Businesses providing Electronic Services – VAT Consequences

We have provided below a quick synopsis of the recent changes to VAT for telecommunications, broadcasting and electronically supplied services but you can obtain more detailed information on the Irish tax office website.


Since the 01 January 2015, supplies of telecommunications, broadcasting and electronically supplied services made by EU suppliers to private, non-taxable individuals and non-business customers will be liable to VAT in the customer’s Member State.


Suppliers of such services will need to determine where their customers are established or where they usually reside.  They will need to account for VAT at the rate applicable in that Member State.  This is a requirement regardless of the E.U. state in which the Supplier is established or is VAT registered.


Consequently, suppliers may need to register for VAT in every EU Member States in which they have customers. As there are no minimum thresholds for VAT registration, making supplies to a single customer in one Member State will require VAT registration in that Member state.


In order to avoid suppliers having to VAT register in each of those countries, the supplier can choose to use the “Mini One Stop Shop” (“MOSS”) simplification system. Some of key features about “MOSS” are:


  • Under Moss, the supplier would submit returns and pay the relevant VAT due to each member state through the electronic web portal of one member state e.g. ROS in Ireland.
  • The Member State in which the MOSS registration is made is known as the Member State of Identification or “MSI”. This means the supplier is designating the MSI to be its single contact point for VAT identification, submitting VAT returns and paying the VAT due in all Member States for the supply of services following under MOSS. A business opting to use the scheme will register for MOSS in the MSI and will submit a quarterly return and the related VAT payment to the MSI. The MSI will then distribute the VAT due to the various Member States in accordance with the information on the return.
  • As already outlined, the MOSS returns are filed on a quarterly basis. Where a business opts to use MOSS, the business must retain records for 10 years from the end of the year in which the B2C transaction was made, regardless of whether the business subsequently stops using the MOSS scheme.


The above is a general commentary on the modifications to VAT for telecommunications, broadcasting and electronically supplied services.  If you think the above might be relevant for you, specialist advice should be obtained. CAG Chartered Accountants has considerable experience in this area and we would be happy to discuss the various issues with you.

Updated Revenue Guidelines in relation to the Research and Development Tax Credit

Revenue has published updated Guidelines in relation to the Research and Development (R&D) Tax Credit provided for in Sections 766, 766A and 766B of the Taxes Consolidation Act 1997.

The Research and Development Tax credit is given in respect of expenditure incurred by companies in the carrying on of qualifying R&D activities as defined in s.766. The credit is given at 25% of qualifying expenditure.

The pdfGuidelines (PDF, 1.07MB) have been updated and amended to take account of changes in the recent Finance Acts, to address certain areas of interpretation (in particular in relation to changes in group membership) and to provide more up-to-date examples of how to calculate the credit.

Adjustments to your LPT Record by Revenue

Revenue may adjust your LPT record for a number of reasons. For example, your LPT charge for 2015 may have been reduced as a result of your local authority reducing the LPT rate for 2015.

Local Authority Reduction for 2015

From 2015 onwards, local authorities can vary the basic LPT rate on residential properties situated within their administrative area. The basic LPT rate can be increased or decreased by up to 15%. This is referred to as the “Local Adjustment Factor” (LAF). 14 local authorities have reduced the LPT rate for 2015. The reductions range from 1.5% to 15%. The following table confirms which local authorities have reduced the LPT rate:

LPT Rate for 2015
Local Authority Has the LPT rate changed? LPT Rate reduced by:
Carlow County Council no
Cavan County Council no
Clare County Council yes 15%
Cork County Council yes 10%
Cork City Council yes 10%
Donegal County Council no
Dublin City Council yes 15%
Dun Laoghaire Rathdown County Council yes 15%
Fingal County Council yes 15%
Galway City Council no
Galway City Council no
Kerry County Council no
Kildare County Council yes 7.5%
Kilkenny County Council no
Laois County Council no
Leitrim County Council no
Limerick City & County Council yes 3%
Longford County Council yes 3%
Louth County Council yes 1.5%
Mayo County Council yes 3%
Meath County Council no
Monaghan County Council no
Tipperary County Council no
Offaly County Council no
Roscommon County Council no
Sligo County Council no
South Dublin County Council yes 15%
Waterford City & County Council no
Westmeath County Council yes 3%
Wexford County Council no
Wicklow County Council yes 15%

If my local authority reduced the LPT rate do I need to apply to Revenue for the reduction?

