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So here we go with Budget 2018. What does it hold for you?

Housing

A total of €1.83 billion has been allocated to housing in Budget 2018, with 3,800 social houses to be built by local authorities and approved housing bodies.

The Housing Assistance Payment Scheme will increase by €149m, enabling an additional 17,000 households to be supported and accommodated next year.

Funding for homeless services will increase by €18m to more than €116m.

The Government has said 4,000 social housing homes will be delivered next year through the Social Housing Current Expenditure Programme.

An extra €500m for the direct building programme will see 3,000 additional new build social houses by 2021.

€750m is to be made available for commercial investment in housing finance.

The level of stamp duty on commercial property transactions will rise from 2% to 6% from midnight.

The vacant site levy will increase from 3% in the first year to 7% in second and subsequent years.

new house-building entity to boost construction has been announced.

More infoBudget 2018
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For an employee working on minimum wage on a 40 hour week, the consequences for an employer are:
Paying out an extra €12 per week in wages
Increased employers PRSI payment of €9.61.
Total extra cost per week: €21.61
Employers PRSI rises from 8.5% to 10.75% on earnings over €376 and the proposed increase in the hourly minimum wage to €9.55 will mean that an employee working a 40 hour week will exceed that threshold so the higher PRSI rate of 10.75% will start to apply for employers.
The figures contained in the Low Pay Commission Recommendations for the National Minimum Wage 2017 demonstrate that the PRSI cost for an employer for an employee working 39 hours will be €31.66 rising to €41.06 if working a 40 hour week and €43.12 for an employee that works 42 hours.
These extra costs will need to be budgeted for by employers in time for January 2018 if the recommendation to increase the national minimum wage to €9.55 is implemented.
 
 
The information contained above is for illustrative purposes only and should not be deemed as professional advice. Please contact a taxation professional before taking any steps to change how you operate your business
 
 
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Brexit

Brexit is the withdrawal of the United Kingdom from the European Union. On 29th March 2017, British Prime Minister, Theresa May, triggered Article 50 starting the process. There is a 2-year window for negotiations on how a range of issues will be dealt with. For example inter trade, freedom of movement, EU citizens living in UK, UK citizens living in EU and of course border between Northern Ireland and The Republic of Ireland are all details that need to be worked out. This is only a sample selection of what will be discussed. There are also a range of financial issues that need resolution.


How does Brexit affect your business?

I have heard several buinesses talk about I only trade in Ireland so it doesn’t really affect me.

WRONG.

Every single business, no matter what industry, will be affected by Brexit. 80% of the UK’s economy comes from providing services, so while you may not buy from or sell to the UK, somewhere along the line your raw materials will pass through. This creates the risk of increased transport costs, Export/Import costs, and of course, exchange rate issues.

Brexit won’t happen until 2019 so I have loads of time to plan

Again, this is incorrect. Brexit proofing your business NOW gives you the opportunity to be ahead of the game, to have a strategy to ensure you have made a contingency plan for the “doomsday, worst case scenario” Let me be clear, No one knows, 100% what will come from the plan, or if article 49 will be triggered, bringing the UK back into the fold. But based on the information that is available, if you know where to look, and what you are looking for, at very least you will have a contingency plan that could actually BOOST your business, and open new avenues of trade.

What should I do?

If you have the time, and wherewithal to understand the “techspeak” get on line, and do as much research as you can to find exactly how your industry will be affected. If you don’t want to take time out from your business (and let’s face it, none of us have that time) talk to an expert who can give you industry specific information.

Devlin and Associates have run a number of workshops around the country giving both the basics (group setting) and more in-depth look based on your industry (one to one) We offer a range of packages where we can alleviate the fear that Brexit holds for many. We regularly communicate with both the UK and EU negotiating teams sharing fears, and getting answers to what might happen. We are in a unique position, as we communicate with both sides, to draw conclusions, and to prepare for the overall outcome.  

If you would like to talk to us about your business then call 0831086692 or email This email address is being protected from spambots. You need JavaScript enabled to view it. with the subject BREXIT.

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Was delighted to be invited to appear on The Business Show with Colm Colgan.

 

Ruairi Devlin from www.DevlinandAssociates.ie talks to Colm on Business and Enterprise from Drumlinmedia.com on Vimeo.

