Written Answers Nos. 101-120
101. Deputy Michael Moynihan asked the Minister for Finance what engagement he has had with the Central Bank and key players in the cash system in order to establish what the appropriate levels of access to cash are to ensure that any further evolution of the cash infrastructure will be managed in a fair, orderly, transparent and equitable manner for all stakeholders; and if he will make a statement on the matter. [4279/24]
View answerOn 23 January, I published the General Scheme of the Access to Cash Bill 2024. The Access to Cash Bill stems from a recommendation made by the Department of Finance's Retail Banking Review, published in November 2022. The aim of the Bill is to ensure continued reasonable access to cash in the State based, initially, on December 2022 levels, adjusted for the subsequent exits of Ulster Bank and KBC.
In the course of preparing the Heads of Bill during 2023, my Department, working closely with the Central Bank, consulted extensively with key stakeholders in the cash system when considering the framework for access to cash in Ireland, including the appropriate levels of access to cash.
This engagement included the Banking and Payments Federation of Ireland and its member retail banks, Cash-in-transit companies, Independent ATM Operators, the members of the Irish Retail Payments Forum, which is hosted by the Central Bank, the Department of Enterprise, Trade and Employment, the Competition and Consumer Protection Commission and the Private Security Authority.
The legislation establishes a framework for the fair, orderly, transparent, and equitable management of future changes in cash infrastructure by setting population and capacity criteria on a regional basis that must be complied with by the designated entities, which will be the three retail banks initially.
There will be a requirement for reviews of the criteria by the Central Bank following the publication of new Census data on population or if cash demand drops by more than 15% in a calendar year compared to the previous calendar year. A review must also be carried out if the Minister requests one and the Central Bank may also carry out a review on its own initiative.
The Central Bank must take account of cash demand, population changes, financial inclusion, operating costs related to the cash infrastructure and any other matters the Bank deems relevant when preparing a review. The Minister must have regard to the Central Bank review when amending the criteria by regulation.
103. Deputy Rose Conway-Walsh asked the Minister for Finance for an update on his engagement with the Banking and Payments Federation and the Department of Finance with respect to the defective concrete blocks redress scheme; and if he will make a statement on the matter. [4595/24]
View answerAs the Deputy is aware, the overall Government response on the problems associated with defective concrete blocks is led by my colleague the Minister for Housing, Local Government and Heritage.
His Department is engaging with impacted householders and relevant stakeholders and has put in place a scheme of financial support to help affected homeowners.
This scheme provides for grants of up to €420,000 to remediate homes and includes ancillary grants of €25,000 to assist homeowners to meet costs relating to temporary accommodation, storage and essential immediate repairs.
I understand that some homeowners have identified a potential challenge with funding the commencement of remediation works in circumstances where it is necessary to make a payment to professionals engaged on a remediation project, prior to receipt of the first grant payment.
The Banking and Payments Federation of Ireland submitted an interim funding proposal to the Department of Housing to address this timing mismatch.
The BPFI propose that funding would be provided upfront from a BPFI member to a homeowner, on the commencement of remediation works. It is proposed that this funding would subsequently be repaid to the BPFI member on the release of the approved grant payment, subject to any requirements of the scheme.
I understand that this proposal was reviewed at a sub-group meeting of the Implementation Steering Group, chaired by the Department of Housing, on 11 January 2024.
Last year, I have asked my officials to engage with the BPFI and with officials in the Department of Housing to support that Department in exploring the funding mechanism proposal. This work is ongoing and includes consideration of the legislative and operational implications of the proposal.
The Government fully understands the importance of this issue in the communities affected by defective concrete blocks and I will continue to work with my Government colleagues, as necessary, to ensure that the Scheme operates effectively and consistently for all affected homeowners who access it.
104. Deputy Pearse Doherty asked the Minister for Finance his response to the recent letter from the Chairperson of the Irish Fiscal Advisory Council with respect to a proposal to reduce the rate of pay associated with the chairperson role; if he has concerns that such a proposal risks diminishing the role and capacity of the council; and if he will make a statement on the matter. [4622/24]
View answer130. Deputy Rose Conway-Walsh asked the Minister for Finance to outline his reasoning for substantially reducing the remuneration for the Chair of the Irish Fiscal Advisory Council; and if he will make a statement on the matter. [4594/24]
View answerI propose to take Questions Nos. 104 and 130 together.
Officials in my Department have been liaising with the Irish Fiscal Advisory Council (the Council) and the Department of Public Expenditure, NDP Delivery & Reform over the last number of months in relation to the issue of remuneration for the Chair of the Council.
The Code of Practice for the Governance of State Bodies 2016 provides a framework for the application of best practice in corporate governance by both commercial and non-commercial State bodies. The Council, like other State bodies, is governed by this Code.
At present, the Chair of the Council is in receipt of a Category 2 fee of €20,520 per annum as per the guidelines set out by the Department of Public Expenditure, NDP Delivery & Reform on fees for members and Chairpersons of State Boards.
