Written Answers Nos. 221-240
221. Deputy Brian Stanley asked the Minister for Transport when testing for a full motorcycle licence will resume; and if, in cases in which the Initial Basic Training licence of an applicant expired in April 2021, they will now be eligible to do their test when they resume. [24696/21]
Amharc ar fhreagraMotorcycle testing has continued throughout level 5. As part of the broader easing of restrictions across Irish society, from the 10 May, Initial Basic Training (IBT), the course of mandatory lessons that learner motorcyclists must complete with an Approved Driving Instructor before taking a test, may resume for all learners, irrespective of their employment status.
The validity period of Initial Basic Training (IBT) certificates is set out in legislation. Making a change to the validity of an existing certificate requires a change in law.
I can confirm that the Road Safety Authority (RSA) has recently submitted a proposal to my Department for a further extension to IBT certificates. This is currently being worked on within my Department. An update is expected shortly.
222. Deputy Michael McNamara asked the Minister for Finance if the Government will re-evaluate its position regarding event caters and expand access parameters to the Covid restrictions support scheme to allow these member companies gain access to the necessary financial supports to ensure their survival; and if he will make a statement on the matter. [24623/21]
Amharc ar fhreagra249. Deputy Bríd Smith asked the Minister for Finance if he will consider allowing event catering companies that comply with all of the business eligibility criteria to access the Covid restrictions support scheme; and if he will make a statement on the matter. [24535/21]
Amharc ar fhreagraThe CRSS is a targeted support for businesses significantly impacted by restrictions introduced by the Government under public health regulations to combat the effects of the Covid-19 pandemic. The support is available to companies, self-employed individuals and partnerships who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D, from a business premises located in a region subject to restrictions introduced in line with the Living with Covid-19 Plan.
The CRSS applies to businesses carrying on trading activities from a business premises located in a region subject to restrictions, which requires the business to prohibit or considerably restrict customers from accessing their business premises and as a result, is operating at less than 25% of turnover in 2019.
Where a business does not ordinarily operate from a fixed business premises located in a region that is subject to restrictions, such as an events catering company, that business will not meet the eligibility criteria.
It is not sufficient that the business supplies goods or services to another business that qualifies for the support because, under the Covid restrictions, that other business is required to temporarily close, or significantly reduce, its activity. Each business must satisfy the eligibility criteria in their own right.
The vast majority of businesses in Ireland are affected by Covid but the CRSS is intended to target specific businesses where access is restricted. The CRSS is and was intended to be a targeted scheme, and was never meant to be a general support measure for the entire economy as the cost of such a scheme would be much more significant.
There are no plans to change the eligibility criteria for the CRSS. The CRSS is targeted at businesses who are forced to restrict access to their premises on foot of health regulations. It is a part of the broad spectrum of Government supports being provided to assist businesses impacted by COVID-19.
The CRSS is an additional measure for businesses in a region subject to significant Covid-19 restrictions. Businesses who do not qualify under this scheme may be entitled to support under various measures put in place by Government, including existing supports available under the COVID Pandemic Unemployment Payment (PUP) and the Employment Wage Subsidy Scheme (EWSS) and the range of measures announced as part of Budget 2021 to support particular sectors including Tourism and live entertainment. They may also be eligible to warehouse VAT and PAYE (Employer) debts and also excess payments received by employers under the Temporary Wage Subsidy Scheme, and the balance of Income Tax for 2019 and Preliminary Tax for 2020 for self-assessed taxpayers if applicable. Another scheme that a business not eligible for CRSS may qualify for, where certain criteria are met, is the Small Business Assistance Scheme for COVID (SBASC).
The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with my Ministerial colleagues to ensure that appropriate supports are in place to mitigate these effects.
223. Deputy Pádraig Mac Lochlainn asked the Minister for Finance when he will meet with a group (details supplied) to discuss its concerns regarding double taxation for workers in Border regions and the impact this will have on inward investment to some of the most economically disadvantaged parts of the island. [23623/21]
Amharc ar fhreagraIn the case of a person who lives in Ireland but who works in another jurisdiction, the general tax position is that, as an Irish resident, they would be subject to Irish tax on their worldwide income from any source, including the employment exercised outside of the State. At the same time, the employment may also be subject to tax in the country in which the work is carried out. In accordance with general principles of international tax, where instances of double taxation arise on the same income, relief against Irish tax may be claimed by way of a credit for any foreign tax already paid, subject to the terms of any applicable Double Taxation Agreement (DTA). Unilateral relief may also be available in certain circumstances under domestic Irish legislation.
In the case of a person who lives in the State but who works in Northern Ireland, the terms of the Ireland/UK DTA provide for relief by allowing the Irish resident to claim a credit for the UK tax paid against any Irish tax that may be due on the same income.
