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Tuesday, 5 Apr 2022

Written Answers Nos. 241-263

Tax Code

Ceisteanna (241)

Cathal Crowe

Ceist:

241. Deputy Cathal Crowe asked the Minister for Finance if the 2.5% transaction charge applicable to transactions handled by a company (details supplied) emanating from Northern Ireland versus the 1.4% fee applicable to those that originate in the Republic of Ireland is congruent with the Brexit agreement and financial protocols in it; and if he will make a statement on the matter. [17611/22]

Amharc ar fhreagra

Freagraí scríofa

Over the past few years, my Department has worked closely with the Central Bank of Ireland to limit the impact of key identified risks in the Irish financial system and to ensure that the sector was adequately prepared for Brexit. My Department and the Central Bank continue to monitor developments and activities in the financial sector.

However the issue raised by the Deputy is not a direct consequence of Brexit and is not related to the EU-UK Trade and Cooperation Agreement, and is instead a commercial decision.

In that context, I am informed by the Central Bank of Ireland that in accordance with its Consumer Protection Code 2012, regulated firms, including Payment and Electronic Money institutions, must ensure that in all dealings with customers and within the context of their authorisation, they make full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer.

It should be noted that the charging of fees is a commercial decision for regulated entities, within the parameters of the regulatory framework. In accordance with Regulation 78 of SI No.6 of 2018 European Union (Payment Services) Regulations, in the event that a payment service user rejects changes proposed by a payments service provider, the payment service user has the right to terminate the framework contract free of charge and with effect at any time before the date when the changes would have applied had the payment service user not rejected the changes.

State Claims Agency

Ceisteanna (242)

Cormac Devlin

Ceist:

242. Deputy Cormac Devlin asked the Minister for Finance if he will request the State Claims Agency to provide a breakdown of claims by sector for the period 2016 to 2021, in tabular form; and if he will make a statement on the matter. [17626/22]

Amharc ar fhreagra

Freagraí scríofa

The National Treasury Management Agency (NTMA) which acts as the State Claims Agency in conducting the state's claims management function has informed me that the information contained in the table below was extracted from the National Incident Management System (NIMS). This report shows the number of claims received by the State Claims Agency from 2016 to 2021. This report is correct as of 31 March 2022.

In answering this question I have taken "sector" to mean the areas under each Minister's responsibility. Numbers reported under each Minister includes their relevant departments and any agencies under the aegis of the Minister that have been delegated to the SCA.

I refer to the NTMA (Amendment) Act 2000 which, inter alia, established the SCA and to Section 9(3)(f) of that Act which provides for the delegation of the claims management function to the State Claims Agency.

“(f) the delegation or declaration shall not remove or derogate from the responsibility of any Minister of the Government to Dáil Éireann or as a member of the Government for the performance of functions of that Minister of the Government thereby delegated or to which the declaration relates.”

On the basis of the foregoing if the Deputy requires any further information on matters to do with claims arising under a particular Minister's area of responsibility he should direct such questions to the Minister concerned.

Table 1: Claims Received by the SCA 2016-2021

Location

Number of Claims

Healthcare*

11,743

Minister for Justice

5,195

Minister for Defence

744

Minister for Children, Equality, Disability, Integration and Youth

667

Minister for Education

438

Minister for Public Expenditure and Reform

248

Minister for Department of Housing, Local Government and Heritage

147

Minister for Finance

134

Minister for Social Protection

103

Minister for Agriculture, Food and the Marine

98

Minister for Transport

69

Taoiseach

25

Minister for Health

24

Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media

24

Minister for Foreign Affairs

16

Minister for Environment, Climate and Communications

15

Minister for Enterprise, Trade and Employment

8

Minister for Rural & Community Development

1

Grand Total

19,699

*Includes Healthcare and Healthcare private

Electric Vehicles

Ceisteanna (243)

Cormac Devlin

Ceist:

243. Deputy Cormac Devlin asked the Minister for Finance the efforts that are being made to achieve national targets regarding the use of electric vehicles; if he will consider a strategy or policy to encourage the importation of second-hand EVs from the UK, including reducing VRT and other taxes, charges and levies on the importation of these vehicles; and if he will make a statement on the matter. [17627/22]

Amharc ar fhreagra

Freagraí scríofa

As the Deputy will be aware, VRT is paid on a vehicle's first registration in the State. The same tax applies to new vehicles and used imports alike.

