Tuesday, 8 Nov 2022

Written Answers Nos. 263-281

Departmental Data

Questions (263, 264)

Pa Daly

Question:

263. Deputy Pa Daly asked the Minister for Finance the monthly number of automatic licence renewals to date in 2022, in tabular form. [54507/22]

Pa Daly

Question:

264. Deputy Pa Daly asked the Minister for Finance the monthly number of automatic off-licence renewals to date in 2022, in tabular form; and if he will make a statement on the matter. [54508/22]

Written answers

Minister for Finance

I propose to take Questions Nos. 263 and 264 together.

I am advised by Revenue that the licensing period for Intoxicating Liquor Licences runs from 1 October to 30 September in respect of Liquor Retailer On Licences, Liquor Retailer Off Licences and Liquor Manufacturers Licences. The licensing period for Liquor Wholesale Dealer Licences runs from 1 July to 30 June. Where both a Retailer Off Licence and a Wholesale Dealer Licence are held together, the licensing period for both runs from 1 July to 30 June.

The renewal process for Intoxicating Liquor Licences is not an automatic process and requires licence holders to reapply to Revenue and pay the licence fee at the start of each new licensing period. Revenue will only renew the licence where the applicant holds tax clearance and can provide any other supporting documentation requested. For example, a certificate of incorporation or a certificate of registration of the business name. For first time applications or where a licence has lapsed, the applicant, in most cases, must produce a Court certificate before Revenue can issue a new licence.

Table 1 sets out the number of liquor licences renewed per month in 2022 (year to date) for all liquor licence categories.

Table 2 sets out the different types of Retailer Off Licences renewed per month in 2022 (year to date)

Table 3 sets out Retailer Off Licences held with Wholesale Dealer Licences renewed per month in 2022 (year to date)

Licences

Question No. 264 answered with Question No. 263.

Tax Collection

Questions (265)

Rose Conway-Walsh

Question:

265. Deputy Rose Conway-Walsh asked the Minister for Finance the total revenue collected from non-tax residents on eligible earnings such as rental income in Ireland in each of the years 2011 to 2021 and to date in 2022, in tabular form; and if he will make a statement on the matter. [54511/22]

Written answers

Minister for Finance

I am advised by Revenue that it is not possible to provide the breakdown requested based on receipts, instead the data provided relates to tax liabilities. I am further advised that the tax liabilities of non-resident taxpayers are based on their total income, which may include rental income as a component. The data below represents the tax liabilities of taxpayers who submitted a Form 11 tax return for those years and indicated that they are non-resident. The table provides data to 2019, the latest year for which data is currently available. Data for 2020 will be available in the coming months, and tax returns for 2021 are still being received as the deadline for online filers has not yet passed.

Year	Income Tax (€m)	USC (€m)
2019	127	20
2018	111	18
2017	97	17
2016	88	16
2015	97	19
2014	69	15
2013	62	14
2012	59	14
2011	52	12

Question No. 266 answered with Question No. 252.

Tax Reliefs

Questions (267, 268)

Emer Higgins

Question:

267. Deputy Emer Higgins asked the Minister for Finance if a 50% discount on VRT for new cars for taxi-driving would increase the number of taxis. [54565/22]

Emer Higgins

Question:

268. Deputy Emer Higgins asked the Minister for Finance if he will outline the regulations concerning VRT for taxi vehicles; and the way in which these rules integrate with EU laws. [54566/22]

Written answers

Minister for Finance

I propose to take Questions Nos. 267 and 268 together.

Ireland’s legislation on the registration of vehicles and vehicle registration tax (VRT) is contained in Sections 130 to 144A of the Finance Act 1992, as amended, together with various Vehicle Registration and Taxation Regulations made under that Act. The legislation is based on EU law in respect of type-approval and classification of vehicles, and it also implements in Irish law certain EU rules relating to vehicle identification matters, such as the format of registration plates.

