Budget 2020 Captured in full - Deloitte United States · Changes will apply the scheme to group structures and Will also facilitate part-time and family friendly working arrangements

Budget 2020Captured in full08th October 2019deloitte.ie/budget

Budget 20202

© 2019 Deloitte Ireland LLP. All rights reserved.

Karen Frawley

Tax Partner

Budget 20203


Carmel Marnane

Tax Director

Budget 20204


Personal Taxes

Budget 20205


Basic Rules

Budget 2020

• USC reduced rate extension for medical card holders

• No change to rates or credits.

• Home Carer Credit increased from €1,500 to €1,600

• Earned Income Credit increased to €1,500

Budget 20206


€15,000 increase in inheritance/gift tax threshold for “Group A” category – parents to children – going from €320,000 to €335,000

Budget 20207


Business Taxes

Budget 20208


Green Agenda Initiatives

Budget 2020

• BIK zero rate extension for electric cars to 2022

• Extension of VRT reliefs for conventional and plug in hybrids to 2020

• Reduce qualifying CO2 thresholds for reliefs in respect of capital allowances and VAT reclaim on commercial vehicles; and

• Provide additional relief through the Diesel Rebate Scheme to hauliers to compensate that sector for the increased cost of fuel.

Budget 20209


Entrepreneurs

Budget 2020

• Full tax relief in the year of investment in the Employment Investment Incentive scheme

• Annual limit increased to €250,000

• A €500,000 annual investment limit for those who invest in EII for ten years or more.

• These changes apply from today.

• No change to Entrepreneurial Relief - still €1m @ 10%

Budget 202010


Employment Tax Measures

Budget 2020

• Welcome changes to KEEP scheme

Originally introduced in January 2018

Just 38 employees in 10 companies have availed of the scheme to date

Changes will apply the scheme to group structures and

Will also facilitate part-time and family friendly working arrangements.

SARP and FED schemes extended until the end of 2022.

Budget 202011


R&D Tax Credit Regime

Budget 2020

• The R&D credit is being amended for micro and small companies to increase the 25% R&D credit to 30% and to enhance the existing limits on the payable credit.

• Budget 2020 includes provisions to allow micro and small companies conducting pre-trading R&D to claim the credit before tradingcommences, limited to offset against VAT and payroll tax liabilities only.

• In respect of all claimants, the current limit on outsourcing to third level institutes of education will be increased from 5% to 15%.

• For an activity to be eligible as R&D for tax purposes, two key criteria must be met:

It must seek to achieve a scientific or technological

advance

Seek to resolve the associated scientific or technological

uncertaintyand

Budget 202012


Dividend Withholding Tax Changes

Budget 2020

• Increase in rate from 20% to 25% from 1 January 2020

• From 1 January 2021, personalised rate of DWT

• Smart use of technology by Revenue via PAYE modernisation

• Aim of increasing compliance

Budget 202013


Stamp Duty Changes

Budget 202014


Stamp Duty Changes

Budget 2020

• Commercial rate of stamp duty increases from 6% to 7.5% tonight

• New anti-avoidance rule to apply to company acquisitions - stamp duty rate of 1%

Budget 202015


Other Changes

Budget 202016


Extension of current Help to Buy Scheme to end of 2021

Budget 202017


Excise duty on cigarettes

+ 50 cent

Budget 202018


Extension of CGT farm restructuring relief to end 2022

Budget 202019


Welcome enhancements to KEEP & EII

Budget 202020


Jane HallinanTax Director

Budget 202021


Budget Update

Budget 202022


Carbon Tax

Budget 2020

• Increase the price of carbon from €20 today to €80 per tonne by 2030.

• From tonight, increase from €20 to €26 per tonne on petrol/diesel.

• Increase on other fuels will be delayed until May 2020.

Budget 202023


Carbon Tax Example

Budget 2020

• Carpenter who drives 30,000 miles a year

• Drives a Ford Transit, approximately 26 miles per gallon (MPG)

• Circa €60 per year increase

• By 2030, will have increased by €600 per annum

Budget 202024


Nitrogen Oxide Tax

Budget 2020

• Nitrogen oxide (NOx) emissions-based charge.

• Apply for new vehicles or newly registered vehicles in the state from 1 January 2020.

• Apply on a euro (€) per milligram/kilometre basis, with an ascending scale.

Budget 202025


Brexit Update

Brexit Omnibus Act March 2019

• Postponed accounting for VAT on imports – all non EU countries

• Changes to 56B authorisation for start ups

Budget 202026


Quick Fixes

Effective 1 Jan 2020

Budget 202027


Quick Fixes

Budget 2020

Cross Border Movement

GoodsBusiness To Business

Supplies

Draft Guidance Notes Available

Budget 202028


EU Quick Fixes

Budget 2020

Uniform simplification opportunity where a supplier transfers stock to a warehouse at the disposals of a known customer to another Member State

1. Call-off stock

Legal certainty enhanced by setting out a default rule for the allocation of transport for intra-Community supplies

2. EU cross border chain transactions

To benefit from the VAT exemption on intra-Community supplies, the availability of the VAT identification number of the customer will become a substantial requirement

3. Mandatory VAT number verification

Reduced set of documentary evidence needed to prove the transport of goods to support the VAT exemption for intra-Community supplies

4. Proof of transport

The European Council adopted four quick fixes to simplifythe currently VAT system for B2B intra-Community transactions and to combat fraud and abuse.