After engagement by my officials, with the Council and the Department of Public Expenditure, NDP Delivery & Reform, sanction was provided by the Department of Public Expenditure, NDP Delivery & Reform in December for the revised remuneration for the Chair of the Council and this was conveyed by my Department to the Council.
The Government has repeatedly highlighted the important role that the Council plays in enhancing the public debate and scrutiny around complex fiscal and economic issues. My Department works closely with the Secretariat and the Board of the Council and will continue to engage with them in a positive way going forward. The revised remuneration from the fixed annual fee of €20,520 to a potential €36,192 per year should only be viewed as a solution to recompense the Chair for any additional time worked.
However, I have asked my officials to engage further with officials in the Department of Public Expenditure, NDP Delivery & Reform to see what might be possible in order to move this issue forward.
It remains a high priority for the Government to ensure it progresses filling the vacancies through the appointment of a permanent Chair of the Council and an ordinary member of the Board.
105. Deputy Cormac Devlin asked the Minister for Finance if he will expand on his comments in Davos that the imposition of a 3% tax on incomes over €140,000 could jeopardise foreign direct investment, resulting in fewer jobs; and if he will make a statement on the matter. [4266/24]
View answerThe position is that at present Ireland’s top marginal rate of tax is 52 per cent for employees and 55 per cent for self-employed. Therefore, to impose an additional 3 per cent tax on incomes above €140,000 per annum would have the effect of further increasing the top marginal tax rates to 55 per cent for employees and 58 per cent for the self-employed.
It is important to point out that high marginal tax rates can create a strong disincentive to work and could also cause harm to our international competitiveness and make Ireland a less attractive place for investment. Multinational enterprises support our economy with high value jobs, and provide substantial revenues across all taxes, including income tax, which are critical to the provision of public services. As the Deputy will be aware, considerable progress has been made in recent years to restore our economy, and this cannot be taken for granted, particularly given the challenges in the international arena that confront us at present.
Ireland has one of the most progressive personal income tax systems in the developed world. A progressive tax system ensures that the burden of taxation falls most heavily on those with a higher ability to pay. For example, in 2024, it is estimated that the top ten per cent of income earners will contribute around 63 per cent of the total income tax and USC collected this year. While, the bottom 80 per cent of income earners will pay only 21 per cent of the total income tax and USC collected in 2024.
Furthermore, a progressive personal income tax system, also 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.
Finally, it is my view that a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the fairest and sustainable income tax system in the long term.
107. Deputy Seán Haughey asked the Minister for Finance the action he is taking to ensure that future banking changes are managed in a controlled, fair and transparent manner for consumers; and if he will make a statement on the matter. [4252/24]
View answerI and my Department are undertaking a number of key actions to ensure that future changes in the retail banking industry are managed in a fair, transparent and equitable manner for all stakeholders, including consumers.
On Tuesday 23 January, I published the General scheme of the Access to Cash Bill. The purpose of this legislation is to initially preserve the level of access to cash at December 2022 level, excluding subsequent changes due the exit of Ulster Bank and KBC and to establish a framework to provide that any future evolution of the cash infrastructure will be managed in a fair, orderly, transparent, and equitable manner.
The framework consists of regional population and capacity criteria that must be complied with by designated entities, which will be the three large retail banks. The legislation will provide that these criteria can be amended by the Minister following a review of the criteria by the Central Bank. Reviews will have to be carried out following the publication of Census data or if cash demand drops by 15% in a calendar year compared to the previous year. Reviews may also be carried out at the request of the Minister or on the Central Bank’s own initiative.
In carrying out a review, the Central Bank must take must take account of cash demand, population changes, financial inclusion, operating costs related to the cash infrastructure and any other matters the Bank deems relevant.
These provisions ensure that the criteria can be adjusted in response to the demand or need for cash in the State, and will ensure that the framework being put in place is adaptable, allowing costs to adjust in relation to demand.
Separately, my Department is preparing a new National Payments Strategy, which I expect to publish later this year. A key focus of the Strategy is to ensure Ireland has an accessible and innovative payment system as this is vital for our society and economy.
All citizens should be able to participate fully in all aspects of modern life using digital or cash methods of payment. While technology can enable vulnerable groups partake in society in new ways, it should not exclude them. I want to ensure choice is at the centre of our future payments strategy.
The Strategy is also specifically considering the issue of the acceptance of cash and whether the Minister should have the regulatory power to require critical sectors or sub-sectors to accept cash. The policy position on the acceptance of cash by public bodies is also being examined.
I launched a public consultation on the 12 December last which closes on the 14 February.
108. Deputy Pádraig O'Sullivan asked the Minister for Finance if the proceeds of the vacant homes tax and residential zoned land tax will be returned to the relevant local authority where it was raised; and if he will make a statement on the matter. [4590/24]
View answerAs the Deputy will be aware, the Vacant Homes Tax (VHT) aims to increase the supply of homes for rent or purchase to meet demand. Legislative provision for the tax was made in Finance Act 2022. A residential property will be within the scope of VHT if it has been occupied as a dwelling for less than 30 days in a chargeable period.