VRT is a national tax which is assessed at the time of a vehicle’s registration. Generally, for passenger cars (and indeed any passenger vehicle with a capacity of up to eight persons) the amount of VRT chargeable is based on the vehicle’s value at the time of registration and its emissions, and this approach results in higher VRT charges for higher-emitting vehicles of the same value. The VRT charge does not vary according to whether or not the vehicle concerned is intended for use as a taxi. Of course, where a vehicle is used as a taxi, then vehicle costs (including VRT incurred) can be taken into account when calculating the taxable profits of the business – specific rules apply.

Finally, the Deputy may also wish to note that as part of the Government’s policy on climate change, until the end of 2023, Battery Electric Vehicles (BEVs), where they do not exceed a certain value, are entitled to VRT relief of up to €5,000, applied at the time of registration. This relief also applies to taxis.

Question No. 268 answered with Question No. 267.

Departmental Data

Questions (269)

Richard Bruton

Question:

269. Deputy Richard Bruton asked the Minister for Finance if there is a record kept of properties which have come into the possession of mortgage holding institutions, which have not been sold or rented, or of properties which are held by an official assignee in a bankruptcy case, which have not been sold or rented; and if such properties have been made the target of any public policy initiative to bring them back into use. [54621/22]

Written answers

Minister for Finance

The Central Bank of Ireland publishes statistics on mortgage arrears and repossessions on a regular basis. The latest available data, which is in respect of the end of June 2022, shows the following:

-  in respect of primary dwelling houses, 146 were in the possession of banks and 209 were in the possession of other Central Bank regulated entities at that time, giving a total of 355 such properties;

-  in respect of buy to let properties, 170 were in the possession of banks and 55 were in the possession of other Central Bank regulated entities at that time, giving a total of 225 such properties.

Decisions in relation to mortgaged properties in the possession of Central Bank regulated entities are, subject to the duties which generally apply to a mortgagee in possession, a business and operational matter for the respective mortgagee.

In relation to the management of properties which are held by the official assignee in a bankruptcy, that is a matter for my colleague the Minister for Justice and the Insolvency Service of Ireland.

House Prices

Questions (270)

Neale Richmond

Question:

270. Deputy Neale Richmond asked the Minister for Finance his views that non-EU property investors are having an adverse impact on Ireland's property market; his plans to address same; and if he will make a statement on the matter. [54628/22]

Written answers

Minister for Finance

Through the implementation of the Housing for All strategy, the Government plans to increase the supply of housing to an average of 33,000 per year over the next decade. This is an ambitious plan which will provide increased housing supply and affordability.

While the plan is backed by unprecedented State investment, the Government cannot deliver on this programme alone. The only way we can deliver housing at the substantial scale we need is by also attracting private capital to the market.

Through modelling undertaken by the Department of Finance, it is estimated that €12 billion of development funding per annum, comprising both debt and equity, will be required to develop the Housing for All target of an average of 33,000 homes per year. Of this €12 billion per annum, an estimated €10 billion will be required from private capital sources. While a portion of this will come from our domestic banks, the majority will be required from international sources.

Domestic banks set risk limits around the type and nature of lending activity, resulting in selective and prudent lending practices. It is not desirable that domestic banks provide senior debt at unsustainable levels and levels of debt should appropriately reflect the risk profile of development projects.

As a result, we will attract and welcome inward investment to our housing market, as we have successfully done with investment in other sectors of our economy. This private and patient capital coming from well-established investors such as pension funds is a normal facet of housing investment in many of our European neighbours and beyond.

CSO data shows that in 2021 there were just 96 units purchased by non-EU property investors. This is less than 0.2 per cent of the 57,995 total units purchased last year. Furthermore, in each of the last four years, there were less than 100 units purchased by non-EU property investors.

A substantial increase in the supply of new homes is the only route to solving Ireland’s housing crisis. This will require significant private investment alongside our public investment and is necessary to meet the targets set out in the Housing for All strategy.

