Thursday, 5 Oct 2023

Tax Exemptions

Questions (101)

Alan Dillon

Question:

101. Deputy Alan Dillon asked the Minister for Finance if he will extend the bike-to-work scheme to those who are self-employed; and if he will make a statement on the matter. [43085/23]

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Written answers

Section 118(5G) of the Taxes Consolidation Act 1997 provides for the Cycle to Work scheme. This scheme offers an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and/or associated safety equipment for one of their employees (or directors) to use, in whole or in part, to travel to work. Associated safety equipment includes helmets, lights, bells, mirrors and locks but does not include child seats or trailers.

One of three thresholds applies to the amount of exempted expenditure. The applicable threshold depends on the type of bicycle purchased and includes related safety equipment. From 1 January 2023, the Cycle to Work scheme applies to the first:

• €3,000 of expenditure in relation to a cargo or e-cargo bike;

• €1,500 of expenditure in relation to a pedelec or e-bike; or

• €1,250 of expenditure in relation to any other type of bike.

The employer and employee may also enter into a Revenue-approved salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary in exchange for a bicycle and/or related safety equipment

BIK is a charge to tax which only applies where an employer provides a benefit to either their director or employee. Therefore, the exemption from BIK under the Cycle to Work scheme is only applicable where the bicycle and/or related safety equipment is provided by an employer to either their director or someone in their employment.

Self-employed individuals generally can’t qualify for the Cycle to Work scheme because an employer-employee relationship does not exist. Likewise, they generally are not eligible for the exemption from tax in respect of sacrificed remuneration because salary sacrifice arrangements may only be entered into between an employer and their director or employee.

Furthermore, as the Deputy will appreciate, the expansion of any tax expenditure creates a cost to the Exchequer in terms of revenue foregone and that cost must be recovered elsewhere.

For these reasons, while the Cycle to Work scheme is kept under review by officials, I have no plans at present to change the scope of the scheme.

Further guidance regarding the Cycle to Work Scheme and salary sacrifice arrangements can be found on Revenue’s website.

National Treasury Management Agency

Questions (102)

Matt Carthy

Question:

102. Deputy Matt Carthy asked the Minister for Finance if his Department has engaged with the NTMA regarding the ISIF investments in companies that are listed on the UN Human Rights Council database of business enterprises involved in certain activities related to the Israeli settlements in the occupied Palestinian territory, published by the UN Human Rights Council in February 2020, A/HRC/43/71; if so, the outcome of any such engagements; and if he will make a statement on the matter. [43045/23]

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Written answers

Minister for Finance

My Department has been working with the Ireland Strategic Investment Fund (ISIF) on the most appropriate way to address the issues raised by the Private Members Illegal Israeli Settlements Divestment Bill 2023. This process is still ongoing.

ISIF constructs its portfolio within the legislative framework set for it by the Oireachtas and must align with any changes that are legislated for. When this Bill was initiated in the Dáil, the Minister of State outlined the State’s position with regard to the policy of differentiation that the State adopts vis a vis Israel and the territories occupied by Israel since 1967. Ireland’s general position with regard to the Occupied Territories is very clear. In the debate on the Bill in May of this year the Minister also raised a number of specific concerns about the content and approach proposed in the Bill including the updating of the proposed list.

In that context, the Office of the High Commissioner on Human Rights issued an update to the UN database of businesses operating in illegal Israeli settlements on 30 June this year. In publishing the update the UN said that it did not purport to provide a complete list of business enterprises engaged in certain activities in relation to Israeli settlement activity in the Occupied Palestinian Territory.

The update, which was also resource constrained and limited only to a review of those companies already listed, resulted in fifteen companies being removed from the Database. This included General Mills, one of the 9 companies that ISIF had investments in. Thus the UN list, while useful, cannot be considered to be fully comprehensive.

ISIF has, to date, completed several divestment programmes and excluded investments from the Fund. Exclusion is used on a limited basis, reflecting exclusions mandated by legislation (such as the Fossil Fuel Divestment Act 2018 or the Cluster Munitions and Anti-Personnel Mines Act 2008) and, inter alia, exclusions are also made on sustainable investment grounds using ISIF’s Exclusion Decision Making Framework including Tobacco and Nuclear Weapons.

On the basis of the foregoing I am continuing to adopt a considered approach to a solution including whether or not to legislate and using the time that the nine-month timed amendment allows to do this. Ultimately, we all want an appropriate solution to address the issue.

Tax Code

Questions (103)

Richard Boyd Barrett

Question:

103. Deputy Richard Boyd Barrett asked the Minister for Finance if he will announce in budget 2024 the abolition of the universal social charge for those earning under €100,000 per year; and if he will make a statement on the matter. [43154/23]

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Written answers

Minister for Finance

The Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services. The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of a person’s own individual income and personal circumstances. It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base.