VHT operates on a self-assessment basis, where the number of properties in scope and the amount of tax payable depends on the self-assessed returns submitted by property owners, the number of properties declared as liable, and the number of property owners entitled to claim available exemptions from the tax. The first chargeable period ended on 31 October 2023 with the first self-assessed returns due on 7 November 2023 and the associated tax payable on or before 1 January 2024.
The revenue collected by the VHT will accrue to the Exchequer.
The Residential Zoned Land Tax (RZLT) is a new tax which was introduced in Finance Act 2021. It seeks to increase housing supply by encouraging the activation of development on lands which are suitably zoned and appropriately serviced. It aims to bring those lands which have benefited from investment in services and are capable of being developed forward for housing.
The RZLT measure is a key pillar of the Government’s response to address the urgent need to increase housing supply in suitable locations. However, it is important that affected landowners have sufficient opportunity to engage with the mapping process and that a fair and transparent process is applied when local authorities consider what land should be placed on the RZLT maps. Therefore, as part of Budget 2024, it was decided to extend the liability date of the tax by one year, from February 2024 to February 2025. The policy rationale behind this deferral is to allow for the annual mapping cycle to complete and afford landowners another opportunity to raise issues regarding the zoning status of their land.
Yield collected by the RZLT will also accrue to the Exchequer.
109. Deputy Martin Browne asked the Minister for Finance the number of mortgage holders who have switched their mortgage from vulture funds to the mainstream mortgage market since 6 September 2023; and as a consequence, his assessment of the effectiveness of the switching eligibility criteria announced by the banking sector on that date; and if he will make a statement on the matter. [4610/24]
View answerThe Government is acutely aware of the changed interest rate environment and the impact this is having on some mortgage borrowers. I met with the mortgage industry including the Banking and Payments Federation Ireland (BPFI), CEOs and senior representatives of all the main mortgage lenders and servicers on 31 August 2023.
At that meeting I emphasised that banks and all other mortgage entities should be fully aware of the significant challenges that some of their customers are facing and that lenders and servicers should respond by assisting their customers who are experiencing difficulty. I also highlighted that greater clarity should be provided to customers on the possibility of switching provider and that this option should be fully supported by all mortgage entities, including the existing mortgage creditor.
Arising from that meeting, on 6 September 2023 the Banking Payments Federation Ireland (BPFI) announced a number of further measures by the mortgage industry to assist their customers, including:
• a second phase of a ‘Dealing With Debt’ campaign to highlight new and existing supports for concerned mortgage customers;
• mortgage servicing firms and MABS to collaborate on an expansion of streamlined customer engagement framework and
• the provision of initial eligibility criteria by the main lenders to provide clear guidelines for home mortgage customers of credit servicing firms who are seeking to switch their mortgage.
This means that, for the first time there is now an agreed industry wide set of initial eligibility criteria to facilitate people switching their mortgage from a non-bank to a bank. All of the banks and some other lenders have signed on to that set of criteria. These new measures are additional to those provided for in the existing regulatory framework for mortgage borrowers regardless of the type of regulated entity with whom they are dealing, such as a bank, a retail credit firm or a credit servicing firm.
Credit servicing firms have committed to working with these criteria to support customers switching and to ensure they are aware that they may have options to switch their mortgage. In addition, the main mortgage broker representative bodies, Brokers Ireland and the Association of Irish Mortgage Advisors, have also agreed to communicate these criteria to borrowers seeking to switch their home loans.
In order to be eligible to switch under these guidelines, customers need to be making full capital and interest repayments on their mortgage. In addition, customers must have no arrears on their home mortgage or any other lending in the past two years.
Once customers meet these and other initial criteria, applications will be assessed on a case-by-case basis in line with individual lender credit policy. The decision on whether or not to provide credit in any particular case, or the amount of credit to provide, remains a commercial matter for an individual lender.
The BPFI has set up a process to monitor the level of switching under this initiative. The BPFI will provide an update when it has data for a number of months to hand.
The Central Bank will also continue to engage with regulated firms to ensure that they have sufficient operational capacity to manage applications by borrowers to switch their mortgage or mortgage provider and that industry participants are extending themselves to support consumers and support switching.
110. Deputy Catherine Connolly asked the Minister for Finance further to Parliamentary Question No. 82 of 23 November 2023, his plans for the phasing out of the help-to-buy scheme; his plans in the interim to increase the minimum mortgage LTV to 80%, as recommended in a report (details supplied), and the timeline for same; and if he will make a statement on the matter. [4282/24]
View answerThe Help to Buy Scheme was introduced in 2017 with the purpose of assisting first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. The relief is only available in respect of new builds, with a view to increasing the supply of new housing and stimulating demand.
To date, the Help to Buy scheme has been a significant support for first time buyers of new homes. To 30 November 2023, some 43,622 first-time buyers, either singly or as part of a couple, have benefited from the scheme.