Tax Code

Questions (271)

Marian Harkin

Question:

271. Deputy Marian Harkin asked the Minister for Finance if he will consider increasing the VAT turnover threshold from the current €37,500 to at least €50,000, given the increase in the cost of services and the increased cost of living; and if he will make a statement on the matter. [54640/22]

Written answers

Minister for Finance

The Deputy should note that the VAT registration thresholds are subject to the requirements of EU VAT law, with which Irish VAT law must comply. Our VAT thresholds were increased to their current values, €37,500 for services and €75,000 for goods, on 1 May 2008.  Under VAT law, traders/businesses such as B&B’s are required to register and account for VAT where their supply of guest or holiday accommodation exceeds the services threshold. 

It is important to note that Ireland’s current registration thresholds are some of the most generous thresholds in the EU. Some Member States do not operate any VAT registration threshold, requiring all businesses to register. As an administrative practice, Revenue allow businesses that are approaching the threshold to take account of the VAT element of their Purchases-for-Resale in calculating turnover. This avoids a ‘cliff-face’ effect when approaching the threshold. There is no data available to suggest a bunching effect below the threshold.

In setting registration thresholds levels, the objective is to strike an appropriate balance between the desirability of reducing the administrative burden on small businesses and the Revenue authorities and the need to avoid undermining tax compliance or causing competitive distortions relative to registered firms. However every business keeps records and the vast majority of businesses keep these records electronically. Therefore, there is not that much additional administration involved in being registered for VAT beyond submitting VAT returns and, for some small businesses, this might only entail an annual VAT return. 

I have currently no plans to change this threshold.

Departmental Schemes

Questions (272, 273)

Claire Kerrane

Question:

272. Deputy Claire Kerrane asked the Minister for Finance if he has plans to make changes to broaden access to support under the disabled driver's scheme, and in particular accessing a primary medical certificate, given the lack of any other mobility supports to individuals; if he will consider looking at the Disabled Drivers and; Disabled Passengers (Tax Concessions) Regulations 1994; and if he will make a statement on the matter. [54673/22]

Claire Kerrane

Question:

273. Deputy Claire Kerrane asked the Minister for Finance if his attention has been drawn to concerns raised by the Ombudsman's report entitled 'Grounded: Unequal access for people with disabilities to personal transport schemes - a commentary by the Ombudsman'; his views on whether the medical criteria in order to obtain a primary medical certificate are excessively restrictive; if he plans to act in relation to this; and if he will make a statement on the matter. [54674/22]

Written answers

Minister for Finance

I propose to take Questions Nos. 272 and 273 together.

I am aware of the Ombudsman report and its findings, particularly in relation to the Disabled Drivers & Disabled Passengers Scheme, which provides relief from Vehicle Registration Tax and VAT on the purchase and use of an adapted car, as well as an exemption from motor tax and an annual fuel grant.

The Scheme is open to severely and permanently disabled persons as a driver or as a passenger and also to certain charitable organisations. In order to qualify for relief, the applicant must hold a Primary Medical Certificate issued by the relevant Senior Area Medical Officer (SAMO) or a Board Medical Certificate issued by the Disabled Driver Medical Board of Appeal. Certain other qualifying criteria apply in relation to the vehicle, in particular that it must be specially constructed or adapted for use by the applicant.

To qualify for a Primary Medical Certificate an applicant must be permanently and severely disabled, and satisfy at least one of the following medical criteria, in order to obtain a Primary Medical Certificate:

- be wholly or almost wholly without the use of both legs;

- be wholly without the use of one leg and almost wholly without the use of the other leg such that the applicant is severely restricted as to movement of the lower limbs;

- be without both hands or without both arms;

- be without one or both legs;

- be wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg;

- have the medical condition of dwarfism and have serious difficulties of movement of the lower limbs.

I have no role in relation to the granting or refusal of PMCs and the HSE and the Medical Board of Appeal must be independent in their clinical determinations.