No action is required. Your local authority has notified Revenue of the reduction in the LPT rate and Revenue automatically adjusted your LPT record for 2015. If you are paying your LPT by deduction at source or by direct debit, Revenue will confirm the revised amount of LPT due for 2015 to the relevant organisation (that is, your employer, Department of Social Protection, Department of Agriculture, Food and the Marine or your financial institution).

How can I confirm which local authority has been assigned to my property? If it’s wrong, what should I do?

This information is included in your online LPT record below the address details for your property. Because county boundaries and postal addresses are not always aligned, there will be cases where the local authority assigned to a property is incorrect and this may result in an incorrect LPT rate for 2015.

You can access your online LPT record by Logging into LPT On-line using your PPSN, Property ID and PIN. If the local authority assigned to your property is incorrect, you should immediately submit an online enquiry to Revenue as follows:

  1. Click on “Your Enquiries” (located beside the “logout” button at the top of the Screen)
  2. Select “Add a New Enquiry”
  3. At ‘My Enquiry Relates To’ select ‘LPT Query’.
  4. At ‘And More Specifically’ select “Change your Local Authority” from the drop down menu.
  5. You will then be asked to enter details of your enquiry which should include the name of the Local Authority that you wish Revenue to assign to your property.
  6. At ‘Email Address’ and ‘Email Confirmation’ enter an email address at which Revenue can contact you.
  7. Click “Submit Enquiry”

When a member of the Customer Services team has dealt with your enquiry, Revenue will contact you to confirm that your LPT record has been updated. You can then arrange for payment of your 2015 LPT charge.

If you cannot access your online LPT record please contact the LPT helpline at 1890 200 255 for assistance.

I’m not sure which local authority should be assigned to my property. How can I establish my local authority?

In general local authority boundaries correspond to geographical county boundaries. If you are unsure about which local authority your property is located in, you may contact the local authority nearest to you for confirmation.

How can I confirm whether my LPT rate for 2015 has changed?

You should check your online LPT record to confirm the amount of LPT due for 2015 and whether your LPT rate has changed.

For example, if your local authority reduced the basic LPT rate by 10% applying to your property valued at €200,001 – €250,000 (Band 4) for 2015:

  • This would reduce the LPT rate for 2015 from 0.18% to 0.162%
  • Your LPT charge for 2015 would be reduced from €405 to €364.
  • Your 2015 Local Property Tax (LPT) record would include the following information:
LPT charge for 2015 (basic rate):			 €405.00
Local Authority Reduction at 10%: 	       	         € 41.00
Total LPT charge:                         		 €364.00

USC and Pension Contributions

Please find below a quick alert on USC treatment for pension contributions. More information can be obtained by contacting CAG Chartered Accountants, who would be happy to discuss this article relevant to your situation.

The taxation of pension contributions is some of the most complex issues that payroll personnel and employers have to deal with.

Normally Income Tax relief is available at the marginal rate of tax for pension contributions paid by an individual to the following types of pension schemes namely:  

    Occupational pension schemes   

    Retirement annuity contracts   

    Personal retirement savings accounts   

    Small self-administered pension funds   

However the USC treatment differs depending on the type of contribution to a pension. For example in some pensions, where the employer make a contribution depending on the type of pension, this employers contributions can be subject to Universal Social Charge.

If the payroll is not set up correctly this contribution can be missed when calculating USC resulting in under-deducted and underpaid USC for employees.  

Revenue are continuously doing PAYE audits and it is important you ensure there are proper procedures put in place to safeguard the correct USC treatment on pension contributions.