As the Deputy is aware, Finance Act 2023 extended the Help to Buy scheme for a further year to the end of 2025. The scheme was also amended to enhance its interaction with the local authority affordable purchase scheme. This amendment will enable the use of the affordable dwelling contribution received through the affordable purchase scheme for the purposes of calculating the 70% loan to value requirement, thereby facilitating access for a greater number of affordable purchase scheme purchasers to the Help to Buy scheme.
The Deputy has previously raised concerns regarding the potential that the scheme may exacerbate housing prices, and as has previously been stated, policy makers were aware at the time that the scheme was being developed that it was not without risk. Likewise, they were aware that there was a danger that, against a background of constrained supply, the initiative could serve to increase prices for new homes, thus potentially undermining to some extent the affordability aspiration of the scheme. However, on all occasions when the matter was formally examined to date, concerns in this regard were not borne out by the review data.
Studies carried out by Indecon Economic consultants found that the main driver of house prices was the mismatch between supply and demand rather than the existence of the scheme. Similarly, the review by Mazars in 2022, referenced by the Deputy, found that there is no definitive evidence that Help-to-Buy pushed up the price of new houses. In fact, Mazars found that the prices paid for new homes by people who received the Help to Buy relief were slightly lower than new house prices in the economy in general, likely because of the €500,000 price eligibility cap.
There have been some significant changes in the market even since the Mazars report on the scheme was published. The increase in interest rates in the intervening period means that further stability and certainty is needed for first time buyers who may now face higher mortgage interest rates. I decided that now is not the time for the withdrawal of supports for those purchasers. The extension of the Help-to-Buy for a further year to 31 December 2025 takes account of the need for certainty in the market pending the increase in new housing supply envisaged by the Government’s Housing for All strategy.
The HTB scheme, was initially intended to be limited to persons who had mortgages with a minimum LTV of 80%. However, Central Bank data indicated that a sizeable number of first-time buyers take out a mortgage with a LTV of less than 80%. As such, it was decided to amend the scheme in the subsequent Finance Bill to set the minimum LTV at 70% so as to ensure that first-time buyers did not feel compelled to borrow larger amounts than they would have otherwise in order to qualify for the scheme.
According to Revenue statistics, from the inception of the scheme to End-November 2023 self-builds have represented 25.28% of approved claims. The nature of self-builds is such that an applicant may already own the land on which the house is built which means that they are likely to need to borrow only in relation to construction costs. To increase the LTV to 80% could have the effect of excluding more self-builds from availing of the relief.
As I indicated on Budget Day, I confirm that the Help to Buy scheme will continue to be examined to see if any additional changes are necessary.
I will continue to work with my Cabinet colleagues to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources and boost the supply of housing in both the public and private sectors.
111. Deputy Willie O'Dea asked the Minister for Finance the action he proposes to take to ensure there is a safety net for consumers in the event of electronic banking or the payments infrastructure being impacted by outages or cyberattacks; and if he will make a statement on the matter. [4254/24]
View answerThe Central Bank’s Cross Industry Guidance on Operational Resilience sets out the Central Bank’s expectations on how regulated firms should prepare for, respond to, recover and learn from an operational disruption that affects the delivery of critical or important business services.
A key focus of this guidance is ensuring firms can recover its critical or important business services (including payment services) from a significant unplanned disruption, while minimising impact and protecting its customers and the integrity of the financial system.
It also sets out a specific focus on business continuity plans which should be tested through severe but plausible scenarios and include any third party interdependencies or interconnections.
In the event of a disruption to payment services, such plans can include utilising contingency cash supplies maintained by the Central Bank and banks to help support essential purchases. The Central Bank also expects Firms to update customers publically, minimise disruption as much as possible to customers and to return services as soon as possible.
In addition, my officials are currently in the process of transposing and enabling Regulation (EU) 2022/2554 and Directive (EU) 2022/2556, a package known as the Digital Operational Resilience Act (DORA). Once enacted, DORA will address the increasing reliance of the financial service sector on digital technologies that can be vulnerable to cyber-attacks by setting minimum requirements on Information and Communication Technology (ICT) risk management for the majority of regulated firms
This will ensure that participants in Europe’s financial system have the necessary safeguards in place to mitigate cyber-attacks and ICT incidents that have the potential to cause widespread service outages. Such as requiring regulated firms to have an ICT business continuity policy to ensure the continuity of critical or important functions, including crisis management functions and response and recovery plans for ICT related incidents.
This will help to address the risk posed by cyber-attacks on digital payments infrastructure used by banks and other financial institutions to process digital payments.
The Digital Operational Resilience Act includes provisions that specifically require financial entities to have response and recovery plans in place that can be activated in the event of a service outage in order to continue business operations throughout a crisis. The Digital Operational Resilience Act will be applicable from 17 January 2025.
My officials are on track to have DORA and the associated Directive transposed into Irish law by the deadline of January 2025.