Section 825A of the Taxes Consolidation Act (TCA) 1997 provides additional Trans-Border relief and may apply, subject to certain conditions, where a person lives in Ireland but works wholly outside of the State.
I would advise the Deputy that this relief applies not only to persons with a UK based employment, but also for employments in the EU and DTA-network regions in compliance with Ireland’s treaty obligations. It therefore has broader application beyond the issues raised by the Deputy.
The conditions for this Trans-Border relief are set out in section 825A TCA 1997. In general, in order to qualify for this relief the individual must:
- be tax resident in Ireland;
- work in a country that Ireland has a Double Taxation Agreement with in an employment held for a continuous period of 13 weeks in the year;
- the employment duties must be wholly exercised outside of the State with none performed in the State, save for duties considered incidental to the foreign employment;
- have paid tax in the other country and are not due a refund of the tax; and
- be present in Ireland for at least one day for every week they work abroad.
Where the Trans-Border relief applies in the case of an Irish resident who works in the UK, it operates in such a way that only UK tax is charged on the employment income and there is no charge to Irish tax on the same income. Any additional Irish tax that may be due is foregone under the domestic Irish legislation.
This tax relief is not normally available for Irish residents who work from home in Ireland. However, in light of the COVID-19 pandemic, Revenue have confirmed that if employees are required to work from home in the State due to COVID-19, such days spent working at home in the State will not preclude an individual from being entitled to claim this relief, provided all other conditions of the relief are met. This position is outlined on Revenue's website - https://www.revenue.ie/en/corporate/communications/covid19/compliance-with-certain-reporting-and-filing-obligations.aspx
The flexibility being shown in the context of the pandemic does not impact the general operation of the measure which requires that a person works outside the State and pays tax in the other jurisdiction in order to qualify for the relief.
I am aware that this issue has been raised specifically in relation to Irish residents who work in Northern Ireland and, as indicated at Report Stage of Finance Act 2020, officials have been asked to look at the operation of the measure in the context of the Tax Strategy Group (TSG) 2021 process. I am also aware that a request for a meeting has been received and this will be arranged with senior officials on my behalf in due course.
The TSG process will consider all relevant matters including the equity of treatment between Irish residents who pay tax in Ireland, the competitive position of Irish employers, and concerns regarding the potential for double non-taxation and established principles of international tax.
224. Deputy Joe McHugh asked the Minister for Finance the rationale for mortgage applicants having to wait six months for approval after coming off the pandemic unemployment payment; if he plans to change the criteria; and if he will make a statement on the matter. [23663/21]
Amharc ar fhreagraSince the COVID-19 situation first arose, I have maintained contact with the BPFI and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. In relation to the particular issue of new mortgage lending, the main retail banks previously confirmed that they are considering mortgage applications and mortgage drawdowns in relation to their customers who were in receipt of COVID-19 support payments on a case by case basis and that they are taking a fair and balanced approach. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Therefore, if mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.
However, there are certain consumer protection requirements which govern the provision of mortgage credit. For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which are necessary, sufficient and proportionate.
In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation. Furthermore, where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.
Within this regulatory framework, the decision to grant or refuse an application for mortgage credit remains a commercial matter for the individual lender. Also a loan offer may contain a condition that would allow the lender to withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is also a commercial and contractual decision for the lender.
Nevertheless, the Central Bank has indicated that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times, including during the COVID-19 pandemic. If a mortgage applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit or the drawn down of credit, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If the mortgage applicant is still not satisfied with the response from the regulated firm, he or she can refer the complaint to the statutory Financial Services and Pensions Ombudsman.
225. Deputy Eoin Ó Broin asked the Minister for Finance his views on whether it is appropriate for purchasers of homes availing of the help to buy scheme to be asked by the seller of the property if they are eligible for the scheme before the price of the property is revealed; his further views on whether such practices could be used to inflate house prices; and if an investigation will be carried out into this practice and action taken to address any issues that arise from such an investigation. [23769/21]
Amharc ar fhreagraThe Help to Buy (HTB) incentive was introduced in 2017. The measure is currently scheduled to expire on 31 December 2021. HTB gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four years, subject to limits outlined in the legislation. An increase in the supply of new housing remains a priority aim of Government policy. The HTB scheme is specifically designed to encourage an increase in demand for affordable new build homes in order to encourage the construction of an additional supply of such properties.
An increase in the supply of new housing is fundamental to resolving the current housing crisis. By restricting the scheme solely to new dwellings and new self-builds, it is anticipated that the resulting increase in demand for affordable new build homes will encourage the construction of an additional supply of such properties. In accordance with a commitment in the Programme for Government, HTB was enhanced in July 2020.
With regard to the Deputy's question, the obligations of the various parties with regard to the HTB scheme are as set out in section 477C of Taxes Consolidation Act 1997 and, as the Deputy will be aware, the circumstances mentioned by him form no part of the scheme. The position is that the transaction process for the purchase of a property is primarily a matter between the vendor and the purchaser having regard to the legal framework which applies to such purchases. Furthermore, I do not believe any reasonable person could support practices that are seen to be unfair or lacking in transparency.