The Government is committed to incentivising electric vehicles (EVs) as has been reflected in the wide suite of measures which have facilitated an exponential growth in EV registrations over the past number of years. The Programme for Government 2020 outlined a commitment to an average 7% per annum reduction in overall greenhouse gas emissions from 2021 to 2030 (a 51% reduction over the decade) and to achieving net zero emissions by 2050. The need to make significant emissions reductions in the transport sector is fundamental to Ireland’s policy around Vehicle Registration Tax (VRT) and Motor Tax; the systems are designed to facilitate the uptake of EVs and to address the increasingly harmful environmental and public health effects of vehicle emissions.

The VRT system has been modified in recent Budgets to strengthen the environmental rationale of the regime, and is structured to provide a reduced rate for EVs of 7% of open-market selling price (OMSP), while vehicles falling into the highest emissions band are liable to a rate of 41%. The €5,000 VRT relief for electric cars and vans were due to end on 31st December 2021 but was extended for two years in Finance Act 2021 to end in 2023. As the rate of VRT charged for EVs is already very low, many purchased in the next two years will pay no VRT at all.

In Finance Act 2019 I legislated for a carbon dioxide-based benefit-in-kind (BIK) regime for company cars from 1/1/2023. From that date the amount taxable as BIK remains determined by the car’s original market value (OMV) and the annual business kilometres driven, while new carbon dioxide emissions-based bands will determine whether a standard, discounted, or surcharged rate is taxable. EVs will benefit from a preferential rate of BIK, ranging from 9 – 22% depending on mileage. Fossil-fuel vehicles will be subject to higher BIK rates, up to 37.5%. This new structure with carbon dioxide-based discounts and surcharges will incentivise employers to provide employees with low-emission cars.

The current €50,000 BIK exemption was extended in Finance Act 2021 with a tapering mechanism that represents a value for money consideration. This forms part of a broader series of generous measures including the preferential rates of VRT and Motor Tax, the VRT relief, SEAI grants, discounted tolls fees, and 0% BIK on electric charging; all designed to achieve national targets around EV uptake.

I am satisfied that this Government continues to provide a generous set of supports to achieve national targets regarding the transition to low and zero emission vehicles.

Tax Data

Ceisteanna (244)

Pearse Doherty

Ceist:

244. Deputy Pearse Doherty asked the Minister for Finance the estimated cost to the Exchequer of reducing VAT on household energy bills, that is, gas, electricity and home heating oil to 9% and 13.5% from beginning of April 2022 to the end of August 2022 and to the end of December 2022, respectively. [17685/22]

Amharc ar fhreagra

Freagraí scríofa

I am advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific services on their VAT returns. Therefore, it is not possible to provide an accurate costing for the potential measures outlined. However, a tentative estimate of the likely cost of a change from the present rate of 13.5% on domestic electricity, home heating oil and gas supplies to 9% is as follows.

Fuel

April 2022-August 2022

April 2022-December 2022

Electricity

€35m

€65m

Gas

€14m

€27m

Oil

€6m

€13m

Tax Reliefs

Ceisteanna (245)

Pearse Doherty

Ceist:

245. Deputy Pearse Doherty asked the Minister for Finance if he, his Department or the Government have requested a derogation with respect to VAT as it applies to domestic energy bills through energy, gas and home heating oil; if so, the date on which the request was made; the specifics in relation to same, such as the rate to which he, his Department or the Government have sought to reduce the current VAT rate; and if he will make a statement on the matter. [17835/22]

Amharc ar fhreagra

Freagraí scríofa

As I previously stated, I wrote to Commissioner Gentiloni in early March regarding the need for Member States to have greater flexibility when responding the energy crisis, particularly in relation to the VAT and Excise Directives. I will continue to work with my European counterparts and the EU Commission to respond to the current energy crisis.

Tax Code

Ceisteanna (246)

Pat Buckley

Ceist:

246. Deputy Pat Buckley asked the Minister for Finance if his Department will consider lowering the VAT rate to 0% on the sale and repair of bicycles and electric bicycles; if his Department will follow the lead of Belgium which has already passed legislation to take advantage of European rule changes; and if he will make a statement on the matter. [17838/22]

Amharc ar fhreagra

Freagraí scríofa

I understand that the proposal for reform of VAT rates is currently being finalised, this process involves, inter alia, ensuring consistent translations of the text in every working language of the European Union. Once finalised, I expect the proposal will be published in the Official Journal of the European Union in the coming weeks.

Officials in my Department are currently reviewing the options now available to Ireland in setting VAT rates. This will include consideration of the new options available to Member States when setting VAT rates as well as the new limitations introduced on how reduced rates may be applied.

Decisions about tax changes are generally taken in the context of the Budget and, as part of our normal annual Budget preparations, various options for tax policy changes will be considered by the Tax Strategy Group prior to Budget 2023. The papers presented to the Tax Strategy Group, including a paper on VAT, are published in advance of the Budget.