112. Deputy Robert Troy asked the Minister for Finance if he will review the powers of the Financial Services Ombudsman with regard to protecting customers against unfair practices by financial institutions. [4606/24]
View answerThe Financial Services and Pensions Ombudsman was established in January 2018 by the Financial Services and Pensions Ombudsman Act 2017. The role of the FSPO is to resolve complaints from consumers, including small businesses and other organisations, against financial service providers and pension providers.
In doing so, the FSPO provides an independent, fair, impartial, confidential and free service to resolve complaints through either informal mediation, leading to a potential settlement agreed between the parties, or formal investigation and adjudication, leading to a legally binding decision.
Complaints are dealt with informally at first, by listening to both parties and engaging with them to facilitate a resolution that is acceptable to both parties. Much of this informal engagement takes place by telephone. Where these early interventions do not resolve the dispute, the FSPO formally investigates the complaint and issues a decision that is legally binding on both parties, subject only to a statutory appeal to the High Court.
Pursuant to the FSPO Act 2017, the Ombudsman has wide-ranging powers to deal with complaints against financial service providers. The Ombudsman can direct a provider to rectify the conduct that is the subject of the complaint. There is no limit to the value of the rectification that can be directed. The Ombudsman can also direct a provider to pay compensation to a complainant of up to €500,000.
In addition, the Ombudsman can publish anonymised decisions and can also publish the names of any financial service provider that has had at least three complaints against it upheld, substantially upheld, or partially upheld in a year.
The Ombudsman also publishes the names of any financial service provider that has had at least three complaints against it upheld, substantially upheld, or partially upheld in a calendar year.
When dealing with complaints against pension providers, the Ombudsman may direct redress. With respect to complaints against pension providers, such redress cannot exceed any actual loss of benefit under the pension scheme concerned. In relation to pension complaints, the Ombudsman can publish anonymised case studies.
In accordance with Section 18 of the FSPO Act, the FSPO cooperates, and exchanges information with, the Competition and Consumer Protection Commission, the Pensions Authority and the Central Bank of Ireland, in a way that contributes to promoting the best interests of consumers and actual or potential beneficiaries of financial services and pension services, and to the efficient and effective handling of complaints.
In addition, next week I will bring the Financial Services and Pensions Ombudsman (Amendment) Bill before the Dáil for consideration at Second Stage. If enacted, this Bill will safeguard the consumer protections and access to the FSPO for customers of financial service providers who have left the Irish market. The Bill aims to introduce legislative amendments to ensure the FSPO continues to discharge its statutory functions in line with the Constitution.
The FSPO has details available on its website with respect to the types of complaints that it can investigate and the statutory jurisdiction of the FSPO, including:
• Informational Videos and Leaflets on its services in the “Our Services” section.
• Details with respect to some jurisdictional issues in the “Legal References” section.
• Annual Published Overviews of Complaints, which include case studies.
113. Deputy Joe Flaherty asked the Minister for Finance if he will review the tax incentives for the SME sector; and if he will make a statement on the matter. [4442/24]
View answerSMEs are the foundation of the Irish economy, accounting for the majority of employment in the State. Their vital importance to our economy is reflected in our Programme for Government commitments.
The tax system contains a number of incentives and reliefs designed to support SMEs and since taking office I have been proactive in both reviewing these measures and introducing targeted new supports.
For example, taxation measures which help small businesses to access investment, scale-up and expand include the Employment Investment Incentive (EII), the Key Employee Engagement Programme (KEEP), the Revised Entrepreneur Relief and the new relief targeting angel investors. These tax incentives have undergone significant change in recent years following feedback from stakeholders, including in particular the SME community.
The Start-Up Relief for Entrepreneurs (SURE) and the Start-Up Capital Incentive (SCI) are also designed to assist new companies with early-stage funding, and the section 486C relief for certain start-up companies provides relief from corporation tax in respect of the first five years of trading for companies with an annual tax liability of less than €60,000. The purpose of the reliefs is to encourage start-up companies in Ireland, thereby supporting additional employment and economic activity in the State.
I also provided in Budget 2024 for an increase in the Research and Development (R&D) tax credit from 25% to 30%. While this increase is relevant to businesses of all sizes, it will be of particular benefit to smaller companies outside the scope of the new Pillar Two rules introduced with effect from end-2023.
Further information on these incentives is available on the Revenue website at www.revenue.ie.
Finally, the increasing complexity of the tax system is a concern frequently raised by businesses, particularly smaller businesses with more constrained resources, and I have committed to making efforts to simplify the tax system where possible. As part of this initiative, I have committed to introducing a participation exemption for foreign sourced dividends in Finance Bill 2024. The detailed development work will continue over the coming months and it is intended that, when operational, the participation exemption will provide administrative and competitive benefits for businesses operating in Ireland.