The USC has played a vital role in meeting the many expenditure demands placed on the Exchequer. Receipts from the USC in 2022 were in the region of €5 billion with a projected yield of €5.2 billion for 2023.

Currently, the exemption threshold for USC applies to individuals who earn €13,000 or less per annum. I am advised by Revenue that the cost of increasing the exemption limit of the USC to €100,000 is an estimated €2.4 billion and €2.8 billion on a first and full year basis respectively. As such, it would be necessary to raise this amount from other sources or there would be a shortfall in the Exchequer finances. Furthermore, such a proposal would also significantly narrow the income tax base and would expose our economy to significant risks in the event of a future economic downturn.

Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI. It is my view a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term.

As such, I have no plans to abolish the USC for individuals earning less than €100,000 per annum.

Tax Collection

Questions (104, 122)

Thomas Gould

Question:

104. Deputy Thomas Gould asked the Minister for Finance to provide an update on Revenue's work on the implementation of a vacant homes tax. [43070/23]

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Paul McAuliffe

Question:

122. Deputy Paul McAuliffe asked the Minister for Finance for an update on the operation of the vacant homes tax; and if he will make a statement on the matter. [43130/23]

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Written answers

Minister for Finance

I propose to take Questions Nos. 104 and 122 together.

Vacant Homes Tax (VHT) is administered by Revenue in accordance with Part 22B of the Taxes Consolidation Act 1997 (TCA 1997). A residential property will be within the scope of the new tax if it has been occupied as a dwelling for less than 30 days in a chargeable period. Each chargeable period will commence on 1 November and end on 31 October of the following year.

The first chargeable period for VHT is 1 November 2022 to 31 October 2023. The first self-assessed returns are due on 7 November this year and the tax will be payable on 1 January 2024. VHT will be charged at a rate equal to three times the property’s existing base Local Property Tax (LPT) liability and is required to be paid in addition to the property’s LPT liability. A small number of exemptions are available to ensure that homeowners are not excessively penalised for normal temporary vacancy.

A preliminary property register, developed by Revenue with data drawn from a range of sources including GeoDirectory, the Residential Tenancies Board and ESB Networks, has identified an initial subset of residential properties which may come within scope of VHT. This preliminary register is being used to issue correspondence to property owners who are identified as being potentially liable for VHT, advising them of their obligations. While approximately 25,000 such notices will issue from Revenue in the coming days, VHT operates on a self-assessment basis and property owners are required to self-assess their liability to VHT and submit a return if they determine that VHT applies to their property, even if they do not receive correspondence from Revenue. Revenue may contact further property owners at a later date following further data analysis.

Upon receipt of a notice property owners are required to confirm their property’s occupation status by 7 November 2023, thereby determining their liability to VHT. A detailed note explaining how Revenue determined the VHT preliminary property register was published on the Revenue website on 27 September 2023. This can be found at: revenue.ie/en/property/documents/vht/letter-campaign-report.pdf

Comprehensive information regarding Vacant Homes Tax is published on Revenue’s website, with clear information to assist property owners on how to self-assess if their property is subject to VHT, including details on how to submit a return, how to make a payment, or how to claim an exemption. Revenue has also published a VHT Tax and Duty Manual (TDM) which provides further detailed guidance on the tax, which is available at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-22b/22b-01-01.pdf

I am advised by Revenue that the online VHT Portal is available since 25 September 2023, where property owners can confirm the occupation status of their property, file VHT Returns, make payments, and submit any necessary documentation to Revenue. The Portal can be accessed through myAccount, ROS, or through the Local Property Tax (LPT) Online Portal.

In June 2023, Revenue launched a series of information sessions and webinars with key relevant stakeholders including Citizen’s Information; Approved Housing Body Regulatory Authority; Irish Council for Social Housing; the Irish Property Valuers’ Association, together with all Local Authorities.

Further information in relation to VHT is available on the Revenue website at: www.revenue.ie/en/property/vacant-homes-tax/index.aspx

Alternatively, individuals can contact Revenue through MyEnquiries, by telephone at (01) 738 36 26 or by post to: Freepost, LPT/ VHT Branch, PO Box 1, Limerick.

Banking Sector

Questions (105)

Peadar Tóibín

Question:

105. Deputy Peadar Tóibín asked the Minister for Finance if his Department has undertaken any study to determine the merit of a public banking system. [42635/23]

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Written answers

Minister for Finance

I wish to advise the Deputy that the Department of Finance published a report in December 2019 by Indecon Consulting on an Evaluation of the Concept of Community Banking in Ireland. This report followed a previous paper on Local Public Banking published by my Department in 2018.