Tax Code

Ceisteanna (247)

Darren O'Rourke

Ceist:

247. Deputy Darren O'Rourke asked the Minister for Finance if he has examined the VAT rates applied to the sale of repaired or used goods given the need to promote the sale of these goods in line with the circular economy; and if he will make a statement on the matter. [17855/22]

Amharc ar fhreagra

Freagraí scríofa

I am advised by Revenue that the VAT rating of goods and services is subject to the requirements of the EU VAT Directive with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate, currently 23% in Ireland, unless they fall within categories of goods and services specified in the Directive, in respect of which Member States may apply a lower rate or exempt from VAT.

However, the Deputy may be interested to know about the margin scheme, which is used as a means of reducing the possibility of double taxation on the sale of second-hand goods. It operates by allowing taxable dealers who deal in margin scheme goods, pay VAT on the difference between the sale price and purchase price of certain second-hand goods. Broadly speaking, for the purpose of the margin scheme, second-hand goods are moveable goods which are suitable for use either as they are or after repair. The VAT rate which applies to a sale of goods under the margin scheme is, with some exceptions, the same rate of VAT which is normally applicable to the particular good. The scheme is optional however, so if a taxable dealer chooses not to operate the margin scheme, then normal VAT rules will apply.

Further information on the margin scheme can be found on the Revenue website.

Question No. 248 answered with Question No. 239.
Question No. 249 answered with Question No. 231.
Question No. 250 answered with Question No. 231.

Flexible Work Practices

Ceisteanna (251)

David Stanton

Ceist:

251. Deputy David Stanton asked the Minister for Finance the current policy with respect to remote working options for staff in his Department; and if he will make a statement on the matter. [18165/22]

Amharc ar fhreagra

Freagraí scríofa

I wish to advise the Deputy that all staff of my Department have been working on a blended working pattern since 28 January 2022. Each Division/Business Unit has an “anchor day” each week when all the team attend the office. Blended working patterns are agreed at a local level to ensure business needs are met.

My Department is currently working on a Blended Working Policy in line with the overarching Civil Service Blended Working Policy Framework, published 31st March 2022. My Department’s policy will be in place by end Q2 at the latest and staff will then have the opportunity to apply for a formal blended working arrangement.

A number of support mechanisms have been put in place by my Department to assist staff in adjusting to working from home; these include ICT supports and the supply of some office equipment and regular workplace health and wellbeing initiatives. In addition, staff have been provided the opportunity to avail of one to one with ergonomic home workstation assessments to ensure they have an optimum workstation set up in the home working environment.

Revenue Commissioners

Ceisteanna (252)

Aengus Ó Snodaigh

Ceist:

252. Deputy Aengus Ó Snodaigh asked the Minister for Finance the number of serving and former Air Corps whistle-blowers who have been placed under surveillance by the Revenue Commissioners or their agents. [18188/22]

Amharc ar fhreagra

Freagraí scríofa

I am advised by Revenue that the Criminal Justice (Surveillance) Act 2009 authorises a small number of public bodies, including Revenue, to undertake surveillance of persons, places or vehicles using surveillance devices.

It provides that Revenue’s powers under the Act may be used in respect of a revenue offence, that is an arrestable offence, under section 14 of the Customs Act 2015; section 1078 of the Taxes Consolidation Act 1997; section 102 of the Finance Act 1999; section 119 of the Finance Act 2001; section 79 of the Finance Act 2003 (inserted by section 62 of the Finance Act 2005); or section 78 of the Finance Act 2005. Examples of revenue offences include tax or duty evasion, fuel fraud, supply or sale of illicit tobacco products.

Because of the intrusive nature of the powers which it confers, the Act delimits clearly the circumstances in which they may be used and lays down the authorisations and approvals which must be obtained before they may be utilised. I know that Revenue is committed to ensuring that the powers conferred by the Act are used only in appropriate circumstances and in full conformity with the provisions and requirements of the Act.

Revenue’s operation of the Act is overseen by a High Court Judge designated by the Government. The designated Judge has access to all official documents or records associated with authorisations under this Act. The Judge ascertains whether Revenue and other agencies are complying with the provisions of the Act and reports annually to the Taoiseach on any matters that are considered relevant. The designated Judge’s Reports are published on the Oireachtas website.

Section 13 of the Criminal Justice (Surveillance) Act 2009 provides that it is an offence to disclose any information in connection with the operation of the Act or reveal the existence of an application for the issue of an authorisation. I am advised by Revenue that accordingly it does not disclose details of surveillance operations in which it may be engaged.