Notwithstanding this, I have been advised by Revenue that, as far as it is aware, no instances of the circumstances described by the Deputy have been reported to it.
226. Deputy Éamon Ó Cuív asked the Minister for Finance the discussions that have taken place between him or his officials with a bank (details supplied) in relation to its planned exit from operations here; the timescale for same; if the bank has outlined its plans in relation to human resource issues or the disposal of the loan book to his Department; and if he will make a statement on the matter. [23770/21]
Amharc ar fhreagraLast month, KBC confirmed that it has entered into a Memorandum of Understanding with Bank of Ireland, which could potentially lead to a transaction where Bank of Ireland acquires a substantial amount of KBC Bank Ireland’s performing loan assets and liabilities. KBC has stated that it is also reviewing its options to divest KBC Bank Ireland’s remaining non-performing mortgage loan portfolio. The execution of these two transactions would ultimately result in KBC Group’s withdrawal from the Irish market.
The Government regrets the decision made by KBC however neither the Government nor I have any role in decisions such as these, which are a matter for the relevant banks and their independent boards. The decision will have a significant impact on staff, customers and, potentially, the level of competition in retail financial services. The news that discussions have commenced with Bank of Ireland regarding it potentially acquiring substantially all of KBC’s performing loan assets and liabilities is welcome and the Government hopes negotiations are concluded quickly and prioritise the continuation of financial services for customers and the preservation of jobs. It is critical that both KBC engages with and keeps all its stakeholders, especially its staff and customers, fully informed in a timely manner as decisions are made.
Last week officials from my Department met with representatives from KBC as part of the normal engagements with the banking sector. In light of the recent announcement, KBC confirmed that work on negotiations are underway, as provided for in the Memorandum of Understanding. However, the KBC representatives outlined that they were not in a position to provide a likely timescale or discuss details of the negotiations until an agreement is reached in due course. KBC emphasised that it has had continuous engagement with staff in relation to the announcement.
227. Deputy Éamon Ó Cuív asked the Minister for Finance if he has raised the issue with either a bank (details supplied) or the Central Bank regarding the position of mortgage holders that have a special discount on their mortgages due to the fact they also have their current account with the bank in the event of the loan book and current account operations of the bank being sold to different bidders; if the normal assurances that the terms of such mortgages would be protected in reality in such a scenario; and if he will make a statement on the matter. [23771/21]
Amharc ar fhreagraThe Central Bank has advised that it does not comment on the commercial decisions of individual regulated entities.
Where a loan is sold or transferred to another regulated entity, it will be subject to the terms of the credit agreement and the protections that were available to borrowers prior to the transaction will also continue to be in place with the new owner. It is worth noting that under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 if a loan is transferred or sold, the holder of the legal title to the credit must be regulated and must act in accordance with Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers whose loans are sold or transferred, maintain the same regulatory protections that they had, including under the various Central Bank statutory Codes of Conduct, such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013 (CCMA).
In circumstances where a regulated entity offers an incentive to a consumer when taking out a mortgage, Provision 6.12 the Consumer Protection Code 2012 requires that the regulated entity must provide the personal consumer, on paper or on another durable medium, with the information needed to consider the incentive being offered.
This information must:
a) Quantify the implications for the personal consumer of availing of the incentive including an indicative cost comparison of the total cost of the existing mortgage or new mortgage credit if they do not avail of the incentive and the total cost of the mortgage if they avail of the incentive;
b) Clearly set out the length of time during which the incentive will be available;
c) Clearly set out any assumptions used, which must be reasonable and justifiable;
d) Set out the advantages and disadvantages to the personal consumer of availing of the incentive;
e) Include other key information which the personal consumer should have available to them when considering the incentive; and
f) Include a statement that the personal consumer may wish to seek independent advice prior to availing of the incentive.
The continued application of preferential mortgage rates is governed by the underlying terms and conditions of the mortgage contract.
228. Deputy John McGuinness asked the Minister for Finance if he will review the concession put in place by the Revenue Commissioners relative to the payment of tax due by employees arising from the temporary wage subsidy scheme allowing the employer to pay the tax without any benefit-in-kind implications for the employee; if so, if categories of employees (details supplied) will be included; and if he will make a statement on the matter. [23798/21]
Amharc ar fhreagraThe Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020. It was legislated for in Section 28 of the Emergency Measure in the Public Interest (Covid-19) Act 2020 and was an emergency measure to deal with the impact of the Covid-a9 pandemic on the economy. Over 66,600 employers were supported through the TWSS in respect of more than 664,500 employees at a cost of €2.8bn. The Scheme operated until 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.