The Indecon report concluded that there is no business case for the State to establish a community banking system in Ireland; supporting the outcome of the previous report on Local Public Banking. The report notes that the Exchequer costs and risks involved would not be justified. The report also notes concerns over the ability of a new State owned bank to provide effective competition.

The Indecon Report looked at the credit union sector, and concluded that Credit Unions are considered to be a ‘community bank’. Credit Unions are a key provider of financial services throughout Ireland, and are continuing to expand the range of services they provide.

As the Deputy will be aware, the Department of Finance also published a broad-ranging review of the retail banking sector in November last year. Section 5 examines competition in the Irish retail banking market and considers the case for the establishment of a community banking system.

Recommendation 5.2 of this review stated that the Department of Finance should support the Credit Union sector to safely and sustainably provide a universal product offering.

Evidence of the Government’s support for the Credit Union movement growing as a key provider of community banking can be seen in the Credit Union Amendment Bill 2022 which was published in November 2022.

This legislation will allow the Credit Union movement to provide a broader range of services to its customers. The Bill completed the legislative process in the Seanad in December last year and was introduced in the Dail in March 2023.

Tax Yield

Questions (106)

Brendan Griffin

Question:

106. Deputy Brendan Griffin asked the Minister for Finance the total USC income collected by the State for each year since its introduction; if he will provide a breakdown, per annum, of the rates and amounts collected in each rate category; if he will provide details of the percentage of overall income tax collected that the USC has represented each year; and if he will make a statement on the matter. [43055/23]

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Written answers

Minister for Finance

The Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services. The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of a person’s own individual income and personal circumstances. It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base.

I have been advised by Revenue that the breakdown per annum of USC receipts are provided below, along with the percentage of total income tax (including USC) that this represented.

Year	USC €m	% of Total IT (incl. USC)
2022	4,895	15.9%
2021	4,367	16.3%
2020	3,832	16.9%
2019	3,797	16.6%
2018	3,738	17.6%
2017	3,724	18.6%
2016	3,968	20.7%
2015	4,174	22.8%
2014	3,647	21.3%
2013	3,930	24.9%
2012	3,790	25.0%
2011	3,114	22.5%

I am further advised by Revenue that USC receipts are not collected according to rates of USC, as the tax is not remitted to Revenue in this way. However, income tax returns and payslip data do provide a breakdown of USC liabilities by USC rate. Accordingly, the tables below provide the breakdown of the amount of USC liabilities that arose at each rate of USC for each year 2012 to 2021 (the latest year for which complete tax returns data is currently available for analysis). Data on 2011 is not available as the liabilities by rate of USC is not recorded in the available data for analysis. The totals for USC receipts and USC liabilities are correlated however differences in the annual totals arise due to several factors including the timing of payments.

USC Rate	Liability €m
	2021	2020	2019
0.50%	134.4	129.6	136.1
2%	410.3	384.2	379.7
4.50%	1,929.4	1,822.5	1,858.1
8%	1,696.2	1,425.7	1,349.7
Surcharge 3%	80.8	66.8	70.6
Total	4,251.1	3,828.8	3,794.2

USC Rate	Liability €m
	2018
0.50%	127.3
2%	337.8
4.75%	1,829.5
8%	1,189.9
Surcharge 3%	64.9
Total	3,549.4

USC Rate	Liability €m
	2017
0.50%	122.0
2.5%	380.6
5%	1,830.8
8%	1,076.3
Surcharge 3%	60.5
Total	3,470.2

USC Rate	Liability €m
	2016
1%	234.1
3%	431.0
5.5%	1,913.7
8%	975.6
Surcharge 3%	58.8
Total	3,613.2

USC Rate	Liability €m
	2015
1.5%	338.9
3.5%	417.6
7%	2,386.8
8%	989.2
Surcharge 3%	87.7
Total	4,220.2

USC Rate	Liability €m
	2014	2013	2012
2%	380.8	366.7	360.5
4%	520.3	495.8	505.8
7%	3,092.1	2,958.1	2,879.8
Surcharge 3%	48.9	51.0	54.2
Total	4,042.1	3,871.6	3,800.3

Tax Code

Questions (107)

Marc Ó Cathasaigh

Question:

107. Deputy Marc Ó Cathasaigh asked the Minister for Finance if, with respect to Annex III of the Reduced VAT Rates Directive (details supplied), his Department is considering the potential implications on lowering the VAT rate applied to newspapers and periodicals either on physical means of support or supplied electronically; and if he will make a statement on the matter. [42189/23]

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Written answers

Minister for Finance

As the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

However it should be noted that a zero VAT rate already applies to newspapers, including those supplied electronically.

Question No. 108 answered with Question No. 98.