I am assured by Revenue that it would not place a person or persons under surveillance for reasons other than the investigation of a revenue offence. If the Deputy has any information to the contrary the Board of the Revenue Commissioners would be very interested in any such details.

Banking Sector

Ceisteanna (253)

Claire Kerrane

Ceist:

253. Deputy Claire Kerrane asked the Minister for Finance if he will provide details of the mandatory charge that the Government applies to customers closing accounts with a bank (details supplied); if a charge is in place, the reason this is the case in this particular situation; and if he will make a statement on the matter. [18217/22]

Amharc ar fhreagra

Freagraí scríofa

In the absence of more complete information, and in light of the fact that the annual stamp duty charge for a credit card account is €30, I must assume that the "accounts" referred to in this question are credit card accounts. No stamp duty charge of that amount applies in respect of other types of bank account.

I am informed by Revenue that there is no Government charge for closing a credit card account. However, and for the reason outlined above, on the assumption that the question relates to section 124 of the Stamp Duties Consolidation Act 1999 which provides for an annual stamp duty at the rate of €30 to be charged on credit card accounts, I can confirm that the charge under section 124 is applied where a credit card account is maintained with a financial institution at any time during the 12-month period ending on 1 April in any year.

The €30 charge applies to the account and not to the card - the number of cards issued to that account are not relevant. Stamp duty is charged to the account on 1 April each year in arrears unless the account is closed during the year. If the account is closed during a year and the card is cancelled, this will result in the €30 charge to stamp duty being applied on the date of closure.

Where an account is closed and a stamp duty charge is applied, the financial institution should provide the account holder with a letter of closure, provided he or she has paid the €30 charge. In such circumstances, if the account holder opens a new account with another financial institution, he or she will not have to pay a stamp duty charge on the 1 April following the account closure if he or she presents this letter to the new financial institution.

Revenue has published guidance on stamp duty on credit and other financial cards on its website, which is available at Stamp Duty on financial cards (revenue.ie).

On the wider matter of bank charges, the charging of fees is a commercial decision for regulated entities, within the parameters of the regulatory framework. This requires, under Section 149 of the Consumer Credit Act, 1995 (as amended), that credit institutions must notify the Central Bank if they wish to:

- Introduce any new customer charge for providing certain services; or

- Increase any existing customer charge for providing certain services.

As Minister for Finance, I do not have a direct function in the operations of any bank. Although the State is a shareholder in some of the banks operating in the State, they must be run on a commercial and independent basis.

I hope this clarifies the matter.

Economic Sanctions

Ceisteanna (254)

Peadar Tóibín

Ceist:

254. Deputy Peadar Tóibín asked the Minister for Finance the investigations that are being undertaken by his Department, the Central Bank or an agency under his authority into the potential circumvention of the sanctions against Russia in the International Financial Services Centre and elsewhere; if there are investigations underway; and if so, the number of investigations. [18263/22]

Amharc ar fhreagra

Freagraí scríofa

It is important to note that all natural and legal persons in the State are obliged to comply with EU sanctions measures. Regulations issued at EU level have direct effect across the Union. A breach of such a sanction is a criminal offence.

Sanctions have been in place against Russian individuals and entities due to Russia’s actions in relation to Ukraine since 2014. These have been updated and added to several times since late February 2022.

The Department of Finance does not undertake investigations into the potential circumvention of sanctions.

I am informed by the Central Bank of Ireland that it cannot comment on specific supervisory engagements but the Bank continues to engage with firms with respect to financial sanctions. Supervisors of regulated entities (including virtual asset service providers that are providing services but not yet registered) emailed firms to notify them of the increased sanctions and provided firms with a link to the Bank's dedicated page on these sanctions.

The Central Bank also took the opportunity to remind firms of the necessity to have processes in place to operationalise these sanctions as they pertain to the business and that firms should be monitoring the situation closely given the potential for further sanctions. Firms were reminded of their obligation to ensure that they have robust controls in place, including policies and processes, to ensure that risks to the business are effectively identified, monitored and mitigated on an ongoing basis. Supervisors were provided with sanctions related materials to assist in their engagement with firms, and there has been a significant focus on Ukraine related issues in supervisory engagements.

In banking, there was an AML sanctions questionnaire issued to Significant Institution and Less Significant Institution firms on the week ended 11 March, and all responses have been received with no significant areas of concern identified by the supervision teams. The Central Bank will continue to engage with its European peers and regulated entities to ensure that there is good awareness of the sanctioning regime and the need for firms to continue to operationalise those sanctions.