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The U.K.’s decision to leave the EU (“Brexit”) will inevitably cause a period of great uncertainty for businesses and individuals. 

Although the Irish economy is not dependent on the U.K., the U.K. remains one of Ireland’s closest economic partners. Given that much of the economic activity between EU members is governed by EU rules, any change in the relationship between the U.K. and the EU is also likely to impact on the relationship between the U.K. and Ireland. 

This period of economic uncertainty will have an impact for businesses, including potential regulatory and legal implications, together with tax, financing, supply chain and foreign exchange implications. This article focuses on the potential tax implications for investors and taxpayers in Ireland, particularly for those where there is a close business relationship with the UK. 

I. Potential Tax Effects

One of the difficulties of determining the implications of leaving the EU is that there are a number of alternatives to full EU membership and much will hinge on the nature of the Brexit negotiations. These negotiations are likely to take at least two years from the date Article 50 of the Lisbon Treaty was invoked, so there will be no immediate change as EU laws and treaty obligations continue to have effect during this secession process.

From a tax perspective, the vote in favor of leaving the EU will have little, if any, immediate impact on either indirect or direct taxes. As the U.K. will remain an EU Member State for two years after Article 50 is invoked (or longer if there is unanimous agreement of the other 27 Member States to extend the period of negotiation), few tax changes are likely to occur in the short term. The scope of any future tax changes will ultimately be determined by the outcome of these negotiations. However, as most indirect taxes (e.g. VAT, Customs Duty, and Excise Duty) are EU-based taxes, it is likely that these will be impacted more by Brexit than direct taxes. 

II. Indirect Taxes

A. Customs Duty

At present, Customs Duty is almost entirely governed by EU Directives and Regulations. Following Brexit (and assuming that a model is not chosen which would allow the U.K. to remain in the EU/EEA customs union), control of Customs Duty would revert to the U.K.. Therefore, the U.K. would need to introduce domestic law to replace the EU Directives, Regulations and Council Decisions that currently govern Customs Duty. It is likely that the most significant change to Customs Duty following Brexit will be that all trade between the U.K. and the EU (including Ireland) will be recognized as imports and exports. Unless a free-trade agreement with no or low customs can be negotiated, duty will become payable on imports and exports between Ireland and the U.K..  

As a result, compliance formalities will arise on both entry and exit of the goods i.e. both at the Irish side and at the U.K. side. As can be appreciated, this may result in some impediment to trade as well as extra compliance costs. The practical implementation of any such changes would obviously be of importance.

B. Excise Duty

Since Excise Duty is not a fully harmonized tax, we would not expect Brexit to result in any material changes to excise rates in the U.K. market. However, as with Customs Duty, movements of excise goods within the EU will no longer be treated as “intra-EU” but instead will be recognized as imports and exports. This could potentially result in extra compliance costs as a result of new procedures. 

C. VAT

With respect to the day-to-day VAT matters for businesses, the practicalities of cross-border transactions will change following Brexit. Invoicing and reporting protocols, including processes and systems, will be revised in respect of cross-border supplies and intra-EU transactions with the U.K. will become “imports” and “exports”. Although, we would not expect there to be any change in the ultimate VAT costs of imported goods, an import VAT charge may become payable up-front at the point of importation. This would result in a cash flow cost and also increased administration/compliance costs for Irish companies trading with the U.K.. 

III. Direct Taxes

Unlike indirect taxes, direct taxes are not expressly dealt with by the EU treaties. Direct taxes are solely an area of national competency, which only must be exercised in accordance with the EU treaties. Therefore, direct taxes are less likely to be directly affected by Brexit.

A. EU Directives

The EU Treaties authorize the EU Council to issue directives to aid intra-EU trade and investment, as well as administrative co-operation. The directives require unanimity from each Member State before the Member State is required to implement it into national law.  In Ireland, the EU directives which have been transcribed into domestic law are as follows: 

  • Parent/Subsidiary Directive: eliminates withholding taxes on dividends paid to parent companies in EU Member States;
  • Mergers Directive; defers capital gains tax which would otherwise accrue on certain mergers, divisions, transfers of assets and exchanges of shares between companies from different EU Member States;
  • Interest /Royalties Directive: eliminates certain withholding taxes on certain interest and royalty payments between companies from different EU Member States. 