Fiscal Policy

Questions (109)

Richard Bruton

Question:

109. Deputy Richard Bruton asked the Minister for Finance his views on whether tax policy can play a more active role in incentivising climate action; and if he will make a statement on the matter. [43048/23]

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Written answers

Minister for Finance

Ireland has committed to a 51 per cent reduction of 2018 Greenhouse Gas (GHG) emissions levels by 2030 and to carbon neutrality by 2050. The Climate Action and Low Carbon Development (Amendment) Act 2021 is the legally binding framework with clear targets and commitments set in law to ensure we achieve our national, EU and international climate obligations in the near and long term. Additionally, the sectoral emissions ceilings (SEC) agreed by Government in July 2022, further cements the emissions targets for each sector as we work towards halving emissions by 2030.

The policy challenge lies in addressing climate change and improving the environmental sustainability of our economic progress while Europe emerges from an energy and cost of living crisis. This involves striking a balance of policy measures which, inter alia, incentivise uptake of cleaner fuels and technology whilst protecting the vulnerable in society.

Taxation, operating in conjunction with other measures, provides the Government with an important climate action policy lever. Fiscal measures such as price signalling and the gradual removal of fossil fuel subsidies support the move away from heavily pollutant fossil fuels and towards more sustainable modes of transport, heat and production. A range of policies, including demand management, is needed to meet the necessary reductions and to underpin the transition to a low emission and ultimately net-zero economy.

The Commission on Taxation and Welfare (COTW), who were tasked with examining how the taxation system can be used to help Ireland meet climate change commitments, set out a number of recommendations on the role of taxation in encouraging carbon emissions reduction. This includes implementing the scheduled increases in Carbon Tax, reducing fossil fuel subsidies and developing new taxes to replace the revenues from fossil fuel taxes. The recent COTW report will inform the future consideration of energy and environmental taxation.

Job Creation

Questions (110)

Alan Farrell

Question:

110. Deputy Alan Farrell asked the Minister for Finance his views on the outlook for job creation in 2023; and if he will make a statement on the matter. [31675/23]

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Written answers

Minister for Finance

Despite the headwinds facing the domestic economy over the past year, the labour market has proved remarkably resilient. Over 88,000 (net) jobs were added over the past four quarters, with employment reaching a record high of 2.64 million in the second quarter of 2023. As a result, almost three quarters of the working age population are now in employment – an all-time high. Perhaps the most remarkable aspect of this growth is that virtually all of it has been driven by increases in labour supply, by inward migration as well as increased participation, by females in particular.

With the unemployment rate at near record lows - averaging just over 4 per cent over the year to date - the economy is now operating at or possibly beyond full employment, with a lack of skilled labour evident in certain sectors including construction. However, overall labour demand - as indicated by job postings data from Indeed – appears to have softened in recent months and labour supply continues to be supported by inward migration. Consistent with these developments, the pace of employment growth is set to moderate throughout the rest of this year and next. My Department will publish updated labour market forecasts as part of Budget 2024 next week.

Tax Code

Questions (111)

Michael Collins

Question:

111. Deputy Michael Collins asked the Minister for Finance if, in budget 2024, all insulation products, for example, solar panels, attic insulation, wall insulation and foam insulation, will be VAT-free, thus enabling those on low incomes the opportunity to insulate their homes. [42056/23]

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Written answers

Minister for Finance

As the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

However, the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT. Currently, Ireland has two reduced rates of 13.5% and 9%.

Following amendments to the VAT Directive in 2022 a limited number of zero rates may be applied by Member States to specific categories. One of these categories is solar panels, and in this regard the Deputy will recall that earlier this year, I introduced a zero rate for the supply and installation of solar panels in private dwellings. However, none of these categories include insulation or other construction material.

It should be noted that while insulation materials have the standard rate of VAT applied they have an effective rate of 13.5% VAT due to the 'two-thirds rule' which applies to construction. This rule means that if the cost of the goods used in carrying out work does not exceed two-thirds of the total price, the rate which applies to the service then applies to the entire transaction.

Defective Building Materials

Questions (112)

Pearse Doherty

Question:

112. Deputy Pearse Doherty asked the Minister for Finance for an update on the operation of the defective concrete products levy, its application to precast concrete products and autoclave aerated concrete, its impact on residential construction costs; and if he will make a statement on the matter. [43135/23]

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Written answers

Minister for Finance

As the Deputy will be aware, arising from a November 2021 Government decision that a levy be imposed on the construction sector to contribute towards the cost of the Mica Redress Scheme, the Defective Concrete Products Levy ("DCPL") was announced as part of Budget 2023.

The DCPL only came into effect on 1 September 2023, with the first return under it not due until 23 days after the end of the first accounting period, that is 23 days after 31 December 2023 i.e. 23 January 2024. It is therefore still too early to provide an update on the operation of the levy.