Entry into force: 1 Jan 2020

Impact on all intra-EU

supplies of goods

Budget 202029


Quick fix proof of transport

Situation 1 January 2020

Harmonization of proof of transport & rebuttable

presumption

Supplier indicates goods have been

transported by him or on his behalf

Two items from A

One item from A + one item from B

Supplier is in possession of written

statement of buyer that goods have been

transported

Two items from A

One item from A + one item from B

A

documents related to transport, e.g.:

• Signed CMR document

• Bill of lading

• Airfreight invoice

• Carrier invoice

B

supportive documents related to transport, e.g.:

• Insurance policy

• Bank payment doc

• Doc issued by public authority, e.g. notary

• Receipt warehouse keeper

Supplier ships

Buyer ships

Budget 202030


Chain Transactions

EU Quick Fixes

Company A

Ireland

Company B

Spain

Company C

Spain

Company A

Ireland

Company C

Spain

Movement of Goods

Legal Position

Budget 202031


Call Off Stock Relief

EU Quick Fixes

Company A

Ireland

Company A

Spain

Company B

Spain

Company A

Ireland

Company B

Spain

Legal Position

Ownership/Goods Movement

Budget 202032


Vic AngleyTax Director

Budget 202033


Transfer Pricing

Budget 202034


DoF Feedback Statement

Budget 2020 – Transfer Pricing

• Public consultation – February 2019

• Feedback Statement - draft legislation that “could apply for chargeable periodscommencing on or after 1 January 2020”

• Broaden applicability to non-trading and acquisition / disposal of chargeable assets

• Recharacterise transactions where the form of the financial or commercial arrangement isinconsistent with the substance of the relations between related parties transacting witheach other

Budget 202035



Incorporating 2017 OECD Guidelines

• S835D currently refers to 2010 Guidelines

• Proposed amendments address the relevant guidelines published by the OECD:

- 2017 OECD Transfer Pricing Guidelines;

- 2018 guidance on Hard-To-Value-Intangibles;

- 2018 guidance Transactional Profit Split Method

Removal of “Grandfathering” Exemption

• Exemption for certain pre 1 July 2010 arrangements removed from 1 January 2020

• Documentation exemption continues where both parties Irish tax resident – arm’s lengthstill required

Budget 202036



Extension of TP rules to SMEs

• Refining S835E TCA 1997 exemption for SME’s

• “Small enterprises” continue to fall outside the ambit of Ireland’s domestic TP documentation provisions

• “Medium enterprises” subject to domestic TP documentation provisions from 1 January 2020

Staff

headcount

AND

Annual

turnover

OR

Balance sheet

total

Small < 50 ≤ €10 million ≤ €10 million

Medium < 250 ≤ €50 million ≤ €43 million

Budget 202037



Extension of TP rules to SMEs

• Reduced documentation requirement will only apply to:

- Aggregate foreign counterparty consideration > €1m

- Disposal or acquisition of asset and counterparty is not tax resident in Ireland,

asset is not within the charge to tax in Ireland,

asset is not a chargeable asset, and market value of asset exceeds €25m

• Medium enterprise documentation requirements include:

- description of the business including org structure, business strategy and key competitors; and

- in relation to each relevant arrangement:

copy of all relevant agreements

description of TP method used and reasons for selection, together with arm’s length support

the amount of the consideration payable or receivable

description of the functions performed, risks assumed and assets employed

Budget 202038



Enhanced TP documentation requirements

• Specific documentation requirements based on revenue basedthreshold

Master File Threshold - €250m

Local File Threshold - €50m

• Documentation completion date is contemporaneous with filingCT1 – no requirement to file with CT1

• Must be made available upon request in writing by Revenuewithin 30 days

Budget 202039



Non-Trading Income

• Transactions between two non-trading Irish tax resident companies exempt from applying TP principles

• If counterparty is a foreign company, exemption will not apply

• If one of the Irish resident companies is subject to tax under Case I or II, exemption won’t apply

• No exemption where an arrangement between two Irish tax resident companies is part of a scheme involving a second arrangement (withrelated foreign party) and main purpose of first arrangement is to obtain a tax advantage in connection with the second arrangement (i.e.aimed at certain IFL arrangements)

Budget 202040



Extension of TP Rules to Capital Transactions

• TP won’t apply in determining:

- capital allowances where total expenditure on asset < €25m

- balancing charges under S291A

- balancing allowance / charge where MV of asset < €25m

- where the acquirer / supplier make certain joint elections for capitalallowances purposes

- chargeable gains / losses between related parties where MV ≤€25m

Budget 202041


Budget 202042


Contacts

Budget 2019

Karen Frawley

Tax Partner

Deloitte Ireland LLPCharlotte Quay

Limerick

[email protected]

01-4172613

Carmel Marnane

Tax Director


Limerick

[email protected]

061-435575

Jane Hallinan

Tax Director


Limerick

[email protected]

061-435505

Vic Angley

Tax Director


Limerick

[email protected]

061-435509

mailto:[email protected]




Documents

Budget 2020 Captured in full - Deloitte United States · Changes will apply the scheme to group structures and Will also facilitate part-time and family friendly working arrangements