It will be recalled that in order to maximise the financial support provided to recipients, tax on TWSS payments was not collected in real-time through the PAYE system and that instead the liability for the 2020 tax year was determined at the end of the year by Revenue through the regular ‘end year review’ process.
Revenue made a Preliminary End of Year Statement available to all employees from 15 January 2021, including those who were in receipt of the TWSS. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Social Protection, as well as their tax credit entitlements. For the tax year 2020, the Statement also includes information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement provides employees with a preliminary calculation of the income tax and Universal Social Charge (USC) position for 2020 and indicates whether their tax position is balanced, underpaid, or overpaid for the year.
Upon viewing the Preliminary End of Year Statement through myAccount, which is Revenue’s secure online facility for individual taxpayer services, employees have an opportunity to complete their income tax return for 2020, declaring any additional income and claiming any additional tax credits due, for example qualifying health expenses, to arrive at their final liability for 2020.
When a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.
Revenue has previously confirmed that it is facilitating employers who wish to pay the tax liabilities of their employees where such income tax and USC liabilities arise from the TWSS. Details of these arrangements are available on the Revenue website at www.revenue.ie/en/employing-people/twss/employers/index.aspx.
Should an employer wish to pay these liabilities on behalf of their employees, on an exceptional, once-off basis and subject to certain conditions, Revenue will not apply the Benefit-in-Kind (BIK) rules that would usually apply where employers make payments of this nature on behalf of their employees.
Revenue has informed me that in order to facilitate employers who wish to make good their employees' liabilities and ensure they have the fullest information available following the TWSS Reconciliation process, this concessional treatment is extended to run until end September 2021.
It should be noted that employers paying amounts to settle employee income tax liabilities will not be entitled to the usual tax deduction in respect of such payments, as the payments would not be regarded as wholly and exclusively incurred for the purposes of the employer’s trade or profession.
Revenue has also recently clarified that the BIK concession will apply where an employer pays the tax and USC liabilities of an employee who is a self-assessed taxpayer or, in joint assessed cases, if the employee's spouse is self-assessed.
Revenue also confirmed that the BIK concession will apply where an employer pays the tax and USC liabilities of a proprietary director(s) in the company, provided that the employer pays the TWSS related liabilities of all employees in the company.
Full details are available on Revenue's website in Revenue eBrief No. 097/21 - https://www.revenue.ie/en/tax-professionals/ebrief/2021/no-0972021.aspx
229. Deputy Michael Moynihan asked the Minister for Finance if the eligibility criteria for the accelerated capital allowance products will be amended to facilitate electric plant and site machinery such as electric telehandlers; if he will consider the addition of a new product category to encourage the use of alternative electric plant equipment in Ireland; and if he will make a statement on the matter. [23871/21]
Amharc ar fhreagraFinance Act 2008 introduced the Accelerated Capital Allowance (ACA) scheme for Energy Efficient Equipment (EEE). The purpose of the scheme is to improve the overall energy efficiency of Irish businesses, and thereby to aid Ireland in meeting our national targets and binding and non-binding EU targets on energy savings and the reduction of carbon emissions
The ACA scheme is based on the existing approach to the treatment of capital allowances for plant and machinery, whereby wear and tear can be taken into account as a deduction for tax purposes. In general, such capital allowances are claimed at a rate of 12.5% annually, over eight years. The ACA scheme allows taxpayers to deduct the full cost of expenditure on eligible equipment from taxable profits in the year of purchase. The benefit to the taxpayers is thus from a cash flow perspective, incentivising businesses to choose a qualifying energy efficient option when purchasing equipment.
To qualify for the scheme, equipment must fall within one of the 10 classes of technology specified in Schedule 4A of the Taxes Consolidation Act 1997. In order for equipment in these classes of technology to qualify for the scheme it must also meet detailed energy efficiency criteria as set by the Sustainable Energy Authority of Ireland (SEAI). Products which meet these criteria are listed on the SEAI’s Triple E Register. A statutory instrument by order of the Minister for Environment, Climate and Communications, with the approval of the Minister for Finance, sets the legal basis for the detailed energy efficiency qualifying criteria. A statutory instrument is also required to update such criteria.
Last year my officials, in conjunction with officials in the Department of Environment, Climate and Communications (DECC), the SEAI and the Revenue Commissioners, completed a Tax Expenditure Review of the scheme in accordance with the Department of Finance guidelines for evaluating tax expenditures. This review recommended the classes of technology included in Schedule 4A and the existing energy efficiency qualifying criteria be reviewed with a view to updating the criteria to reflect technological advances in energy efficiency.
The SEAI is the body responsible for setting the eligibility criteria and maintaining the register of eligible products for which the incentive can be claimed. The SEAI and DECC are currently undertaking a technical review of the classes of technology which currently qualify for the scheme and the detailed energy efficiency criteria to ensure the scheme reflects best in class energy efficiency standards. Should this review recommend amending the detailed energy efficiency criteria, this would fall within the remit of the SEAI under the aegis of DECC. If this review recommends amending Schedule 4A to include a new class of technology, officials in my Department will take this into consideration in advance of Finance Bill 2021.
