]

View answer

Pearse Doherty

Question:

303. Deputy Pearse Doherty asked the Minister for Finance the number of banks that have communicated to the Central Bank an intention to pay bonuses in 2020; the actions of the Central Bank in response in each case; and if he will make a statement on the matter. [22207/20]

View answer

Written answers

I propose to take Questions Nos. 301 and 303 together.

I am advised by the Central Bank that it is not in a position to disclose information about applications and requests made by individual firms in a supervisory capacity.

In line with the recommendation of the European Central Bank of 27 July 2020 on dividend distributions during the COVID-19 pandemic the Central Bank expects that credit institutions should not pay dividends for the financial years 2019 and 2020 until at least 1 January 2021 and should refrain from share buybacks aimed at remunerating shareholders.

The Central Bank expects that credit institutions adopt a prudent, forward-looking stance when deciding on their remuneration policies, in line with communications from the ECB to significant institutions, the EBA statement on dividends distribution, share buybacks and variable remuneration of 31 March 2020 and the recommendation of the European Systemic Risk Board of 27 May 2020 on restriction of distributions during the COVID-19 pandemic.

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