In the majority of cases, the domestic legislation in Ireland into which the directive has been transposed is drafted in terms that simply refer to “Member States” without naming specific jurisdictions.  Consequently, as the provisions are formulated by reference to EU membership, presumably U.K. business will automatically cease to benefit from the preferential treatment offered by Ireland under these directives from the moment it exits the EU.  Conversely, the U.K. will not be required to introduce into its domestic legislation the various anti-tax avoidance measures proposed by the recently enacted Anti-Tax Avoidance Directive which will take effect from 1 January 2019, assuming that it is no longer a member of the EU at that stage.  However it should be noted that the U.K.  has already published legislation to limit interest deductions and to address hybrid mismatches

Notwithstanding the non-application of the above directives which provide preferential treatment by Ireland to payments made to EU Member States, much of Ireland’s tax law has been drafted in such a way as to aid international trade and investment between overseas parties located both in the EU and in a tax treaty country.  For example, withholding tax should not apply on dividend payments from Ireland where the recipient is located either in the EU or in a tax treaty country (provided certain other conditions are met). Therefore, although it would be necessary to review the particular circumstances, it is likely that domestic exemptions would continue to apply to payments made by an Irish resident company to a U.K. resident company.

B. Tax Treaty

From an international perspective, the ability to benefit from the Ireland/U.S. tax treaty may be somewhat restricted under the Limitation of Benefits provision (unless the U.S. issues a protocol), where an Irish company is ultimately owned by EU residents that are based in the U.K..

C. Domestic Legislation—Group Relief

As noted above, most of Ireland’s tax legislation is drafted to provide relief to companies resident in either the EU or a tax treaty country.  

Group relief is available for losses where a qualifying group exists. The definition of what constitutes a qualifying group for loss relief purposes was extended in recent years to include companies resident in tax treaty countries.  Under existing legislation, a qualifying group should exist for loss relief purposes where all the relevant companies are resident in the EU, EEA or a country with which Ireland has a double tax treaty and therefore there should be no impact by Brexit. However, where there is an Irish branch of a U.K. company, loss relief would not be available to be claimed from or surrendered to an Irish resident group company by that Irish branch

Where there is a transfer of assets inter-group, these assets can broadly only be transferred on a tax-neutral basis where both entities are within a qualifying Capital Gains Tax (“CGT”) group. However, in order to be in a qualifying CGT group, all entities must be EU resident or resident in an EEA state which has a double tax agreement. Therefore, assuming that the U.K. does not get EEA status, if there is a U.K. resident holding company of two Irish resident companies, this could have the effect of breaking the group for Irish CGT relief purposes. Consideration would then need to be given to any potential clawback of any previous CGT intra-group relief claimed on prior transactions as well as the impact on future transactions.

IV. Talent Considerations

Talent has become one of the key assets of most businesses. As a result of the U.K.’s decision to exit the EU, businesses will need to give consideration to a number of issues relating to their talent, including immigration, tax and social security and mobility policy implications

Tax costs associated with assignees working in the U.K. (or vice-versa) will need to be evaluated and policies, systems and processes will need to be reviewed to ensure that they are fit for purpose going forward.

A. Immigration

Until such time as the U.K. formally withdraws from the EU, there is no change to the current freedom of movement as between U.K. and EU citizens. However, the full impact of Brexit on immigration matters will not be clarified until a finalized deal on free movement of people is negotiated between the U.K. and the EU as part of the withdrawal process. Based on the comments to date, it seems unlikely that free movement of people can continue in its current form post Brexit. 

So far, the U.K. government has indicated that EU nationals currently resident in the U.K. will be permitted to remain post-Brexit (subject to eligibility for permanent residence) but it can be expected that EU nationals will, at some point, be required to obtain employment permits/visas in order to live and work in the U.K.. Similarly, U.K. nationals will be subject to an employment permit regime in EU Member States. Accordingly, it is prudent for employers to carry out audits of their current workforce demographic in order to ascertain their current EU populations in the U.K. (and vice versa) and how the proposed Brexit scenarios will impact these populations.