230. Deputy Matt Carthy asked the Minister for Finance the funding allocated by his Department or agencies under his remit to An Taisce in each of the years 2015 to 2020 and to date in 2021; the expected allocations to An Taisce for 2021; and if he will make a statement on the matter. [24103/21]
Amharc ar fhreagraI wish to inform the Deputy that neither my Department, nor any of the bodies under the aegis of my Department, has allocated funding to An Taisce during the specified timeframe.
231. Deputy Kathleen Funchion asked the Minister for Finance his plans to implement a tax incentive to support the purchase of capital equipment and investment in the manufacturing sector (details supplied). [24183/21]
Amharc ar fhreagraThe Deputy will be aware that a company may claim capital allowances on capital expenditure it incurs on certain types of business assets and business premises. Capital allowances are generally calculated on the net cost of the business asset. There are different rates available depending on the type of asset such as on plant and machinery, motor vehicles, industrial buildings, transmission capacity rights, computer software, specified intangible assets.
A company can claim capital allowances at a rate of 12.5% over eight years for plant and machinery. However, a company can claim an Accelerated Capital Allowance (ACA) of 100% in the first year the asset is used in the business for the following:
- Energy efficient equipment including electric and alternative fuel vehicles;
- Gas vehicles and refuelling equipment;
- Equipment in a creche or gym provided by the company to its employees.
Additional information is available on the Revenue website.
232. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be generated by introducing a 3% stamp duty surcharge on the purchase of residential properties by trusts, partnerships and companies including real estate investment trusts (REITs) and Irish Real Estate Funds (IREFs) and if he will make a statement on the matter. [24233/21]
Amharc ar fhreagra246. Deputy Alan Kelly asked the Minister for Finance if he will provide a list all of the tax exemptions and reliefs which have been available to real estate investment trusts in each of the years 2013 to 2020, in tabular form; and the total loss to the Exchequer as a result of the trusts availing of each of these tax exemptions and reliefs in each of the years. [24497/21]
Amharc ar fhreagra247. Deputy Alan Kelly asked the Minister for Finance the number of registered real estate investment trusts in operation in the State. [24498/21]
Amharc ar fhreagra248. Deputy Alan Kelly asked the Minister for Finance the estimated amount that has been paid in stamp duty by real estate investment trusts in tabular form; and the number of units that stamp duty was paid on by real estate investment trusts for the purchase of properties in the State for each of the years 2013 to 2020. [24499/21]
Amharc ar fhreagraI propose to take Questions Nos. 232, 246, 247 and 248 together.
Finance Act 2013 introduced the regime for the operation of Real Estate Investment Trust companies (REITs) in Ireland. The purpose of the REIT regime is to allow for a collective investment vehicle which provides a comparable after-tax return to investors to direct investment in rental property, by eliminating the double layer of taxation at corporate and shareholder level which would otherwise apply. This double layer of taxation is removed by providing that REITs are not subject to corporation tax on their rental profits or on any gains that arise from the disposal of rental properties, and requiring that REITs must distribute at least 85% of profits annually for taxation at the level of the investor.
There are a number of criteria which companies must meet in order to avail of the REIT tax regime, including the requirement to be listed on a the main market of an EU stock exchange, a debt cap and an income-to-financing costs ratio.
Dividend Withholding Tax (DWT) provisions at a rate of 25% apply to distributions by REITS. The tax position of REIT investors is as follows:
- Irish resident REIT investors are required to pay tax at their marginal rate on any distributions they receive on a self-assessment basis, with a credit available for any DWT deducted;
- Foreign investors are subject to 25% DWT on distributions received from a REIT. However, investors in tax treaty countries may be able to reclaim some part of the DWT if the relevant tax treaty allows for this. The taxation of distributions varies from treaty to treaty, but commonly a source state would retain the right to approximately 15% tax on dividends paid from that state.
- Excluded investors, such as pension schemes or charities, may receive distributions gross, subject to completion of appropriate declarations. Such entities are more generally exempt from tax or subject to gross roll-up regimes where tax is accounted for on distribution, such as the taxation of pensioners on pensions received.
The REIT regime is continually under review to ensure that REITs continue to meet the purpose for which the regime was designed. Amendments were made to the taxation of REITs in Finance Act 2019 to ensure they operate in line with the original policy intention of encouraging long-term, stable investment in rental property. The obligation to deduct DWT was extended to include distributions of the proceeds of capital disposals, and a provision providing a relief from Capital Gains Tax on ceasing to be a REIT was limited to apply only after a minimum term of 15 years of REIT status.