114. Deputy Fergus O'Dowd asked the Minister for Finance the ways that he is making processes easier for coeliacs to claim tax rebates, with particular consideration to the increasing cost of gluten-free foods which is hitting those on marginal incomes hardest; and if he will make a statement on the matter. [4445/24]
View answerI am advised by Revenue that section 469 of the Taxes Consolidation Act 1997 (TCA 1997) provides for tax relief where an individual proves that he or she has incurred costs in respect of qualifying health expenses. Only “health expenses” incurred in the provision of “health care”, which has been carried out or advised by a practitioner, will qualify for tax relief. Broadly, “health care” is defined as the prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability.
Tax relief will generally be available for the cost of foods that have been specifically manufactured to be gluten free if the individual provides a letter from a doctor stating that the person for whom the foods have been purchased is a coeliac sufferer.
A taxpayer may be asked to provide additional documentation in support of his or her claim. Revenue does not specify the exact form such additional documentation should take, although it should contain sufficient information to satisfy the Revenue officer dealing with the claim that the costs incurred by the taxpayer relate to foods which have been specifically manufactured to be gluten free.
In verifying claims for tax relief on gluten free food, Revenue officials may therefore accept:
a chemist or supermarket receipt;
evidence from food packaging; or
an annual statement from a supermarket
in support of a claim, if the information provided clearly demonstrates that the foods purchased have been specifically manufactured to be gluten free and show details of the expenditure incurred.
Revenue officials may also accept information from the Coeliac Society of Ireland’s annual Food List if it is provided by a taxpayer in support of his or her claim for tax relief, together with proof of the expenditure incurred. As there is a subscription required to access and view this list, which is subject to change, Revenue are currently engaging with the Coeliac Society of Ireland with a view to making this available to Revenue compliance staff.
Claims for tax relief on qualifying health expenses, in this case the cost of foods that have been specifically manufactured to be gluten-free, can be made during the year the expenditure is incurred or, after the year end. The benefit of making a claim during the year, as opposed to after year end, is earlier repayment of tax relief.
Claims during the year are made via Revenue’s “Real Time Credit” facility which can be accessed through a taxpayer’s “myAccount”. For further information, see -
www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/real-time-credits/index.aspx.
When a real time claim is made it is required that the taxpayer provides receipts at the time of claim via the “Receipts Tracker” service. For further information see - www.revenue.ie/en/online-services/services/common/manage-your-receipts-with-receipts-tracker.aspx.
Claims for tax relief on qualifying health expenses made after the year end by way of filing an Income Tax Return do not require the provision of receipts at the time of the claim. However, a claim for health expenses may be subject to a verification check at a later date by Revenue, similar to verifications for other types of expense claims, tax credits or deductions, etc. Thus, as outlined above, a claimant may be requested by Revenue to provide supporting documentation regarding his or her claim for health expenses at a later date and records should be retained for a period of six years for this purpose.
Revenue’s Health Expenses Tax and Duty Manual Part 15-01-12 is available via the following link:-
www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-12.pdf.
115. Deputy Seán Canney asked the Minister for Finance if he will confirm that householders who install solar panels on their home will not be liable for any tax for the green electricity fed to the grid from the solar panels; and if he will make a statement on the matter. [2961/24]
View answerMicro-generation of electricity is the small-scale production of electricity by consumers who generate electricity at their own homes for their own consumption and sell the excess electricity produced.
Under the EU Clean Energy Package, Ireland introduced an obligation on suppliers to offer the Clean Export Guarantee tariff to new and existing micro-generators so that they will receive payment for excess renewable electricity they export to the grid, reflective of the market value.
Section 216D of the Taxes Consolidation Act 1997 provides for an exemption from income tax, USC and PRSI for certain profits arising to a qualifying individual who generates energy from renewable, sustainable or alternative energy sources for their own consumption. The profits which are exempted are those from the generation of residual electricity at an individual’s qualifying residence from 1 January 2022 until 31 December 2025.
The scheme provides for a tax exemption of up to €200 per year for tax years 2022 and 2023. Finance Act (No.2) 2023 increased the exemption available for tax years 2024 and 2025 to €400 per year.
There is no requirement on individuals to include the exempt profits in an income tax return. Therefore, where an individual is not already required to file an income tax return, the fact that he or she has exempt profits from the micro-generation of electricity does not necessitate the filing of a tax return. Where an individual is already required to file an income tax return, the exempt profits do not need to be included on the return.
Any income in excess of the €200 or €400 exemption limit which is earned from micro-generated electricity must be declared by the individual on their annual tax return and will be subject to income tax, USC and PRSI in the usual manner.
The individual does not need to own the residential premises in question, it could be a rented property. However, he or she must use the property as his or her sole or main residence during the tax year. Additionally, the individual must be named on the electricity bill for the premises. Where more than one individual is named on the electricity bill, each individual can avail of the exemption.
The aim of this tax exemption is to remove the potential administrative barrier, for those who engage with the Clean Export Guarantee scheme, that could be created by the declaration and payment of tax on relatively small amounts of sums received for the export of limited amounts of electricity to the national grid. I increased the exemption to €400 to ensure that the typical domestic renewables self-consumer will pay no tax on income of this source.