The DCPL applies, at a rate of 5% of the market value of the concrete products within scope of the levy, at the point of first supply of those products in the State on or after 1 September 2023. The levy applies to both supplies within the State and into the State (from outside the State) to ensure fairness of application of the levy.

It is important to note that pre-cast concrete products are not within the scope of the levy, and therefore the levy does not apply on supplies of such products. The DCPL does however, apply to the value of pouring concrete that forms a constituent element of precast concrete products.

In light of recent feedback from industry participants on the 6th of September 2023 I announced my intention to bring forward amendments in the forthcoming Finance Bill to exclude the value of pouring concrete used in precast products from the scope of the levy. This will come in to effect on 1 January 2024 and a refund scheme will apply for the interim period to the end of 2023. Concrete blocks and pouring concrete for use other than in precast products will remain within scope of the DCPL.

Recognising that pre-cast concrete is an important and growing export orientated sector, my Department is engaging with industry and other relevant experts to prepare the necessary amendments.

The levy is intended to apply to concrete blocks and my Department is aware of issues regarding autoclave aerated concrete blocks. The current legislation unintentionally did not sufficiently ensure that autoclave aerated concrete blocks are in scope of the levy. My Department is currently analysing this issue and I will make an amendment in the forthcoming Finance Bill to ensure that all blocks are in scope.

Business Supports

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Written answers

Minister for Finance

I propose to take Questions Nos. 113, 114, 130, 133 and 139 together.

The Temporary Business Energy Support Scheme (TBESS) was introduced to support qualifying businesses with increases in their electricity or natural gas costs arising from the Russian invasion of Ukraine. Finance Act 2022 (as amended) made provision for the TBESS.The scheme provided support to qualifying businesses in respect of increases in their electricity or natural gas costs. The TBESS was available to eligible tax compliant businesses carrying on a trade or profession, the profits of which are chargeable to tax under Case I or Case II of Schedule D.The claim period for TBESS was a calendar month from 1 September 2022 to July 31 2023. The final deadline for eligible businesses to submit claims for relief under the Temporary Business Energy Support Scheme (TBESS) was Saturday, 30 September 2023. The scheme is now closed.Over €140 million has been paid out to 31,044 businesses across the country.I am advised by Revenue of the following registrations and claims for the businesses who availed of the TBESS:

County	Registered Customers	Value of Approved claims
Carlow	438	€2,013,857
Cavan	665	€3,024,823
Clare	806	€2,979,866
Cork	4,075	€16,067,453
Donegal	1,316	€4,589,265
Dublin	6,728	€43,097,917
Galway	1,814	€8,395,946
Kerry	1,346	€4,708,125
Kildare	1,108	€5,717,312
Kilkenny	727	€2,404,037
Laois	436	€1,541,096
Leitrim	261	€578,218
Limerick	1,346	€5,898,106
Longford	310	€1,280,323
Louth	884	€3,433,132
Mayo	975	€3,570,172
Meath	1,112	€4,890,221
Monaghan	637	€2,646,916
Offaly	482	€1,598,839
Roscommon	382	€1,647,170
Sligo	439	€2,064,630
Tipperary	1,295	€4,087,602
Waterford	931	€4,495,747
Westmeath	690	€2,548,101
Wexford	1,085	€4,413,025
Wicklow	756	€3,000,221
Total	31044	€140,692,120

I am advised by Revenue that further TBESS statistics will be published on the Revenue website on 5 October 2023 at: www.revenue.ie/en/corporate/information-about-revenue/statistics/number-of-taxpayers-and-returns/cost-living.aspx

The TBESS was designed as a temporary measure and I do not have plans to introduce a similar scheme.

Question No. 114 answered with Question No. 113.

Tax Code

Questions (115)

Michael Lowry

Question:

115. Deputy Michael Lowry asked the Minister for Finance regarding Revenue duty and charges levied on motor dealers, traders, and registered vehicle importers during and after the Brexit period; as the Minister is aware Revenue demands specific documentation before granting clearance and releasing vehicles to their owners; if he is aware that Revenue is currently re-evaluating the duty and charges applied to vehicles imported into Ireland from the UK over the past three years; if he is also aware that Revenue is now imposing an additional 10% fee on these vehicles; the reason why Revenue introduced new guidelines and altered the requirements; if he concurs that the imposition of this additional 10% levy appears unjust, especially considering that motor dealers, traders, and registered vehicle importers had diligently adhered to Revenue's requirements at the time of import; furthermore, if he could explain the removal of the 2020/21 guidelines for compliance that were initially provided to motor dealers, traders, and registered vehicle importers on the Revenue website; and if he will make a statement on the matter. [42886/23]

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Written answers

Minister for Finance

I am advised by Revenue that as a result of the UKs departure from the EU, the import of a vehicle from the UK is treated as an import from a third country. As a result, the importer is required to complete a Customs import declaration and pay Customs duty, if applicable, and import VAT at the standard rate of 23% prior to presenting the vehicle for registration.