Top Marginal Income Tax cut timeline called for

The Irish Tax Institute has called for a clear timeline to be announced in next month’s budget setting out how the top marginal income tax rate will be reduced below 50% over a three year period.

The professional body for tax practitioners also said that marginal income tax thresholds should be increased to raise the entry point to the top rate of income tax.

The institute also said that self-employed taxpayers – many of whom generate jobs in the economy – should not be paying higher marginal tax rates than employees.

It called on the Government to allow the 10% USC rate on self-employed individuals to expire at the end of the year as planned. This would reduce the USC charged on the self-employed to 7%, the same rate as most other taxpayers.

The Special Assignee Relief Programme – a tax break for senior executives in Foreign Direct Investment companies – has not worked as intended, the institute said.

A new targeted regime that provides effective, competitive relief for FDI and domestic businesses seeking mobile executives is required to replace the SARP, it urged.

In 2012, just 15 individuals applied for SARP relief. The ITI contrasts this with the Netherlands, where a relief scheme for overseas executives attract between 10,000 and 12,000 applications each year.

On corporation tax, the ITI said Ireland needs a certain and predictable tax regime for multinational companies. It said a communications strategy to address the certainty investors require is vital.

The tax treatment of Intellectual Property (IP) must be attractive and in-line with those offered by competitor countries, it added.

For domestic business, the institute said the Entrepreneur’s Relief introduced in Budget 2014 needs to be reviewed to compete with the low rates available for active business investment in competing jurisdictions such as the UK.

The Employment and Investment Incentive (EII) should also be improved to support investments in active Irish businesses, while the Seed Capital Scheme (SCS) should be improved to assist individuals in starting their own business.

All of these areas were subject to consultations with the Department of Finance during the year, as was a review of taxes on the agri-business sector.

The ITI believes changes to the agri-business tax regime will be announced in the Budget next month.

Inheritance/Gift Tax nightmare coming down the line

There are two certainties in life, death and taxes. Ironically, in Ireland for the future the latter is relying on the former to increase the tax take under this tax head.

So now is the time for planning in relation to this.

The Problem

Revenue reported that, in 2012, €280 million was paid in Capital Acquisitions Tax; in excess of €933 million worth of assets are declaring and paying Gift and Inheritance Tax on.

The taxation double whammy:

Tax rate: The rate of Capital Acquisitions Tax, both for gifts and inheritances, increased from 20% in 2008 to 33% in 2013.

Tax-free thresholds: Thresholds have been dramatically reduced. For example, the group 1 threshold from parents to children reduced from €521,208 in 2008 to €225,000 in 2013.

Mr. & Mrs. Kelly are aged 55 and their estate, valued at €3,000,000, is to be divided equally between their three children. Their children’s inheritance tax bill will be €767,250 – i.e. 25% of the estate will be taken in tax.

If you have any queries, CAG Chartered Accountants would be happy to discuss this article relevant to your situation.

Income Tax Filers – Beware of LPT

How not filing your LPT return can lead to a 10% income tax surcharge on your income tax return

As the Pay & File Deadline approaches, self-employed individuals and company directors could encounter a 10% Surcharge on their income tax return if they have not yet complied with their Local Property Tax (LPT) obligations.

It is possible to avoid this LPT Surcharge by doing the following:

  1. File your LPT return, and
  2. Pay, or enter into an arrangement to pay, any outstanding LPT before your income tax return is filed.

If these actions are taken before the income tax return is filed, no LPT Surcharge will apply (provided the income tax return itself is filed on time).  

In summary; you must ensure you are compliant with the Local Property Tax in order to avoid a LPT Surcharge.

If you have any queries, CAG Chartered Accountants would be happy to discuss this article relevant to your situation.

See below different scenarios and for more information read Revenue’s Guidelines

1. Client filing an income tax return but also has PAYE income

Take the situation where this taxpayer files his/her income tax return on time but has not filed his/her LPT return. Revenue advises us that this taxpayer will have had the LPT (based on the Revenue Estimate) compulsorily deducted from his/her wages. Notwithstanding this fact, an LPT Surcharge of 10% will also be applied to his/her income tax return, with:

  • no credit for LPT paid through the compulsory deduction at source, and
  • no capping of the LPT Surcharge until such time as he/she files their LPT Return.