I believe this measure represents an important incentive to citizens who are integral to the energy transition in the years ahead.
116. Deputy Louise O'Reilly asked the Minister for Finance his views on the small benefit exemption; in particular the restriction by which only the first two benefits qualify for the exemption, regardless of their combined value falling beneath the threshold of €1,000; and if he will make a statement on the matter. [4608/24]
View answer126. Deputy Pearse Doherty asked the Minister for Finance his views on the small benefit exemption and, in particular the restriction by which only the first two benefits qualify for the exemption, regardless of their combined value falling beneath the threshold of €1,000; and if he will make a statement on the matter. [4618/24]
View answerI propose to take Questions Nos. 116 and 126 together.
Under the “Small Benefit Exemption”, an employer may provide up to two small benefits which will be exempt from Income Tax, PRSI and USC, provided all of the conditions contained within section 112B of the Taxes Consolidation Act 1997 (TCA) are satisfied.
The main conditions for the exemption are as follows -
• the benefit provided must be in the form of a voucher or other non-cash item;
• where the benefit provided is in the form of a voucher, the voucher must only be for the purchase of goods or services and must not be capable of being exchanged in part or in full for cash;
• the aggregate value of the benefit(s) must not exceed €1,000 in a year of assessment; and
• the benefit must not form part of a salary sacrifice arrangement.
If more than two eligible benefits were issued in a year of assessment, it is only the first two which could qualify for the exemption. It is not permissible to opt to tax the first and/or second qualifying incentive in a year of assessment to allow an employee to avail of the exemption later in the year when a third benefit is granted with a higher value.
Where all of the conditions are not satisfied, the exemption does not apply and the benefit is subject to tax in the usual way, in accordance with section 112 TCA 1997.
Since 1 January 2024, where the Small Benefit Exemption applies an employer is required to return details of all qualifying incentives provided to their employees/directors on or before the benefit is provided.
Amendments were made to the Small Benefit Exemption in Finance Act 2022 to increase the number of permissible benefits from one to two and to increase the maximum amount of the benefit from €500 to €1,000. These changes were intended to allow employers greater scope and flexibility to grant tax-free non-cash rewards to their employees, for example in respect of exceptional performance, meeting targets, increased profits, etc.
The scheme continues to be kept under review by my officials but any changes to the scheme could create an additional cost which would need be recovered elsewhere.
Further information on the Small Benefit Exemption is available on Revenue’s website, at the following link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-01e.pdf.
117. Deputy Aindrias Moynihan asked the Minister for Finance the rationale for the delayed opening by the Revenue Commissioners of application for taxpayers to avail of the mortgage interest relief; and if he will make a statement on the matter. [4536/24]
View answerThe position is that Finance Act 2023 introduced the temporary one-year Mortgage Interest Tax Relief that I announced on Budget day.
The tax relief will be available to taxpayers in respect of their principal private residence in the State where the outstanding mortgage balance was between €80,000 and €500,000 as of 31 December 2022, and the taxpayer is compliant with Local Property Tax requirements. The relief also extends to a qualifying property located in the State, which is the sole or main residence of the individual’s former or separated spouse or civil partner or a dependent relative.
The tax relief will be available at the standard rate of income tax and is based on the increase in interest paid in 2023 over interest paid in 2022. The value of the relief will be equal to the lesser of 20 per cent of this excess interest figure, or €1,250. This means that the maximum tax credit will be €1,250 per property.
Where the interest payments made in respect of either the 2022 or 2023 tax years are not for a full year, pro-rating of the relief will apply, to ensure interest is applied on a period of equivalence basis and that the cap is adjusted accordingly. Revenue’s systems will carry out the calculation of the relief at the point of claim.
A taxpayer will be able to make a claim to Revenue for this tax relief by filing a 2023 Income Tax Return. Revenue provides a free and easy to use facility to file an Income Tax Return for all taxpayers. For PAYE taxpayers this is done through myAccount, with self-assessed taxpayers using ROS.
The taxpayer will be required to submit the following documents at the time the claim is made:
• Certificate of Mortgage Interest 2022,
• Certificate of Mortgage Interest 2023, and
• Confirmation of mortgage balance at 31 December 2022.
Revenue had to update and develop their IT systems to allow for claiming of the tax relief together with updating the online and paper Income Tax Returns. I am informed by Revenue that the functionality for claiming the tax relief for PAYE taxpayers is now live in myAccount and claims are currently being made. The facility for self-assessed taxpayers is anticipated to be available by mid-February 2024.
Detailed guidance material regarding the Mortgage Interest Tax Relief, to include the claims process is included in Revenue’s Tax and Duty Manual Part 15-01-01B, available at:
www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-11B.pdf.