In relation to question 24233/21, Revenue has reviewed Stamp Duty records for 2020 to identify possible property purchases by entities such as trusts, partnerships and companies including REITs and Irish Real Estate Investment Funds (IREFs), as well as other purchases of multiple properties. For those that can be readily identified, there are approximately 1,330 properties purchased in 2020 with Stamp Duty paid of €9.1 million. Residential property accounted for over 99% of the 1,330 transactions. This is out of about 56,000 stamp returns are marked as residential in 2020, meaning the identified purchases represent less than 3% of total residential transactions in 2020.
On the basis of this activity, I am advised by Revenue that applying a 3% surcharge to all such property acquisitions in 2020 could have yielded in the region of €4.5 million. The possible yield in future years would depend on the level of activity in a given year, which cannot be predicted at this stage.
Regarding questions 24497/21, 24498/21 and 24499/21, Revenue has confirmed that due to the small number (less than 10) of REITs that operate in Ireland, and Revenue’s obligation to maintain the confidentiality of taxpayer information, specific quantitative information in relation to these entities cannot be provided.
233. Deputy Pearse Doherty asked the Minister for Finance if he will conduct a review into the current tax exemptions in place for real estate investment trusts and Irish real estate funds with a view to restricting the advantage they enjoy over individual prospective buyers here; and if he will make a statement on the matter. [24234/21]
Amharc ar fhreagraInvestment funds are a long term presence in the Irish market, as in most other property markets. As with investment funds generally, tax occurs primarily at the level of the investor rather than within the fund. Additionally, in the case of both Irish Real Estate Funds (IREFs) and Real Estate Investment Trust companies (REITs), withholding taxes apply on distributions to investors to ensure collection of tax revenues.
The operation of such investment structures is kept under review and in recent Finance Acts I have made significant changes where concerns have been identified, to ensure that appropriate tax is collected.
In 2019, officials in my Department produced a report on REITs and IREFs as respects their investment in the Irish property market. The report was presented to the Tax Strategy Group and published in July 2019. It provided a basis for policy discussions and the amendments which were introduced in Finance Act 2019.
In relation to IREFs, amendments were made in Finance Act 2019 to prevent the use of excessive debt and other payments to reduce distributable profits, and to prevent the avoidance of tax on gains on the redemption of IREF units. In addition, the IREF return filing requirement was placed on a mandatory annual footing and the information which Revenue can request was increased to facilitate ongoing monitoring of the sector.
In relation to REITs, Finance Act 2019 extended the obligation to deduct DWT to include distributions of the proceeds of capital disposals. If the net proceeds from such capital disposals are not re-invested in the REIT business or distributed within a 2 year period, they become part of the profits of the REIT business, 85% of which must be distributed annually. In addition, the deemed disposal provisions upon cessation of REIT status were restricted to REITs that have been in operation for at least 15 years, in line with the regime's stated objective of encouraging long-term, stable investment in rental property.
These amendments were made to ensure appropriate levels of tax are paid by investors in Irish property.
Institutional investment in commercial and residential property is critically important to generating additional supply of property in Ireland through forward-funding of development projects, particularly in the area of high-density urban developments such as apartment buildings. Rebuilding Ireland identified the encouragement of the build-to-rent sector as a key factor in improving the rental sector and acknowledged that institutional investors have the potential to provide significant investment in such projects.
However I would note that I do not support the bulk purchase of completed homes by institutional investors, and I will be working together with Minister O’Brien to develop targeted measures to address this issue, and to direct institutional funding towards developments generating real additional supply for Irish households.
234. Deputy Thomas Gould asked the Minister for Finance the support that can be given to persons currently in receipt of the employment wage subsidy scheme indefinitely who cannot drawdown a mortgage. [24273/21]
Amharc ar fhreagraSince the COVID-19 situation first arose, I have maintained contact with the BPFI and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. In relation to the particular issue of new mortgage lending, the main retail banks previously confirmed that they are considering mortgage applications and mortgage drawdowns in relation to their customers who were on the Employment Wage Subsidy Scheme on a case by case basis and that they are taking a fair and balanced approach. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Therefore, if mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.
However, there are certain consumer protection requirements which govern the provision of mortgage credit. For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which are necessary, sufficient and proportionate.
In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation. Furthermore, where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.
Within this regulatory framework, the decision to grant or refuse an application for mortgage credit remains a commercial matter for the individual lender. Also a loan offer may contain a condition that would allow the lender to withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is also a commercial and contractual decision for the lender.
Nevertheless, the Central Bank has indicated that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times, including during the COVID-19 pandemic. If a mortgage applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit or the drawn down of credit, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If the mortgage applicant is still not satisfied with the response from the regulated firm, he or she can refer the complaint to the statutory Financial Services and Pensions Ombudsman.