As the Deputy is aware, I committed to a comprehensive review of the DDS to include a broader review of mobility supports. In order to achieve this objective, Minister O’Gorman agreed in September 2021 that the DDS review should be incorporated into the work of the National Disability Inclusion Strategy (NDIS) Transport Working Group (TWG).

The Working Group, under the Chairpersonship of Minister of State Anne Rabbitte, held a number of meetings across 2022 and is expected to hold its final meeting later this month. The Working Group will produce its report shortly afterwards.

As part of its engagement in this process, the Department of Finance established an information-gathering Criteria Sub-group (CSG) at the start of this year. Its membership comprised of former members of the DDMBA and Principal Medical Officers (PMOs) in the HSE. Its purpose was to capture their experiences, expertise and perspectives in relation to the practical operational and administrative challenges of the DDS, as well as to explore what alternative vehicular arrangements were available for those with mobility issues based on international experience. The CSG work led to the production of five papers and a technical annex, submitted to the Department of Children, Equality, Disability, Integration and Youth in July 2022.

The work of the CSG provides clear documented evidence of the shortcomings of the scheme, evidence that is essential as we undertake a review of the scheme. It clearly outlines the problems with the scheme, including the fact that it does not meet the needs of a significant group of those with a disability and with mobility impairments; it requires individuals to 'prove' they are sufficiently 'disabled' as determined against six outdated medical-based criteria; it is significantly divergent from international best practice in almost all scheme aspects examined; it is managed and delivered through a historically complex, 'light touch' administrative and operational regime that by such design cannot, does not and will never operate to the standards expected of a 21st century operational model.

In my view, the DDS needs to be replaced with a fit for purpose, needs-based vehicular adaptation scheme that is grant based. I believe making changes to the DDS is not feasible or credible as any change or expansion of eligibility criteria for the DDS will still require an individual to 'prove' they meet that criteria and conversely there will still be individuals that will be deemed not to meet the criteria i.e. the scheme will still adhere to an 'in or out' policy rationale. Such an approach has the potential to make already highly contested Primary Medical Certificate and appeals processes even more difficult, for the HSE, for the DDMBA, and for individuals.

This conclusion, together with design principles and parameters for the new scheme as based on international practice, were incorporated into a response to three questions posed in September 2022 to members of the NDIS Transport Working Group, in respect of proposals for enhanced, new and/or reconfigured supports to meet the transport and mobility needs for those with a disability. I hope they will receive the appropriate consideration.

I cannot comment on any potential changes to the scheme in advance of these proposals.

Question No. 273 answered with Question No. 272.

Interest Rates

Questions (274)

Paul Kehoe

Question:

274. Deputy Paul Kehoe asked the Minister for Finance if he is considering any measures to specifically mitigate the impact of recent and future ECB rate increases on homeowners with variable or tracker mortgages who will be facing increasing mortgage repayments in the midst of a cost-of-living crisis; and if he will make a statement on the matter. [54708/22]

Written answers

Minister for Finance

The European Central Bank is independent in the formulation and implementation of monetary policy and, as the Deputy is aware, in its efforts to combat inflation it has increased official interest rates in recent months. 

These recent monetary policy decisions will influence the level of interest rates in the economy more generally, including the interest rate charged by lenders for mortgages and other loans.  However, the actual price lenders charge for their loans is a commercial matter for individual lenders and as Minister for Finance I cannot determine the lending policies of individual banks or other lenders, including the interest rates they charge for mortgages and other loans.  

A 2017 addendum to the Consumer Protection Code requires regulated entities to explain to borrowers how their non tracker variable interest rates have been set, including in the event of an increase. The measures also improve the level of information required to be provided to borrowers on variable rates annually about other mortgage products available from their lender which could provide savings for the borrower. The lender must also signpost the borrower to the CCPC’s mortgage switching tool.  However, in this context it should also be noted that most new mortgages are now fixed interest rate mortgages and this will protect those borrowers from interest rate increases for the period the interest rate is fixed.