There will also be immigration implications which are Irish-specific in relation to the Common Travel Area (“CTA”) and the current Visa Waiver Programmes between U.K. and Ireland. At present, there is a CTA made up of the U.K. and Ireland. It is uncertain as to whether the CTA between Ireland and the U.K. in its current form (i.e. border free movement) will continue post-Brexit. However, a future version of this may be discussed during the negotiation period.

V. Foreign Direct Investment (“FDI”)

EU membership has played a key role in attracting FDI to the U.K.. The U.K. outside the EU is likely to be considered less attractive by some companies as a FDI location because of uncertainty and reduced access to the EU Single Market.  However, other attractive advantages of the U.K., such as its large population, will remain.

The U.K.’s decision to leave the EU may present potential opportunities for Ireland to attract FDI projects, including some relocation of FDI from the U.K.; however the extent of such opportunities is not yet clear. In addition to Ireland becoming the only English-speaking country in the EU, it remains well placed in offering the unique combination of a sustainable low-tax regime, certainty on EU membership, access to top talent (both from Ireland and the EU) and access to the EU Single Market. 

From a financial services perspective, a critical issue for financial services companies is the ability to passport their operations from a regulatory perspective seamlessly from one EU location to another, under EU regimes. Given that these passporting rights may be lost post-Brexit, some companies are now considering the need to relocate some U.K.-based operations to ensure continuity of service. Ireland has proven to have the right infrastructure to support U.K. financial services businesses considering expanding or establishing an EU footprint. 

To date, Ireland’s advantage, relative to the U.K., in attracting FDI is its more competitive corporate tax rate. Ireland’s Minister of Finance has reinforced the Government’s commitment to the 12.5% rate of tax and Ireland’s place with regard to global tax reform saying “Ireland continues to play an important role in international tax reform. It is important that we meet the best international standards, while at the same time retaining our sovereign taxing rights and our right to compete on a level playing field. Ireland will retain its 12.5% corporate tax rate which is transparent and there for all to see”.  In addition, as noted above, much of Ireland’s direct tax legislation is likely to remain unaffected by Brexit and therefore, this provides a degree of certainty for businesses looking to invest in Ireland and benefit from its EU membership.

Over the coming months, the U.K. authorities are likely to try to provide reassurance and bolster public and business sentiment. Indeed, it has already been indicated that in order to offset any slowdown in the U.K. market, the U.K. will actively pursue tax strategies to attract and retain FDI.  In particular, a further potential reduction in the corporate tax rate to 15% has been mentioned.  Although this may change, given the new U.K. Government, as it has not been reiterated by the new Chancellor of the Exchequer, Philip Hammond. 

In summary, the vote in favor of the U.K. leaving the EU will have little, if any, immediate impact on either indirect or direct taxes in Ireland. The scope of any future tax changes will ultimately be determined by how the U.K. negotiates its exit, however it is expected that any tax impact will mainly relate to indirect taxes. In terms of FDI, a strong focus must be placed on ensuring that Ireland continues to have a pro-business tax regime which is competitive with what is on offer in the UK. This, coupled with Ireland’s political stability and access to the EU Single market will ensure that Ireland remains a key location for FDI. 


The Views in this post are those of Ruairi Devlin ACFE. They are for guideline purposes only as some businesses could be affected in other ways not listed above. Before undertaking any changes to your business you should seek professional advice.

© Ruairi Devlin 2017

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I am probably going to be a little bit controversial in this post, as I am throwing my views re #AppleTax out there.
Firstly to be clear I have no connection with Apple (I generally don't even like their products).
By minimising their liability Apple did nothing wrong. ANYONE can apply to Revenue and ask for advice on minimising their liability. Less than 2% actually do. Every day while working with my clients I am looking at where savings can be made. I won't use the reckless ideas of some accountants (Your dog is a business expense because he can bark and is therefore an alarm system) but I will put as much effort into what people are not claiming for as looking at what they are.
More infoThe Apple Effect
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The Start Your Own Business Scheme Explained

 

The scheme provides relief from Income tax for long term unemployed people who start a business. It is available from the 25th October 2013 to the 31st December 2016.

Who can avail of it?

Long term unemployed individuals who start a new business.

They must be unemployed for 12 months or more before starting the business.