The Customs Duty rate for the import of new and second-hand passenger cars into the EU is 10%. Customs duty rates are determined by the EU and as Customs is an EU competence, it is not possible for Ireland to apply a different rate as Customs duty rates are common across all Member States. However, I am advised that in certain circumstances, relief from Customs duty and / or import VAT may be available to importers and in these circumstances, documentation must be provided to Revenue to show that the vehicles meet the specific conditions set out in the EU Customs legislation, the Union Customs Code (UCC) or in the EU-UK Trade and Cooperation Agreement (TCA).

Importers of new and second-hand passenger cars from the UK into Ireland can claim a preferential tariff rate of 0% under the TCA where they can provide documentary proof that the vehicle is of UK origin. The documentation proving UK origin should be included with the Customs import declaration to allow the vehicle to be released to its owner in a timely manner. The proofs required to claim preferential origin are detailed in the TCA and are the same as the proofs required in other trade agreements that the EU has entered into, and generally come from the exporter, via the vehicle supplier or manufacturer.

There is also a Returned Goods Relief which may be available for second-hand passenger cars if the vehicle was originally exported from the EU to the UK, has not been altered and is being re-imported within three years of export to the EU. There are specific proofs required under the UCC to qualify for the relief from Customs Duty and import VAT. In this regard, Revenue works closely with SIMI and the trade to simplify compliance with the UCC and TCA requirements. Simplified guidelines to the trade are updated regularly on the Revenue website and through Revenue’s direct communication to the trade via eCustoms Notifications.

Proofs for the 0% preferential rate or for Returned Goods Relief may be assessed by Revenue at the point of import or may be checked post-clearance. If the check is undertaken at the point of import, then the vehicles will be held until the necessary proofs are provided. Under EU legislation, post-clearance interventions can be carried out up to 3 years after the importation of the vehicles and importers are obliged to maintain books and records for this period. The proof requirements for both the 0% preferential rate and for Returned Goods Relief have not changed so the importer should have the proofs available to confirm the entitlement to either the preferential rate or to the relief, as appropriate. However, if during the post-clearance intervention, the proofs cannot be provided, then Revenue is obliged under EU law to collect the correct amount of Customs Duty and VAT owed. This is essential to ensure a level playing field for compliant importers but also because 75% of Customs Duty collected is remitted to the EU and Ireland is audited on an annual basis to ensure that it is carrying out this function effectively and that it remits the correct amount of Customs Duty to the EU.

The guidance on the Revenue website has changed in relation to the simplified Supplementary Import Declaration (SID) which was required for some vehicles imported via Northern Ireland. Since 1 May 2023, the UK Government has introduced a new scheme – known as the Second-Hand Motor Vehicle Payment Scheme (SHMVPS) – which replaces the Margin Scheme for second-hand vehicles that dealers buy in Great Britain, move to Northern Ireland, and then resell. When the Windsor Framework was announced on 27 February 2023, the UK Government’s guidance material on the Framework referred to the SHMVPS. The new scheme allows car dealers who are VAT registered in Northern Ireland and other Member States to reclaim the VAT element of the vehicle cost if the vehicle is purchased in Great Britain and removed or exported from there by the purchaser or by the Great Britain dealer. This means that Irish car dealers will now be in the same position as Northern Irish car dealers when purchasing a qualifying vehicle from Great Britain. The UK Government’s introduction of the SHMVPS from 1 May 2023 and winding down of the previous margin scheme arrangement by 30 October is very welcome as it will unwind the tax avoidance risk created by their previous approach and as a result a SID will no longer be necessary. Guidance material on this issue will be published on the Revenue website shortly.

Comprehensive information on the importation of vehicles from the UK to Ireland, including reliefs from duty and import VAT, is available on the Revenue website at www.Revenue.ie. In addition, Revenue’s Import Policy Unit can be contacted by emailing importpolicy@revenue.ie .

Financial Services

Questions (116, 140, 153)

Brendan Smith

Question:

116. Deputy Brendan Smith asked the Minister for Finance for an update on the review of national payments strategy; and if he will make a statement on the matter. [43131/23]

View answer

Christopher O'Sullivan

Question:

140. Deputy Christopher O'Sullivan asked the Minister for Finance what he is doing to ensure that public bodies maintain their existing payment methods in relation to cash acceptance. [43178/23]

View answer

Brendan Smith

Question:

153. Deputy Brendan Smith asked the Minister for Finance the action he is taking to ensure that cash payments continue to be accepted; and if he will make a statement on the matter. [43132/23]

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Written answers

Minister for Finance

I propose to take Questions Nos. 116, 140 and 153 together.