Tax Reliefs

Ceisteanna (255)

Darren O'Rourke

Ceist:

255. Deputy Darren O'Rourke asked the Minister for Finance if he has examined expanding the cycle-to-work scheme to college students; the estimated cost of such an expansion; and if he will make a statement on the matter. [18330/22]

Amharc ar fhreagra

Freagraí scríofa

Section 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the Cycle-to-Work scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee.

Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment.

Where a bicycle or safety equipment is purchased under the Cycle-to-Work scheme or through a salary sacrifice arrangement certain conditions must be met, including:

- The exemption applies to the first €1,250 of expenditure incurred by the employer in obtaining a bicycle and related safety equipment. This exemption limit is increased to €1,500 for pedelecs or ebikes and related safety equipment. Employers may incur costs in excess of these limits, but any such excess will not qualify for the exemption and will be liable to tax.

- The bicycle and related safety equipment must be new and must be purchased by the employer.

- The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.

- An employee or director can only avail of the Cycle-to-Work scheme once in any 4 year period. A salary sacrifice arrangement is subject to the same time limits and any salary sacrifice arrangement entered into must be completed within a 12 month period.

The Cycle-to-Work scheme is only applicable where the bicycle and safety equipment is provided by an employer to either a director or someone in its employment. Thus, where college are employed in a full or part time capacity and their employer is willing to participate in the Scheme, they may participate in the scheme. However, where the employer-employee relationship does not exist, such individuals can’t qualify for the scheme.

The Cycle-to-Work scheme operates on a self-administration basis. Relief is automatically available provided the employer is satisfied that the conditions of its particular scheme meet the requirements of the legislation. There is no notification procedure for employers involved. This approach was taken with the deliberate intention of keeping the scheme simple and reducing administration on the part of employers. Therefore, the cost of the existing scheme and of any potential changes can only be estimates.

Further comprehensive guidance can be found on Revenue’s website.

While the scheme is kept under review by my officials, I have no plans at present for its expansion.

Credit Unions

Ceisteanna (256)

Michael Collins

Ceist:

256. Deputy Michael Collins asked the Minister for Finance if there is an enhanced and more ambitious policy framework being planned or in discussion in relation to an issue (details supplied); and if he will make a statement on the matter. [18343/22]

Amharc ar fhreagra

Freagraí scríofa

This Government recognises the importance of credit unions. The Programme for Government contains commitments to:

- Review the policy framework within which Credit Unions operate;

- Enable and support the Credit Union movement to grow;

- Support Credit Unions in the expansion of services, to encourage community development; and

- Enable the credit union movement to grow as a key provider of community banking in the country.

With regard to fulfilling the commitments for credit unions in the Programme for Government, the review of the Policy Framework is in its final stages following a recent engagement session with all the credit union representative bodies on the emerging proposals. The proposals being considered aim to better position credit unions to grow as a key provider of community banking

In developing these proposals, Minister Fleming and officials have conducted extensive stakeholder engagement, meeting with the representative bodies, collaborative ventures, service providers, the Credit Union Advisory Committee, the Registrar of Credit Unions and individual credit unions. The information gained from this engagement has helped inform the proposals which will be considered by Government shortly.

Mortgage Interest Rates

Ceisteanna (257)

Michael Healy-Rae

Ceist:

257. Deputy Michael Healy-Rae asked the Minister for Finance if the thousands of mortgage holders who are customers of a bank (details supplied) will be offered the best available rate, whether it be fixed or variable; if they will be better than the rates being offered to new customers by another bank; if the other bank will make it seamless for the customers in that they will not have to be supplying endless paperwork; and if he will make a statement on the matter. [18351/22]

Amharc ar fhreagra

Freagraí scríofa

The Central Bank has indicated that, in the event of a regulated entity withdrawing from the Irish market, the withdrawal must be undertaken in accordance with the provisions of Irish financial services legislation, including the Central Bank’s codes of conduct and specifically, Provision 3.11 of the Consumer Protection Code 2012.

Under Provision 3.11 of the Code, a regulated firm that intends to cease operating, merge with another, or to transfer all or part of its regulated activities to another regulated firm, must:

- provide affected consumers with at least two months’ notice to enable them to make alternative arrangements if they so wish;

- ensure all outstanding business is properly completed prior to any transfer, merger or cessation of operations; or, in the case of a transfer or merger, inform customers as to how continuity of service will be provided following a transfer or merger; and

- in the case of a merger or transfer of regulated activities, inform customers that their details are being transferred to the other regulated entity, if that is the case.

More generally in relation to loans, where they are sold or transferred to another regulated entity, the consumer protections in place for borrowers will not change. In addition, the legal rights and terms and conditions of a customer’s mortgage agreement, including in relation to the interest rate, remain in place following a loan sale/transfer.