2. Clients who have CGT as well as income tax liabilities in their returns

Where a client’s return has both an income tax liability and a CGT liability, Revenue has said that the 10% LPT Surcharge will be applied to both the income tax liability and the CGT liability.

The general rule is that where an LPT Surcharge arises on a return, that LPT Surcharge will be capped at the amount of the LPT liability once the taxpayer subsequently files their LPT return and pays their LPT liability.

However, where an LPT Surcharge arises on a return with both an income tax and a CGT liability, you need to look separately at the income tax element and the CGT element to determine what cap applies.

Revenue’s new Code of Practice for Revenue Audit and other Compliance Interventions

Revenue’s new Code of Practice for Revenue Audit and other Compliance Interventions (the new Code) came into effect from the 14th of August 2014. It significantly revises the previous 2010 Audit Code.

We have provided below a quick synopsis of the key changes which is consolidated under 5 broad headings and you can obtain more detailed information on the Irish tax office website

1. Focus of audits and compliance interventions

Paragraph 4.5 of the new Code notes that Revenue audits will generally focus on a year or period where a specific risk has been identified. Multi-year or period compliance interventions may be carried out where material risks, identified by a range of data sources, are identified for a number of years (or periods).

This approach also applies to non-audit interventions, as set out in paragraph 2.3 of the new Code.

The additional costs to a taxpayer of extending an audit has also been introduced as a factor that will be taken into account in deciding whether to open earlier or later years (paragraph 4.6).

2. The “no loss of revenue” provision

Paragraph 3.5 of the new Code recognises that there may be exceptional circumstances where “no loss of revenue” claims may be considered in relation to taxes other than VAT and RCT. The paragraph also contains information on how to make a claim.

3. Timeframe for concluding Revenue interventions and receiving refunds

Delays can arise in the conclusion of an audit or intervention, even though a taxpayer has answered all queries promptly. Paragraph 5.8 of the new Code notes that if there is no clear cause for the delay in finalising the audit/intervention a taxpayer’s entitlements to credits or tax refunds shall not be delayed or withheld.

4. Protocols for e-Audits

Paragraphs 1.9 and 1.9.1 include detailed information on what taxpayers can expect when undergoing an e-Audit and at the pre-audit meeting.

5. The interaction of the “late” surcharge with tax-geared penalties

Revenue has clarified in paragraph 5.4.1 that the Section 1084 “late” surcharge that can be sought for the timely filing of an incorrect return will not be sought where a tax-geared penalty applies in a settlement.

If you have any queries regarding the above, CAG Chartered Accountants would be happy to discuss this article relevant to your situation.

Business Startup Relief for Long Term Unemployed

Who can avail of the Business Start Up Relief for individuals?

In Budget 2014 the Minister for Finance announced a new relief targeted at encouraging long term unemployed to set up new businesses. We have provided below a quick synopsis of how the scheme works but you can obtain more detailed information on the Irish tax office website.

What is the relief?

This is a relief aimed at individuals who have been out of work for at least 12 months, and will allow them to earn €40,000 in profits p.a. in the first two years of trading without paying Income Tax (USC and PRSI will be payable). The relief will apply by way of a deduction from trading profits.

Who can apply?

The relief applies to an individual who commences a new business between 25 October 2013 and end of December 2016 and who has been continuously unemployed for a period of 12 months immediately preceding the commencement of the business and during that period you were in receipt of any of the following

  • crediting contributions
  • jobseeker’s allowance
  • jobseeker’s benefit
  • the one-parent family payment
  • partial capacity payment

How do I apply?

There is no pre-approval required here and you just complete a section in the tax return. Self Employed people are required to complete their tax return every October for the previous calendar year.

If you have any queries regarding the above, CAG Chartered Accountants would be happy to discuss this article relevant to your situation.