118. Deputy James Lawless asked the Minister for Finance how the income tax treatment of employees with salaries of €100,000 in Ireland compares with other EU countries; and if he will make a statement on the matter. [4276/24]
View answerIt is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. Ireland has a progressive income tax system which is structured such that the more income a person has, the more tax that person pays. Therefore, a progressive tax system ensures that the burden of taxation falls most heavily on those with a higher ability to pay. As a person’s income increases they move up through the various rates and bands and, as a result, while the levels of net pay increase overall, the amount of tax they pay also increases.
For example, in 2024, it is estimated that the top ten per cent of income earners, those earning in excess of €102,000, will contribute around 63 per cent of the total income tax and USC collected this year. In contrast, those earning €69,500 or less, which represents the bottom 80 per cent of income earners, will contribute 21 per cent.
Ireland has one of the most progressive systems of taxes and social transfers of any EU or OECD country. These systems contribute to the redistribution of income and to the reduction of income inequality in Ireland. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI.
In addition, it is useful to examine the tax wedge – a measure of workers labour income taking account of employee and employer taxes less benefits as a proportion of employer costs. It essentially captures the tax burden facing workers.
The latest OECD data, available for the year 2022, show that Irish lower income workers, in general, have lower effective tax burdens / wedges than their EU and OECD counterparts. The wedge for below-average income earners was 25½ per cent in 2022, below the OECD average; and when compared to the wedge of above-average income earners, Ireland is the most progressive EU Member State, and is the third most progressive in the OECD.
It is my view that a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the fairest and sustainable income tax system in the long term.
119. Deputy Richard Boyd Barrett asked the Minister for Finance if he will consider introducing a specific tax on data centres given their high impact on our energy and resource infrastructure. [4571/24]
View answerIn July 2022, the Government Statement on the Role of Data Centres in Ireland’s Enterprise Strategy was published. The Statement sets out the strategic importance of data centres to Ireland through their central role in the twin, and complementary, transitions to the digitalisation and decarbonisation of our economy and society. While it acknowledges that not all existing demand for data centre development can be accommodated, this infrastructure remains an important part of Ireland’s value proposition as an investment location for future-focused sectors such as artificial intelligence, quantum and edge computing. The Statement outlines principles that will ensure that the data centres that can be accommodated are done so in a manner that contributes to our climate and digital ambitions. This will ensure that, over the longer term, Ireland can build the foundations for a net-zero-ready economy and society
The Government’s Climate Action Plan 2024 sets out the roadmap to deliver on Ireland’s climate ambition. The Plan addresses, amongst other objectives, and building on progress made to date, our ambition to further decarbonise our electricity system. We will seek to further decarbonise our electricity grid while simultaneously pursuing the electrification of sectors such as transport and heating and, crucially, preserving our security of supply and the reliability of our grid.
With regard to taxation, as a small open economy, connected to Europe, the US and the wider world, Ireland is committed to a competitive, transparent and stable corporation tax system. As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%, while larger businesses with a global turnover in excess of €750 million will now be subject to the Pillar Two minimum effective tax rate of 15%. Some of the main features of the current corporation tax regime are its simplicity and that it applies to a broad base.
Imposing additional taxes on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing an additional tax on data centres could lead to a short-term theoretical gain, there is a risk of such a tax leading to lower levels of economic activity in the sector, putting in jeopardy our climate and digital transition ambitions, and to companies passing the additional tax burden onto their suppliers or consumers. For these reasons, it is not intended to introduce a specific tax on data centres.
120. Deputy Pearse Doherty asked the Minister for Finance if he and his Department are considering measures to tackle financial fraud and scams; to outline policy considerations in this area; and if he will make a statement on the matter. [4620/24]
View answerFirstly, it is important to note that the Department of Finance does not hold any supervisory or investigative role in relation to fraud which is a criminal offence and, as such falls, under the remit of the Minister for Justice.
However, my Department does have a key role in developing policy and legislation to ensure that Ireland’s framework for combating both money laundering and the financing of terrorism adheres to EU and international standards.
The nature of this policy area requires a whole-of-Government approach. Accordingly, the Department of Finance chairs the Government’s Anti-Money Laundering Steering Committee or AMLSC. The purpose of the AMLSC is to provide a national, cross-sectoral forum for the oversight and active review of Ireland’s framework for anti-money laundering and combating the financing of terrorism, or AML/CFT. Membership of the AMLSC consists of a range of bodies, including:
• Government Departments, including the Department of Justice and the Department of Enterprise, Trade, and Employment;
• State bodies including An Garda Síochána, the Criminal Assets Bureau and the Central Bank of Ireland; and
• Supervisors including designated accountancy bodies and the Law Society of Ireland
Details of the AMLSC are available: gov.ie - Anti-Money Laundering and Countering the Financing of Terrorism (www.gov.ie)
As you may be aware, political agreement was recently reached in Brussels in respect of the new EU AML ‘Rule Book’. However, formal agreement on the package, including the actual text, remains to be agreed by all Member States. Following agreement of the new EU AML package, officials will consider what further amendments to domestic legislation in this regard may be required as part of the required transposition process.