It is also 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).

The Central Bank has also advised that it’s supervision of any bank that withdraws from the market will be focused on ensuring that its customers are treated fairly, that it remains in compliance with the letter and spirit of regulatory requirements. The Central Bank has clearly communicated the requirement for a customer-focused approach to be taken in all aspects of their business throughout the period of change and that they ensure that customers understand what the withdrawal means for them.

Within the regulatory and contractual framework as outlined above, it is a commercial matter for individual banks and other lenders to set their lending interest rates. Neither I nor the Central Bank have a role in prescribing or setting interest rates on individual loans.

The Deputy may also wish to note that, on 25 June 2021, the Central Bank issued an industry letter regarding its consumer protection expectations in the changing retail banking landscape. These expectations reflect the Central Bank's assessment of possible risks to consumers during periods of change and reinforce previously communicated expectations, based on it's experience of prior events. The Central Bank also expects that by clearly outlining its expectations, this will inform regulated entities’ actions and decisions to ensure that customers’ interests are protected and potential risks are mitigated.

Tax Data

Ceisteanna (258)

Cian O'Callaghan

Ceist:

258. Deputy Cian O'Callaghan asked the Minister for Finance the cost of, or the revenue that is foregone by, the capital gains tax exemption provided under section 604A of the Taxes Consolidation Act 1997, which provides relief from capital gains tax for certain properties; and if he will make a statement on the matter. [18372/22]

Amharc ar fhreagra

Freagraí scríofa

The Deputy will be aware that section 604A of the Taxes Consolidation Act, 1997 provides for relief from Capital Gains Tax (CGT) on the disposal of certain investment property purchased between 7 December 2011 and 31 December 2014, where that property is held for 7 years. The gain attributed to that 7-year period will not attract CGT. However, where the property is held for more than 7 years, relief is reduced in the same proportion that the period of 7 years bears to the period of ownership, so if the property is held for 9 years, 7/9 of the gain will be relieved.

This relief was amended in Finance Act 2017 for disposals made on or after 1 January 2018, to provide that gains on land and buildings acquired between 7 December 2011 and 31 December 2014 are not chargeable gains where the land or buildings are held for at least 4 years and up to 7 years from the date they were acquired.

I would note that the structure of the relief means that 2018 is the first year that this relief could be claimed by taxpayers.

I am advised by Revenue that detailed statistics on the relief from Capital Gains Tax under section 604A of the Taxes Consolidation Act 1997 are published on Revenue’s website at: www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/relief-on-disposal-of-certain-land-or-buildings.pdf.

These statistics include the cost of the relief and other information.

Tax Data

Ceisteanna (259)

Cian O'Callaghan

Ceist:

259. Deputy Cian O'Callaghan asked the Minister for Finance the cost of, or the revenue that is foregone under, section 705G of the Taxes Consolidation Act 1997, which provides that a REIT is not chargeable to corporation tax or income from its property rental business; and if he will make a statement on the matter. [18373/22]

Amharc ar fhreagra

Freagraí scríofa

A Real Estate Investment Trust (REIT) is a quoted company used as a collective investment vehicle to hold rental property. The purpose of the REIT regime is to allow for a collective investment vehicle which provides a comparable after-tax return to investors as direct investment in rental property, by eliminating the double layer of taxation at corporate and shareholder level which would otherwise apply.

In order to ensure distribution of profits for taxation at the level of the shareholder, REITs are obliged to distribute at least 85% of property profits annually to shareholders. REITs are obliged to operate Dividend Withholding Tax (DWT), at the standard rate of 25%, on distributions to shareholders. The DWT is available as a credit against the shareholder’s tax liability.

For Irish investors:

- Individuals are liable to tax at their marginal rates on dividends received, with credit for the DWT deducted;

- Corporates will be liable to tax at 25%, with credit for DWT; and

- Institutional portfolio investors are liable to tax on REIT dividends at 12.5%, this being the rate generally applicable to trading income.

Foreign investors are also subject to the DWT at 25%. Those resident in treaty-partner countries may be able to reclaim some of this DWT under the relevant tax treaty. Tax treaty rates on dividends vary from treaty to treaty, but the most common rate applicable to small shareholdings would be 15% - this means that Ireland would retain taxing rights of 15% on dividends paid from Ireland.

Excluded investors, such as pension schemes or charities investing in the REIT, 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 in view of their own purposes or objectives.

To avoid a double layer of taxation, a REIT (or a group REIT) is ordinarily exempt from corporation tax on income from its rental property business and chargeable gains accruing on disposal of assets of their property rental business.