WHAT IS THE MAXIMUM RELIEF THE SCHEME CAN PROVIDE?

A maximum relief from Income Tax of €40,000 per year for a period of two years.

 

 

Who qualifies for the scheme?

Any person who has been out of work for twelve months or more, and

during that time were in receipt of any of the following:

  • Crediting contributions
  • Jobseeker’s allowance
  • Jobseeker’s benefit
  • The one-parent family payment
  • Partial capacity payment
 

Do training courses and schemes apply?

If you took part in training courses during your twelves months plus of unemployment, they will be treated as part of the period of unemployment.

Examples of valid training courses:

  • FÁS training courses
  • Community Employment Schemes
  • Job Initiative
  • Back to Education Schemes
  • What are the restrictions?
 

What are the restrictions?

  • The business must be set up between the 25th of October 2013 and the 31st of December 2016.
  • It must be set up by a person that qualifies for the relief.
  • The business must be new – it cannot be inherited or bought.
  • It must not be registered as a company i.e. it must be unincorporated.
 

How do I apply for the scheme?

Complete the relevant section of your annual Income Tax Return form.

The relief only applies to Income Tax – not USC and PRSI.

 

How do I calculate the relief?

The calculation depends on when you started your new business.

Revenue.ie explains how the relief is calculated below:

Year 1 – Profits are relieved from income tax once that they are less than the cap.

If you start your new business in January, the cap is €40,000. If you start it later in the year then the cap will be reduced proportionately according to the month you start. For example if you start your business in February, 11 months remain in the year so you can earn up €36,667 (being 11/12 of €40,000). If you start your business in December, one month remains in the year so you can earn up to €3,333 (being 1/12 of €40,000).

Year 2 -Profits are relieved from income tax once they are less than the €40,000 cap.

The accounts for the second year will always be for a period of 12 months so there is no need to consider reducing the cap.

Year 3 – Profits for any part of this year which fall within the first 24 months of business are income tax free once they are less than the cap.

The cap for year 3 is calculated as €40,000 x [months left to claim] / 12

Months left to claim = 24 – [Months claimed in Year 1] – 12

If you started your business in January, then you have used up the 24 months relief in Year 1 and Year 2 and there is no relief available for Year 3. If you started your business later in the year then there is still some relief available.

 

If we can help you with this or any other Revenue related matter please call us on 0831086692

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As time goes by we all grow complacent in our business. It happens. We don't plan it to, or set out to. So how can we prevent this.

One of the most effective ways is to apply the 7 P rule. 

The 7 P's are Proper Prior Planning Prevents Piss Poor Performance

More infoThe 7 P Rule
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So you have the idea for your new business, but are afraid what others might think of it, or worse still might steal it.


Ideas


What can you do?

  1. Find the passion that started your journey.
  2. Review, and if necessary, rewrite your business plan.
  3. Do your SWOT Analysis (strengths, weaknesses, opportunities and threats) on your business as it currently stands.
  4. On completing your analysis act on it. Match your strengths to your opportunities, look at your weaknesses and see how to develop them. Plan for your identifiable threats and how to combat them.
  5. Get a business development guide to help. Seeking professional advice can save you substantially more than it costs. Going in be clear on what, specifically, you need support in. 
  6. Look at those who have FAILED in your industry, for these are the people who will tell you what went wrong, as opposed to those who succeeded.
  7. I was reminded a long time ago that the man who never failed never tried. Failure only occurs when you give up. If plan A doesn't work there are plenty more letters in the alphabet.


    Dawn



    This email address is being protected from spambots. You need JavaScript enabled to view it. and let our years of experience assist your years of upcoming success.

 

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Welcome to Budget 2016. We will report through the afternoon as the reports come through on exactly what this budget means...


Who are the winners and who are the losers?

Stay with us as we crunch the numbers.


Budget2016

 So we are ready to go. Minister Howlin, unsurprisingly, in the red of Labour (tie wise), while the Finance Minister has gone for a grey/silver option.


Currently Sympathy being expressed following the tragadies in Carrickmines, and the murder of the Garda this weekend. 

May those who lost their lives rest in peace.


So we have begun

Michael Noonan is setting the scene. Ireland will be the fastest growing economy in Europe for the second year in a row.