235. Deputy Ged Nash asked the Minister for Finance further to Parliamentary Question Nos. 284 to 287 of 28 April 2021, the reason the number of convictions for serious offences under section 1078 of the Taxes Consolidation Act 1997 was considerably lower in the period 2016 to 2020 than in the period 2011 to 2016; and if he will make a statement on the matter. [24274/21]
Amharc ar fhreagra236. Deputy Ged Nash asked the Minister for Finance further to Parliamentary Question Nos. 284 to 287 of 28 April 2021, if he is satisfied that the programme for prosecuting those offences constitutes an effective deterrent to tax evasion and fraud in view of the significantly reduced number of convictions for serious offences under section 1078 of the Taxes Consolidation Act in the period from 2016 to 2020 compared with the previous five year period; and if he will make a statement on the matter. [24275/21]
Amharc ar fhreagraI propose to take Questions Nos. 235 and 236 together.
I am advised by Revenue that where suspected serious tax offences under section 1078 of the Taxes Consolidation Act 1997 are identified through Revenue’s various compliance programme, such cases are considered for investigation with a view to prosecution. Where sufficient levels of proof and evidence are obtained, a file is prepared for the Director of Public Prosecutions (DPP) for consideration and directions are issued for the case to be tried summarily or on indictment.
The number of convictions each year are therefore dependent on a number of factors including the number of cases sent to the DPP, the number of cases where the DPP issues directions and the number of cases heard by the Courts.
I am advised by Revenue that the table below outlines the number of cases of serious tax offences under section 1078 of the Taxes Consolidation Act 1997 before the courts at the end of each year i.e. not concluded, in the period in question.
|
Year |
Number of cases before the courts at year end |
|
2011 |
20 |
|
2012 |
16 |
|
2013 |
15 |
|
2014 |
25 |
|
2015 |
18 |
|
2016 |
15 |
|
2017 |
11 |
|
2018 |
18 |
|
2019 |
15 |
|
2020 |
28 |
The Deputy will be aware from my response to Parliamentary Question Nos. 284 to 287 of 28 April 2021 that I am satisfied that Revenue’s work in investigating cases of serious tax and duty offences with a view to prosecution has achieved a considerable level of success. I am also satisfied that Revenue’s programme of investigations with a view to prosecution in respect of such cases is an effective deterrent to tax evasion and fraud.
I am aware that taxpayer behaviour determines the nature, extent and consequences of Revenue’s compliance interventions. Revenue’s interventions range from non-audit compliance interventions such as assurance checks, aspect queries and profile interviews to audit or investigations. It undertakes investigations where cases of serious tax and duty evasion and fraud are discovered, seeking to apply the full legal sanctions available that reflect the seriousness of the evasion involved. I am satisfied that this approach represents the correct approach to tackling non-compliance and in particular to tackling the most serious cases of evasion and fraud.
237. Deputy Aindrias Moynihan asked the Minister for Finance the engagement that has been had with the Central Bank in relation to the planned negative interest rate charges that will affect some solicitor client accounts; the measures being examined to ensure that any additional charges are not at the expense of the average customer and clients of these solicitors; and if he will make a statement on the matter. [24282/21]
Amharc ar fhreagraI have no role in the day to day operations of any bank operating within the State including banks in which the State has a shareholding. Decisions in relation to commercial matters such as the application of interest rate charges are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis.
I am advised by the Central Bank that it serves the public interest by safeguarding monetary and financial stability and by working to ensure that the financial system operates in the best interests of consumers and the wider economy. Monetary policy for the euro area is formulated by the Governing Council of the European Central Bank (ECB) and implemented by the Eurosystem. The Governing Council sets its key lending and deposit rates with regard to its monetary policy objective. The Central Bank has also advised me that it too does not have a role in prescribing or setting interest rates.
Deposit balances and liquidity in general has risen significantly across the banking system in Europe in recent years as the ECB has continued to provide additional funds through their asset purchase schemes and long term refinancing operations. This has been further exacerbated by the COVID-19 pandemic as households continue to stay at home and save and businesses defer investment decisions.
This excess liquidity which has grown significantly in the European system and in the main it gets placed back on deposit with the ECB who charge the banks -0.50%. The application of negative deposit rates by the ECB has resulted in European banks incurring a consequent cost on deposit accounts. The Irish banks are impacted in a similar way to their European counterparts. The banks across Europe have looked to pass some of the costs associated with negative rates to deposit holders with larger balances. The Irish banks are no different in this regard.
In passing on some of these costs, banks have decided that they cannot differentiate between customers in different sectors and for that reason, banks have chosen to apply charges based on the size of the deposit balance.
I am not in a position to comment on the potential impact on clients of solicitors. However, I understand that some legal practices have already taken steps to work closely with their clients to ensure that clients' monies spends the least amount of time possible in the solicitors client account.