Due to Revenue’s obligation to protect taxpayer confidentiality, and there being fewer than 10 REITs, it is not possible to provide an estimate of the net tax revenue which would accrue if REIT companies were subject to corporation tax, rather than the current regime of taxation at the level of the shareholder.

However, REITs are required to be publicly listed companies and therefore publish information such as annual accounts online, which may be of assistance to the Deputy.

In addition to the above, it should be noted that REITs are not entirely exempt from tax and there are a range of circumstances in which a REIT may accrue a direct tax liability, including the following:

- Any non-rental property profits are subject to corporation tax and capital gains tax in the normal manner.

- As REITs are designed to encourage long term property investment, there are anti-avoidance rules to prevent REITs being used as property development vehicles. If a REIT acquires an asset and following that acquisition, develops the asset to such an extent that the cost of development exceeds 30% of the market value of the asset at the time the development commenced, and the asset is then disposed of within 3 years of development, the corporation tax and capital gains tax exemptions will no longer apply.

- To prevent indefinite deferral of tax at the shareholder level, a REIT will be charged to corporation tax under Case IV of Schedule D if it distributes less than 85% of its annual property income.

- A REIT (or a group REIT) will also be charged to corporation tax under Case IV of Schedule D if it pays a dividend to a shareholder who holds more than 10% of its shares or if, in computing the profits available for distribution, it has taken a deduction for any amount which is not wholly and exclusively incurred for the purposes of:

- the property rental business, where it relates to the property rental business of the REIT, or

- the residual business where it relates to the residual business of the REIT.

I am informed by Revenue that gross REIT DWT collected in 2021 amounted to €15,361,133. Revenue processed €3,218,997 of REIT DWT refunds in 2021.

Real Estate Investment Trusts

Ceisteanna (260, 261, 262)

Cian O'Callaghan

Ceist:

260. Deputy Cian O'Callaghan asked the Minister for Finance the total gross amount of assets held by Irish real estate funds for 2016 to 2021, as reported to the Revenue Commissioners on form IREF - part 3 - schedule of IREF assets; and if he will make a statement on the matter. [18374/22]

Amharc ar fhreagra

Cian O'Callaghan

Ceist:

261. Deputy Cian O'Callaghan asked the Minister for Finance the total amount of revenue for Irish real estate funds as included in their financial statements which are required to be filed with the Revenue Commissions for each accounting period under section 739FA of the Taxes Consolidation Act 1997; and if he will make a statement on the matter. [18375/22]

Amharc ar fhreagra

Cian O'Callaghan

Ceist:

262. Deputy Cian O'Callaghan asked the Minister for Finance the reason that the accounts of Irish real estate funds are not made publicly available; and if he will make a statement on the matter. [18376/22]

Amharc ar fhreagra

Freagraí scríofa

I propose to take Questions Nos. 260 to 262, inclusive, together.

The questions all relate to the Irish Real Estate Fund (‘IREF’) regime.

An IREF is an investment undertaking which derives 25% or more of its value from IREF assets. An investment undertaking may also be regarded as an IREF where it is reasonable to consider that the main purpose or one of the main purposes of the investment undertaking is to acquire IREF assets or to carry on an IREF business.

‘IREF assets’ are defined in section 739K Taxes Consolidation Act 1997 as including one or more of the following:

(a) relevant assets such as land (including buildings) in the State;

(b) shares in a Real Estate Investment Trust;

(c) shares that derive their value or the greater part of their value from relevant assets;

(d) certain specified mortgages; or

(e) units in an IREF.

I am advised by Revenue that the total gross value of IREF assets held by IREFs for the period 2016 – 2020, extracted from the data submitted in the IREF WHT returns, is as detailed below. Complete 2021 data will not be available until after 30 July 2022, that being the latest filing deadline for information relating to accounting periods ending in 2021.

Total Assets as per the IREF WHT Returns Filed

-

2017 1/1/17 – 31/12/17 €M

2018 1/1/18 – 31/12/18 €M

2019 1/1/19 – 31/12/19 €M

2020 1/1/20 – 31/12/20 €M

Gross Assets

7,929

7,501

18,417

20,293

In relation to the total amount of revenue generated by IREFs in the period 2018 to 2020, I am advised by Revenue of the following indicative amounts, extracted from the financial statement filings:

Total Revenue as per the Financial Statements Filed:

-

20181/1/18 – 31/12/18 €

20191/1/19 – 31/12/19 €

20201/1/20 – 31/12/20 €

Total Revenue

825,737,497

997,275,473

1,487,523,446

Revenue advise that the figures provided above for total revenue are for indicative purposes only, they have not been subject to full verification and should therefore be interpreted with caution. The total revenue is gross (i.e. before relevant expenses incurred) and is comprised of income from various sources, the primary source is rental income. The Revenue figure also includes “other income” which in some instances includes development contract income. Further, the above amounts exclude realised and unrealised gains booked as income in the financial statements.

