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  Business Advice

Dealing with Inflation: Advice for Business Owners

Current inflation factors

The Irish economy is going through an unprecedented period of inflation. This was initially driven by supply chain hangovers from COVID 19, which saw prices of building materials, materials for cars and increased costs of consumer goods. Since the start of 2022 there has been further inflationary pressure mainly as a result of the Russia/Ukraine conflict. This has resulted in a dramatic increase in energy costs and food product costs. Annual inflation in Ireland neared an almost 40-year high of 6.7% in March, a jump from 5.6% a month earlier. Diesel and petrol have increased by 46% and 35% respectively year-on-year while food prices rose by 3.1%. Electricity prices were up 22.4% while gas prices rose 28%.


The Central Bank predicts that price growth will peak at 7.7% in the second quarter of 2022 before retreating to 5.1% towards the end of the year. SME’s have endured a turbulent few years as a result of COVID 19 and are still dealing with legacy issues as a result of the pandemic. There is now an additional headache as they navigate inflationary increases.

What companies need to consider

  • As a result of inflationary pressures margins for businesses are likely to come under pressure due to:
    • Higher raw material costs
    • Higher energy costs
    • Upward pressure on employee wage costs as staff deal with a higher cost of living
Directors need to plot how they can manage the increase in overheads without impacting the profitability of the business.

Steps companies need to take now

  • Preparation of reliable management information will be crucial to help companies deal with the current headwinds. This information should include:
    • Up to date Management Accounts
    • Cashflow and Budgets which reflect accurately any cost increases and are reasonable in terms of increases in turnover.
  • Engage with Revenue and agree how warehoused taxes are to be dealt with.
  • In a high inflation economy, it is important to engage with suppliers and lock in prices as early as possible.
  • Engage with customers / clients early and flag increased prices. Any lag in passing on price increases will affect margins and profitability.

How Roberts Nathan can help 

We have been assisting many of our clients recently with their plans to navigate through this challenging time with the preparation of the above-mentioned Management Accounts and Budgets. If you are concerned about these current challenges and would like to consider availing of these services we would be delighted to assist you. If you would like to discuss the above you can contact Brendan or email us at info@robertsnathan.com Contact Us
May 11, 2022

Company Registers – What You Need to do

Having seen a recent an increase in new company incorporations with many companies having been incorporated post Brexit by UK parent groups we are receiving more queries around the legal requirements around the statutory books to be maintained for these companies. Company registers are the official books kept by a company relating to legal and statutory matters and are often referred to as the statutory registers, combined registers or company books. There is a legal obligation under the Irish Companies Acts for every company to have and maintain their company registers which is a responsibility of the Company Secretary. Failure to keep the registers correctly is a category 3 offence by the company and every officer of it who is in default. The company registers are however often overlooked and not reviewed and updated on a regular basis. It is often only when there is a possible sale or a dispute within a company that the registers can suddenly become a priority which can lead to delays and issues between parties.  

Company sale

Questions about the whereabouts of the company registers and their status usually arise when a company is to be sold and the purchaser requests the registers in order to conduct the company secretarial due diligence as part of the sale process. If the company registers have not been properly maintained, they will need to be reconstituted prior to the sale. Even if the registers were maintained, they should be reviewed as part of the pre-sale company health check to ensure that they correctly reflect the current position of the company to avoid unnecessary complications during the sale process. If there are any deficiencies that cannot be remedied, the purchaser may require the seller to indemnify the purchaser for any loss they may suffer due to the statutory registers not having been properly maintained. We frequently see that transactions in relation to the share capital of the company or changes in company officers have not been kept up to date in the registers of the company.  

What are the registers each company must have?

Under European Legislation and the Companies Act 2014 there are seven mandatory statutory registers required to be maintained by all companies incorporated under the laws of Ireland. These are:
  1. Register of Members pursuant to Section 169 of the Act
  2. Register of Directors and Secretaries pursuant to Section 149 of the Act
  3. Register of Directors' and Secretaries' Interests in Shares or Debentures pursuant to Section 261 of the Act
  4. Register of Directors' Service Contracts pursuant to Section 154 of the Act
  5. Register of Directors' Interests in Contracts pursuant to Section 231 of the Act
  6. Register of Instruments creating Charges pursuant to Section 414 of the Act
  7. Register of Ultimate Beneficial Ownership pursuant to Article 30 of the 4th EU Anti Money Laundering Directive
Many companies often have additional registers that, although not legally required, are very useful such as a register of sealing of documents. Companies are also obliged by law to maintain minute books for the directors and shareholders' meetings and other corporate documents such as written resolutions.  

Register of members

The most important register is the register of members. The register of members shows past and present members and is evidence of who the current members of the company are and the number and classes of shares they hold. This information is vital for conducting company meetings and passing resolutions, especially in companies with large numbers of members or where members change frequently. It helps to ensure that all decisions are taken properly and to avoids decisions made to be challenged in the future. If there is a dispute in relation to the company’s shareholding, the Court will ask to see the register of members as evidence of who the existing shareholders are.  

Inspection and location of the registers

The registers should be kept at a company’s registered office address or its principal place of business or another place within the State. The registers shall be open to inspection by any member of the company without charge. The members of the company are also entitled to request a copy of the registers and a copy of the minute book of the members' meetings. It should also be noted that any other person may also inspect the register of members, directors and secretaries and disposable interests and request a copy of those registers (for a small fee). The registers can be kept in paper or electronic format.  