The Central Bank has in place a range of measures in order to protect consumers who take out a mortgage or other loan.  This consumer protection framework, which includes the Code of Conduct on Mortgage Arrears (CCMA), seeks to ensure that lenders are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle, for example, through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties.

In particular, the CCMA requires that regulated entities pro-actively encourage borrowers to engage about financial difficulties which may prevent a borrower from meeting his/her mortgage repayments and, if necessary to address a genuine repayment difficulty, they must explore all the options for an alternative repayment arrangement offered by that regulated entity.   

More generally of course, Budget 2023 was a 'Cost of Living Budget' and many of the tax and expenditure measures it contained were focused on helping individuals and families deal with rising prices and in doing so the Government was especially mindful of the fact that the rising cost of living has hit hardest for those on lower incomes.

Tax Code

Questions (275)

Duncan Smith

Question:

275. Deputy Duncan Smith asked the Minister for Finance if there are any plans by Government to incorporate protection for cohabiting couples under inheritance laws; if he is aware of any similar schemes in other EU countries; and if he will make a statement on the matter. [54709/22]

Written answers

Minister for Finance

For the purposes of capital acquisitions tax (CAT), the relationship between the person who provides a gift or inheritance (the disponer) and the person who receives it (the beneficiary) determines the tax-free threshold (Group Threshold) below which CAT does not arise. Any prior gift or inheritance received by a person since 5 December 1991 from within the same Group Threshold is aggregated for the purposes of determining whether any CAT is payable on a benefit. Where a person receives gifts or inheritances that are in excess of the relevant Group Threshold, CAT at a rate of 33% applies on the excess.   There are three Group thresholds:

- the Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer;

- the Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant of the disponer.

- the Group C threshold (currently €16,250) applies in all other cases. 

Gifts and inheritances between spouses and civil partners are exempt from CAT.

In the case of long-term cohabitants who are not married or in a civil partnership, the relevant Group Threshold is the Group C threshold, which is €16,250. In addition to this, a CAT exemption may be available in relation to certain gifts and inheritances between long-term cohabitants.

Firstly, where a cohabitant inherits the family home from his or her deceased partner, he or she may be in a position to avail of the dwelling house exemption. To qualify for the exemption, the inherited property must have been the deceased cohabitant’s principal private residence at the date of his or her death. This requirement is relaxed in situations where the deceased person left the property before the date of death due to ill health; for example, to live in a nursing home. The inheriting cohabitant must also have lived in the house for 3 years prior to the date of the inheritance and must continue to live in the house for 6 years after that date.  In addition, the inheriting cohabitant must not have a beneficial interest in another residential property.

In addition to the dwelling house exemption, gifts and inheritances taken by a qualified cohabitant in accordance with a Court Order made under Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 are exempt from CAT. Part 15 of that Act provides for a redress scheme whereby Court Orders can be obtained in certain circumstances in relation to the transfer of property. A “qualified cohabitant” is a person who has been in a committed and loving relationship with another person for a minimum period of 5 years (or 2 years where they are parents of one or more dependent children), whose relationship has ended due to death or separation and neither of whom was married to and living with another person in 4 of the 5 years immediately prior to the end of the relationship.

Regarding similar schemes in other EU Member States, I am informed by the Department of Justice that it is not possible to have access to the information sought. Inheritance rights differ from country to country across the EU.

Question No. 276 answered with Question No. 252.

Pension Levy

Questions (277)

Duncan Smith

Question:

277. Deputy Duncan Smith asked the Minister for Finance if a company is liable for the pensions levy when paying a pension out of its own company funds. [54815/22]

Written answers

Minister for Finance

I assume the pensions levy the Deputy is referring to is the levy which was charged on pension schemes from 2011 to 2015 in accordance with section 125B of the Stamp Duties Consolidation Act 1999. 