In relation to Dail Question No. 262 (Ref: 18376/22), IREFs are obliged to electronically file financial statements with Revenue for each accounting period (under the Investment Undertaking Electronic Account Filing Requirements Regulations 2018 SI No. 368 of 2018). This information, once provided to Revenue, is taxpayer information which, for confidentiality reasons, cannot be shared by Revenue.

Irish real estate funds, where regulated, are authorised by the Central Bank of Ireland (“Central Bank”) in accordance with the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (“AIFMD”) AIFM Regulations and the Central Bank AIF Rulebook.

Qualified Investor Alternative Investor Funds (“QIAIFs”) can be established as an investment company, an ICAV, a unit trust, a common contractual fund or an investment limited partnership and will be authorised under the domestic legislation pertaining to the selected corporate structure.

The AIF Rulebook details the supervisory requirements applicable to Irish authorised AIFs and includes, inter alia, criteria on the content and frequency of reporting obligations for these funds. Chapter 2 of the AIF Rulebook sets out the requirement for QIAIFs to publish an annual report for the consumption of the unit holders for each financial year. The QIAIF shall prepare and submit to the Central Bank a set of accounts (whether an interim report or an annual report) within 12 months of the launch date and publish it within 2 months if an interim report or 6 months if an annual report. The Qualifying Investor AIF shall, on request, supply unitholders with copies of the annual reports and half-yearly reports (if any) free of charge.

Alternative Investment Fund Managers (“AIFM”) which are authorised by the Central Bank under the AIFM Regulations are required to prepare and submit half-yearly financial and annual audited accounts of the AIFM to the Central Bank. The half-yearly accounts shall be submitted within two months of the half year end and the annual audited accounts within four months of the year end, as per Chapter 3 of the AIF Rulebook.

Question No. 261 answered with Question No. 260.
Question No. 262 answered with Question No. 260.

Departmental Contracts

Ceisteanna (263)

Mattie McGrath

Ceist:

263. Deputy Mattie McGrath asked the Minister for Finance the cost of consultants to his Department in 2020, 2021 and to date in 2022; and if he will provide an outline of the role of each. [18887/22]

Amharc ar fhreagra

Freagraí scríofa

I can advise the Deputy that the amount my Department spent in respect of consultancy services in 2020, 2021 and to date in 2022 is outlined in tabular form below.

2020

Supplier

Amount

Description

William Fry

€228,459.62

Legal Advice

Indecon

€133,393.50

Economic Consultancy

Arthur Cox

€111,183.27

Legal Advice

Fitzpatrick Associates

€72,539.50

Bi-annual Credit Demand Survey

McCann Fitzgerald Solicitors

€52,034.16

Legal Fees

RSM Ireland Business Advisory

€30,442.50

Review of cost & outcomes of large scale liquidations/bankruptcies

KPMG

€24,600.00

Financial Advice re HBFI

Lilley Ventures T/A Workproducts

€17,990.91

eDiscovery software licence

A & L Goodbody Solicitors

€15,990.00

Legal Advice

Social Finance Foundation

€7,700.00

Research re the borrowers of licensed moneylenders, in particular the home collection sector

Daniel J. Edelman Ireland Ltd

€4,878.99

Provision of specialist advice on using social media in overseas markets to promote Ireland for Finance

2021

Supplier

Amount

Description

Behaviour & Attitudes

€68,880.00

SME Credit Demand Survey

Arthur Cox

€11,372.58

Legal advice

Conan McKenna

€6,650.00

Review of Domestic Implementation of Restrictive Measures (Sanctions)

Dept. of Foreign Affairs

€64,633.53

Ireland's approved contributions to the OECD (Part II programme- FATF) for 2021. FATF is the Financial Action Task Force on Money Laundering.

KPMG

€36,900.00

Fee in connection with lot 2 - General financial advice - Home Building Finance Ireland - Market Economy Investor Principle

State Claims Agency

€726.00

Counsel Fees

William Fry

€142,425.97

Legal Advice

2022

Supplier

Amount

Description

Mazars

€40,468.84

Professional services - Provision of executive search services for the role of Tier 3 Temporary Tax Appeal Appeals Commissioners

William Fry

€2,243.52

Legal advice

Dept. of Foreign Affairs

€58,171.00

Ireland's approved contribution to the OECD (Part II programme- FATF) for 2022. FATF is the Financial Action Task Force on Money Laundering

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