Regarding Question 43131/23, I published the terms of reference for the National Payment Strategy (NPS) on 27 June 2023. Since then a team in my Department has commenced work on the project. The NPS will take account of the changing payment landscape and it will consider ongoing legislative developments at EU level, including proposals on instant payments, payment services, legal tender and the Digital Euro. The development of the NPS will be underpinned by a public consultation process including engagements with stakeholders.

The NPS team is currently drafting the consultation paper, following extensive research and consultation with key stakeholders (the Central Bank of Ireland, the European Commission, and other Government Departments etc.). The public consultation process will be published in Q4 2023, and will be open for eight weeks. The estimated publication for the NPS itself is in H2 2024.

Regarding question 43132/23, the NPS work will look at the acceptance of cash and consider if legislation should be introduced to require certain sectors or sub-sectors, to accept or facilitate the acceptance of cash. It will also consider whether it should be the policy of the Government to require public service to accept or facilitate the acceptance of cash.

In addition to the NPS work, on 28 June, the European Commission published a proposal for a Regulation on Legal Tender which looks at both access to and acceptance of cash.

The proposal aims to ensure everyone within the Euro Area has sufficient access to cash. The proposal will make cash acceptance mandatory across the Euro Area. However, it also provides flexibility around mandatory acceptance in circumstances where there is a prior agreement in place between both parties regarding payment method, or if the refusal is made in good faith. The exceptions to mandatory acceptance are largely common practice in Ireland at the moment. The NPS will take account of this, and other developments at a European level.

Regarding question 43178/23, as the NPS is on-going I wrote to my Government colleagues on 20 September 2023 to request that public bodies within their aegis maintain acceptance of cash as a payment method, where it currently exists, until the NPS is finalised.

Question No. 117 answered with Question No. 98.

Housing Schemes

Questions (118)

Pádraig O'Sullivan

Question:

118. Deputy Pádraig O'Sullivan asked the Minister for Finance if he will introduce a scheme to help people unable to obtain a mortgage due to unfortunate medical history; and if he will make a statement on the matter. [42850/23]

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Written answers

Minister for Finance

The Financial Consumer Protection Roadmap, which was published by my Department on 13 September 2023, addressed this issue in the context of the consumer protections available in Ireland.

Firstly, the Deputy should note that in June of this year Insurance Ireland and its members published a Code of Practice for Underwriting Mortgage Protection Insurance for Cancer Survivors, which is expected to be operational by the end of the 2023.

Insurers will disregard a cancer diagnosis where treatment ended more than 7 years prior to application (or more than 5 years if the applicant was under 18 at the time of diagnosis). The Code will apply to mortgage cover applications of up to €500,000 for a principal private residence. Insurance Ireland estimates that this threshold covers over 90 per cent of mortgage protection policies in the market. My officials continue to engage with Insurance Ireland regarding the implementation of the Code, and will closely monitor the outcomes.

It may also interest the Deputy to know that that in order to assist clients who have had difficulty acquiring life cover due to a pre-existing illness, Brokers Ireland has published a register containing contact details of Brokers who have experience in advising on life cover in this area. This is available at: brokersireland.ie/life-cover-pre-existing-illnesses/.

The Department of Finance is also closely monitoring work by the European Commission to develop a Code of Conduct on access to financial services for cancer survivors, by early 2024. This objective is set out in ‘Europe’s Beating Cancer Plan’ which was published in 2021, and includes an initiative for 2021-2023 to “Address fair access for cancer survivors to financial services (including insurance), via a code of conduct and a reflection on long-term solutions”.

Through ‘Europe’s Beating Cancer Plan’, the Commission will closely examine practices in the area of financial services (including insurance) from the point of view of fairness towards cancer survivors in long-term remission.

The Commission will engage in dialogue with businesses to develop a code of conduct to ensure that developments in cancer treatments and their improved effectiveness are reflected in the business practices of financial service providers. This is to ensure that only necessary and proportionate information is used when assessing the eligibility of applicants for financial products, notably credit and insurance linked to credit or loan agreements.

In ‘Europe's Beating Cancer Plan: Implementation Roadmap’, the timeline for the objective “Address fair access for cancer survivors to financial services” is as follows: 2021 - Study on situation in Member States; 2022 - Stakeholder engagement, additional studies; 2023 Draft Code of conduct; 2024 Code agreed, with the Code of Conduct established in 2024.

In relation to cases where a person has been refused a mortgage by a bank or another Central Bank regulated mortgage provider, eligible borrowers, including where the applicant can provide proof of insufficient mortgage offers of finance from two regulated financial providers, can apply to the Local Authority Home Loan Scheme, which falls within the remit of the Department of Housing Local Government and Heritage.