The levy was introduced in the wake of the financial crash, at a time when the economy was in very serious difficulties.  It was charged on the market value of assets in pension schemes held on 30 June in each year at a rate of 0.6% (2011 to 2013), 0.75% (2014) and 0.15% (2015) and was discontinued from 2016.

When the levy was charged, liability for paying it rested with the trustees of pension schemes and others responsible for the management of pension fund assets.  In this regard, it should be noted that there was never an obligation on companies to pay the levy when paying into a pension scheme.

Departmental Reports

Questions (278)

Mairéad Farrell

Question:

278. Deputy Mairéad Farrell asked the Minister for Finance further to Parliamentary Question No. 169 of 6 October 2022, if he will provide an update on the retrieval of said document; and if he will make a statement on the matter. [54828/22]

Written answers

Minister for Finance

I acknowledge the request for a specific TSG report from 1998, made by the Deputy in the referenced Parliamentary Question. 

This report has now been retrieved by my officials from file storage and has been forwarded directly to the Deputy.

Banking Sector

Questions (279)

Róisín Shortall

Question:

279. Deputy Róisín Shortall asked the Minister for Finance his views on the need to keep bank charges at an affordable level for customers, given the financial pressures facing the public; and if he will make a statement on the matter. [54858/22]

Written answers

Minister for Finance

The Government is acutely aware of the cost pressures facing households and firms. That is why Budget 2023 is a ‘Cost of Living’ Budget, built around interventions aimed at reducing the impact of inflation.

In relation to bank charges specifically, I want to welcome the respective decisions of Ulster Bank and KBC to remove certain maintenance fees as they move to exit the market. This will reduce the cost that customers may incur by potentially having two current accounts open at once during the mass migration of accounts.

While I welcome these decisions, as Minister for Finance, I do not have a direct function in the operations of any bank. Although the State is a shareholder in some of the banks operating in the State, they must be run on a commercial and independent basis, and their independence in this regard is protected by the relationship agreement. 

The charging of fees is a commercial decision for regulated entities, but this is subject to the regulatory framework which is the responsibility of the Central Bank of Ireland. Under Section 149 of the Consumer Credit Act, 1995, credit institutions must notify the Central Bank if they wish to introduce any new customer charges or increase any existing customer charges, in respect of the provision of any of the following services: 

- making and receiving payments; 

- providing foreign exchange facilities; 

- providing and granting credit; 

- maintaining and administrating transaction accounts. 

Each notification received by the Central Bank is assessed in accordance with the specific criteria set out in Section 149 of the Consumer Credit Act 1995. The Central Bank may either approve (in full or at lower levels than requested) or reject a credit institution’s application under Section 149. In fulfilling its statutory role under Section 149, the Central Bank assesses these notifications in accordance with the following specific assessment criteria as set out in the legislation: 

- the promotion of fair competition; 

- the commercial justification;

- the effect new charges or increases in existing charges will have on customers; and 

- passing on costs to customers. 

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 for commercial or competitive reasons.

The letter of direction also sets out that credit institutions must publish the charges to be imposed on notices, leaflets, and promotional material etc. which should be made available to customers and on the credit institutions website if appropriate (the withdrawal of the fees will also be notified to the relevant customers prior to withdrawal).

Where a regulated entity intends to introduce new charges or increase any existing charges, under provision 6.18 of the Consumer Protection Code, it must give notice to affected consumers of the introduction of any new charges or of increases in charges, specifying the old and new charge, at least 30 days prior to the charge taking effect. 

In relation to current account fees, the Deputy may wish to note that the Competition and Consumer Protection Commission operates a comparison tool for current accounts (including information on fees) on its website. This can be used by consumers to find the account which best meets their needs.

Question No. 280 answered with Question No. 252.