1.97 Million to be in employment by end of 2015. 86,000 new jobs for 2016.

Unemployment to be down to 8% by end of 2016 from current 9.4%

Growth rate of 4.3%

50c on a packet of Cigarettes from midnight tonight. This will raise 61.4 Million in 2016.

€750 million revenue relieving provisions but no tax increase other than excise on cigs. 

USC threshold to increase to €13,000 

Rates of USC reduced as follows:

1.5% rate reduced to 1% - Applies on income up to 12,012

3.5% rate is reduced to 3% - Applies on income between €12,002 - €18,668

7% rate is reduced to 5.5% - Applies income between €18,668 - 70,044

Top rate of USC exemption for Medical Card Holders and over 70s retained 



Home Carer Tax Credit increased to €1000

Marginal Threshold up to €70,000 reduced to 49.5%

It was expected some 700,000 income-earners would be outside the USC net altogether

Self employed worker earning €40,000 will see a saving of €1,002 which is an increse of 3.5%

The tweaks to the tax brackets will mean a single-income family on €35,000 will take home an extra €57 a month, while those working full-time on minimum wage will have an extra €708 per year.

The inheritance tax threshold will also be raised from €225,000 to €280,000.


No change to VAT rates. 9% rate to continue.

Bank Levy extended to 2021

Self Employed Tax Credit of €550 PA for those who do NOT benefit from PAYE Tax credit.

Nama will build 20,000 units by the end of 2020. 90% of these will be in the Dublin area, and 75% of them will be starter homes.


Minimum wage increase from €8.65 to €9.15 from Jan 1st 2016

Commercial Motor tax to be simplified from the current 20 bands to a more straight forward 5 bands.

Free childcare from age 3 to age 5 and a half, or until they start school. This is to include ALL children with special needs.

Child benefit up to €140 per child.

Statutory Paternal leave for fathers of 2 weeks from next September.

Respite grant reinstated

Fuel Allowance increased to €22.50 per week for social welfare recipients

Family Income Suppliment increased by €5 for first child and €10 for second and subsequent children.

Old age pension up by €3 per week

Free GP care up to 12 years of Age

8,000 new places in community childcare

Funding for thereputic treatments 

€3 million for the development of after school services

€5 debit card charge scrapped to be replaced with a transaction charge of 12c per transaction up to a cap

Transaction limit on contactless card transactions increased to €30

Home Renovation Incentive extended to December 2016.


So the main points in brief

USC

  • The 1.5% rate of USC will be reduced to 1.0%
  • The 3.5% rate of USC will be reduced to 3.0%
  • The 7% rate of USC will be reduced to 5.5%
  • The entry point to the USC will rise from €12,012 to €13,000
  • It’s expected that some 700,000 earners will be outside the USC net completely

Minister Noonan says that these measures will equate to an increase in yearly income of one week’s wages.

Income Tax

  • Inheritance tax threshold increases to €280,000 from €225,000
  • Introduction of ‘tapered PRSI credit’ with a maximum level of €12 per week to alleviated the ‘step effect’ across a range of incomes
  • Capital gains tax for self-employed and entrepreneurs drops to 20% from 33%

Pensions

  • Pension fund levy has done its job apparently and is no longer needed. The 0.15% levy as it currently stands will no longer apply from January 2016

Motor Tax

  • Commercial tax rates on vehicles are to be made less complex – the range of brackets will reduce from 20 to five, ranging from €92 to €900

Cigarettes and Alcohol

  • The cost of a pack of 20 will increase by 50c to €10.50.

    It’ll raise €61.4 million for the exchequer in 2016, and is the only tax increase in the budget
  • Excise duty on alcohol will remain unchanged

Tourism

  • 9% VAT rate for tourism sector to remain unchanged

Film

  • Cap on eligible expenditure increased to €70 million

The home carer’s tax credit is to be increased by €190 to €1,000 bringing it back in line with pre-2011 levels.

The revaluation date for Local Property Tax (LPT) is to be moved from 2016 to 2019, suggesting that rising house prices will not hit homeowners in 2017 with greatly increased LPT.




Watch for the breakdown on how it affects you coming soon.




© Ruairi Devlin 2015