Financial Consumer Protection Roadmap

Tax Reliefs

Questions (119)

Paul McAuliffe

Question:

119. Deputy Paul McAuliffe asked the Minister for Finance for a report on the operation of the living city initiative; and if he will make a statement on the matter. [43129/23]

View answer

Written answers

Minister for Finance

The Living City Initiative, provided for in Finance Act 2013 and commenced on 5 May 2015, is a tax incentive aimed at the regeneration of the historic inner cities of Dublin, Cork, Galway, Kilkenny, Limerick and Waterford. The scheme provides income or corporation tax relief for qualifying expenditure incurred in refurbishing/converting qualifying buildings which are located within pre-determined 'Special Regeneration Areas' . Such developments may include both residential and commercial elements.

The Living City Initiative was reviewed as part of the Tax Strategy Group process in 2022. This review is contained in the 'Property-Related Tax Issues, Tax Strategy Group 22/04' paper available on the Department of Finance website.

The review noted that the scheme is a very specific tax incentive, established in compliance with the Department of Finance’s Tax expenditure Guidelines, with the aim of encouraging businesses and home-owners back to the centre of Irish cities in order to preserve historic buildings in 'Special Regeneration Areas'.

Finance Act 2022 provided that the Living City Initiative be extended for a further five year period to 31 December 2027. The owner-occupier element of the relief was also enhanced in Finance Act 2022 for new entrants from 1 January 2023. Owner-occupiers may claim the relief over seven years rather than ten. Where they can’t absorb the deduction in-year, claimants will have the ability to carry forward relief up to a maximum of ten years after the expenditure is incurred.

Information in relation to the overall cost of the scheme is available on the Revenue website for the years 2013 to 2020, the latest year for which fully analysed data are available.

The estimated costs have assumed tax foregone at the 40% rate in the case of income tax and 12.5% in the case of corporation tax.

Take-up has been modest with circa 190 total claimants over the period 2015-2020, but has increased since inception. In relation to 2020, there were 50 claimants of the Living City Initiative and a maximum cost to the Exchequer of €0.3 million.

As with any tax expenditure, the Living City Initiative is kept under review. Decisions regarding tax incentives and reliefs, whether in respect of the introduction of new measures or the amendment of existing measures, are normally made in the context of the Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines.

Insurance Industry

Questions (120, 131)

Ruairí Ó Murchú

Question:

120. Deputy Ruairí Ó Murchú asked the Minister for Finance what the Government’s priorities are in respect of insurance competition work and reform of the insurance market for the remainder of 2023; and if he will make a statement on the matter. [42888/23]

View answer

Ruairí Ó Murchú

Question:

131. Deputy Ruairí Ó Murchú asked the Minister for Finance if the Office for the Promotion of Competition in the Insurance Market produces end of year reports on the progress made on its aims, objections and targets, and if not, will the Minister commit to doing so; and if he will make a statement on the matter. [42887/23]

View answer

Written answers

Minister for Finance

I propose to take Questions Nos. 120 and 131 together.

Insurance reform remains a priority for this Government and is being delivered via the Action Plan for Insurance Reform. The latest Implementation Report demonstrates that significant progress has been made, with 90 per cent of the actions contained in the Action Plan now either delivered or initiated. The importance that Government places on the Action Plan is evidenced by the fact that implementation is overseen by a Cabinet Sub-Group on insurance reform, chaired by the Tánaiste.

The establishment of the Office to Promote Competition in the Insurance Market is a Programme for Government commitment. Chaired by Minister Carroll MacNeill, its aims are to help expand the risk appetite of existing insurers and explore opportunities for new market entrants in order to increase the availability of insurance. Since its establishment, the Office has met with a range of stakeholders, including insurance companies and representative organisations. It is also working closely with IDA Ireland to help leverage the ongoing insurance reforms with the objective of targeting new entrants to the Irish market. I am confident that the IDA now has a positive message to communicate, and new insurance providers have either established in Ireland or are in the process of doing so. In addition, there are also indications that domestic incumbents are expanding their product lines across a diverse range of areas such as SME business, professional indemnity and renewables. This is a clear sign that the Government reform agenda is working. In order to maintain this momentum, Minister Carroll MacNeill will shortly be meeting with the CEOs of the major insurance companies in the State in order to impress upon them the necessity of passing on savings from the new insurance environment to customers, in the form of reduced premiums. She has also recently had a series of engagements with insurance stakeholders in London, including earlier this week with Lloyds, where she emphasised the positive impact of the Government reform agenda and highlighted the opportunities now available for insurers to enter the Irish market. The Minister of State will update the Cabinet Sub Group on the activity of the Competition Office at its next meeting, later this quarter.

In conclusion, I wish to assure the Deputy of my intention to continue to work with my Government colleagues to ensure that the implementation of the Action Plan will continue to bring benefits in terms of affordability and availability of insurance for all consumers.