Tax Code

Questions (281, 282, 286, 293, 294, 295)

Michael Ring

Question:

281. Deputy Michael Ring asked the Minister for Finance if he will reconsider the BIK rate change coming into effect in January 2023, in view of the impact that it will have on employees who have no choice but to use a company car, particularly in view of the current cost-of-living crisis; and if he will make a statement on the matter. [54934/22]

Gino Kenny

Question:

282. Deputy Gino Kenny asked the Minister for Finance if he will review tax increases for BIK tax on company cars (details supplied). [54986/22]

Mark Ward

Question:

286. Deputy Mark Ward asked the Minister for Finance if he will provide an update on the increases to benefit-in-kind charges for company cars; the rationale for the increases; and if he will make a statement on the matter. [55029/22]

Neale Richmond

Question:

293. Deputy Neale Richmond asked the Minister for Finance his views on whether the benefit-in-kind for electric vehicles category A should be for cars with zero emissions, category B should be 1-59g/km and so on, in order to encourage more electric vehicles on the road; and if he will make a statement on the matter. [55445/22]

Duncan Smith

Question:

294. Deputy Duncan Smith asked the Minister for Finance if his Department has carried-out an impact assessment of the financial implications of introducing BIK for electric vehicles; and if he will make a statement on the matter. [55456/22]

Duncan Smith

Question:

295. Deputy Duncan Smith asked the Minister for Finance if his Department has carried-out an impact assessment of the financial implications of increasing interest rates on BIK, in view of the current inflation and fuel crises; and if he will make a statement on the matter. [55457/22]

Written answers

Minister for Finance

I propose to take Questions Nos. 281, 282, 286 and 293 to 295, inclusive, together.

Recent Government policy has focused on strengthening the environmental rationale behind company car taxation. Until the changes I brought in as part of the Finance Act 2019, Ireland’s vehicle benefit-in-kind regime was unusual in that there was no overall CO2 rationale in the regime. This is despite a CO2 based vehicle BIK regime being legislated for as far back as 2008 (but never having been commenced).

In Finance Act 2019, I legislated for a CO2-based BIK regime for company cars from 1 January 2023. From that date the amount taxable as BIK remains determined by the car’s original market value (OMV) and the annual business kilometres driven, while new CO2 emissions-based bands will determine whether a standard, discounted, or surcharged rate is taxable. The number of mileage bands is reduced from five to four.

EVs will benefit from a preferential rate of BIK, ranging from 9 – 22.5% depending on mileage. Fossil-fuel vehicles will be subject to higher BIK rates, up to 37.5%. In terms of impacts, broadly speaking this means that higher emission vehicles will experience BIK increases versus the 2022 year of assessment, while lower emission vehicles will experience a lower BIK liability depending on mileage levels. This new structure with CO2-based discounts and surcharges is designed to incentivise employers to provide employees with low-emission cars. 

The rationale behind the mileage bands in the new BIK structure is to acknowledge that the greater the business mileage, the more the car is a benefit to the company rather than its employee (on average); and the more the car depreciates in value, the less of a benefit it is to the employee (in years 2 and 3) as the asset from which the benefit is derived is depreciating faster. Mileage bands also ensure that cars more integral to the conduct of business receive preferential tax treatment.

Reforming the BIK system to include emissions bands provides for a more sustainable environmental rationale than the continuation of the current system with exemptions for electric vehicles (EVs).  This will bring the taxation system around company cars into step with other CO2-based motor taxes as well as the long-established CO2-based vehicle BIK regimes in other member states.

In addition to the above and  in light of government commitments on climate change, Budget 2022 extended the preferential BIK treatment for EVs to end 2025 with a tapering mechanism on the vehicle value threshold. This BIK exemption forms part of a broader series of very generous measures to support the uptake of EVs, including a reduced rate of 7% VRT, a VRT relief of up to €5,000, low motor tax of €120 per annum, SEAI grants, discounted tolls fees, and 0% BIK on electric charging.

Finally, it should be noted that this new BIK charging mechanism was legislated for in 2019 and was announced as part of Budget 2020. I am satisfied that this has provided a sufficient lead in time to adapt to this new system before its implementation in 2023.