238. Deputy Donnchadh Ó Laoghaire asked the Minister for Finance the steps he is taking to cease the blanket refusal of mortgages to persons whose employers are engaging in wage subsidy schemes; the engagement he has made with the banks on this issue; and if he will make a statement on the matter. [24333/21]
Amharc ar fhreagraSince the COVID-19 situation first arose, I have maintained contact with the BPFI and lenders on the measures they have put in place to assist their customers who are economically impacted by the pandemic. In relation to the particular issue of new mortgage lending, the main retail banks previously confirmed that they are considering mortgage applications and mortgage drawdowns in relation to their customers who were on the Employment Wage Subsidy Scheme on a case by case basis and that they are taking a fair and balanced approach. Lenders continue to process mortgage applications and have supports in place to assist customers impacted by COVID-19. Therefore, if mortgage applicants have any queries or concerns about the impact of COVID-19 on their mortgage application, they should in the first instance contact their lender directly on the matter.
However, there are certain consumer protection requirements which govern the provision of mortgage credit. For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that, before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness with a view to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR further provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which are necessary, sufficient and proportionate.
In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. The Code specifies that the affordability assessment must include consideration of the information gathered on the borrower’s personal circumstances and financial situation. Furthermore, where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.
Within this regulatory framework, the decision to grant or refuse an application for mortgage credit remains a commercial matter for the individual lender. Also a loan offer may contain a condition that would allow the lender to withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is also a commercial and contractual decision for the lender.
Nevertheless, the Central Bank has indicated that it expects all regulated firms to take a consumer-focused approach and to act in their customers’ best interests at all times, including during the COVID-19 pandemic. If a mortgage applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit or the drawn down of credit, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If the mortgage applicant is still not satisfied with the response from the regulated firm, he or she can refer the complaint to the statutory Financial Services and Pensions Ombudsman.
239. Deputy Carol Nolan asked the Minister for Finance the non-governmental organisations in receipt of funding from his Department; the amount of funding allocated to same in 2020; and if he will make a statement on the matter. [24373/21]
Amharc ar fhreagraI wish to advise the Deputy that my Department has no record of any funding being provided by it to non-governmental organisations in 2020.
I wish to note that my response refers only to Department of Finance records and I cannot comment on behalf of other Government Departments.
240. Deputy Thomas Pringle asked the Minister for Finance if the employment wage subsidy scheme will be extended for the remainder of 2021 to the childcare sector; and if he will make a statement on the matter. [24422/21]
Amharc ar fhreagraSection 28B of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provides for the operation of the Employment Wage Subsidy Scheme (EWSS), which is an economy-wide enterprise support for eligible businesses in respect of eligible employees. It provides a flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll and charges a reduced rate of employer PRSI of 0.5% on wages paid which are eligible for the subsidy payment.
While the criteria for eligibility for business in general is based on a reduction in turnover, as a result of the pandemic and having regard to the importance of maintaining the provision of childcare facilities so as to enable parents to continue in, or to take up, positions of employment, the legislation provided that childcare businesses in possession of tax clearance and registered in accordance with Section 58C of the Childcare Act 1991 are eligible for the EWSS.
The objective of the EWSS is to support all employment and maintain the link between the employer and employee insofar as is possible. The EWSS has been a key component of the Government’s response to the continued Covid-19 crisis to support viable firms and encourage employment in the midst of these very challenging times. To date, payments of over €3 billion and PRSI credit of over €500 million have been granted to 48,900 employers in respect of 558,000 workers.
I have been clear that there will be no cliff-edge to the EWSS and, as the Deputy will be aware, it was decided that the scheme is being extended until the end of June 2021. Similarly, the COVID Restrictions Support Scheme is also been extended to end June 2021.
Motions seeking Dáil approval of the extension of the Covid Restrictions Support Scheme and the Employment Wage Subsidy Scheme to 30 June 2021 took place on Thursday 22 April, during which I reaffirmed the Government’s commitment that there would be no cliff-edge to the economic supports at the end of June.
With the agreement by Government on the revised plan, COVID-19 Resilience and Recovery 2021: The Path Ahead, a cautious and measured approach will be taken as we lay the foundations for the full recovery of social life, public services and the economy. It is therefore appropriate that key business supports should remain in place until the end of June 2021.
As the revised plan is implemented, the EWSS will play an important role in getting people back to work as public health restrictions are eased, thereby reducing the numbers dependent on social welfare payments over time, including the Pandemic Unemployment Payment (PUP).
Consideration is being given to the fact that continued support for businesses could be necessary out to the end of 2021 to help maintain viable enterprises and employment and to provide firms with certainty to the maximum extent possible. Decisions on the form of such support will take account of emerging circumstances and economic conditions as they become clearer. At this point, it would be inappropriate to single out any one sector for mention notwithstanding the Deputy's question.
The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with Ministerial colleagues to ensure that within the resources available appropriate supports are in place to mitigate these effects.