Rectification of company registers by Court Order

As mentioned above any person has a right to request to view the registers of a company. If a person’s name is omitted from the register or entered without sufficient cause or the registers were not updated to reflect that a person ceased to be a member, the aggravated person may apply to the court for rectification of the register. The Court may then order rectification of the register and payment by the company of compensation for any loss sustained by any party affected. If the company was sold, the seller could also face a claim for breach of warranty and associated damages in respect of the cost to the company and the purchaser. It is important to note however that a company can rectify its registers without a Court Order. As soon as any omission or error has been identified, the company registers should be rectified.  

How we can help

These issues highlight the importance of maintaining the company registers in good order which reflect the current company position from the outset when a company is first incorporated. How Roberts Nathan can help – we can review and assist in an overall health check on your company registers and where necessary carry out a reconstitution, or rectification of the registers. If you would like to discuss the above you can
contact Aidan or email us at info@robertsnathan.com Contact Us
May 3, 2022

Do you need to Switch your bank from KBC and Ulster Bank?

With the closure of KBC and Ulster Bank, over 120,000 customers will be searching for their new banking service. Ulster Bank will be issuing letters shortly to account owners to begin the process of transferring to a new bank. Ulster Bank will be providing account holders with 6 months to make the switch to their new bank. The moving process is expected to span over a year, which will be done on a staggered basis. KBC have sold their deposit accounts to Bank of Ireland. However Bank of Ireland have not agreed to take the current accounts, and they have to be moved elsewhere. You may be in the same position as some of our clients find themselves in as a current account holder with KBC or Ulster Bank, if so you may wish to consider the following when selecting your new bank:

Do I Require a Full Service Bank?

A full service bank contains options for current, deposit, overdraft accounts etc. These banks include
AIB, Bank of Ireland and Permanent TSB. You should consider and compare charges for transactions, monthly/quarterly fees, caps on savings and negative interests when choosing what bank suits your needs. There are also online banking options such as Revolut and N26 which have now acquired European banking licenses. These new licenses can provide you with an IBAN, allowing you to set up your salary, direct debits, etc. These services seem more cost efficient but there are higher withdrawal fees or a % fee applied to withdrawals that go over the free allowance limit. It will be up to the individual to inform employers, tenants or anyone who lodges money into their account of their new bank details. This also applies for direct debit transactions etc. Talk to your new bank about a new switching pack which will help move over any direct debits as seamlessly as possible. You should also ensure your account details on Revenue Online (ROS) are updated to allow you to make your tax payments from the updated account.

 What Are my Next Steps?

Once you have opened an account with your new bank, you must close your account with Ulster Bank and KBC. Ulster Bank have recently begun to issue closure forms to their account holders which can be filled out and posted back to the bank. Once the request is submitted it can take 5-7 working days for the account to close. In this time, you should not use your account as it may delay the closing procedure. Also check that there are no pending transactions and the account has been inactive for 24 hours.

After Closing your Account

  • Securely destroy all cards, cheque books and pre-printed cheques associated with the account
  • Update standing orders and direct debit payments with your new bank
  • Inform originators of credits to Ulster Bank and KBC of your new account details

What do I Need to Set up a New Bank Account?

  • Photo identification,
  • A recent bank statement
  • A recent utility bill
  • Your PPS number (might not be mandatory).
If you wish to discuss further or require assistance, please contact us by booking a consultation, or email us at info@robertsnathan.com
April 26, 2022
  Corporation Tax

Corporation Tax Ireland: 15% Tax Rate

In October 2021 it was announced that Ireland would increase their corporation tax rate to 15% for certain large multinational companies. It was originally envisaged this increased rate would be implemented in 2023 provided agreement was reached at an OECD level. However, delays on approval in the US by the Biden administration and recent objections by Member States at an EU level have potentially deferred this implementation which we have examined below.

Why an increase in Corporation Tax?

In October 2021, members of the Organization for Economic Co-Operation and Development (OECD)/G20 Inclusive Framework worked on a global consensus-based solution to reform international corporation tax. It resulted in a
global agreement of 137 jurisdictions including Ireland. The proposal was made up of two key global tax initiatives referred to as Pillar 1 and Pillar 2. Pillar 1 addresses the partial re-allocation of taxing rights. This will result in the taxing rights being shifted towards the country of consumption rather than the country where the company is located. Some jurisdictions have already sought to impose digital taxes in advance of this measure. Pillar 2 addresses the minimum level of taxation applied on profits of multinational enterprises. After some initial negotiations around the wording of the minimum tax, ensuring the words “at least” 15% were removed to avoid future rate creep, Ireland agreed to adopt the minimum corporation tax rate of 15% for certain large multinationals. However, the proposed tax increase will only apply to any domestic and international group with a combined financial revenue of over €750 million a year.

Timing of new Corporation Tax Rate

With the EU presidency currently sitting with France they had pushed for EU States to implement the minimum tax rate quickly. However, the approval for this would need the unanimous support of all 27 States and recently Poland, Sweden, Estonia, and Malta have raised their reservations until a clear position has been taken by the US. With Ireland in agreement to the proposal, Paschal Donohoe (Minister for Finance) wishes to legislate the bill for the beginning of 2023. However, with pushback from these other EU nations, suggestions have been made to change implementation to 2024 to allow companies time to adapt. French Minister for Finance Bruno Le Maire intends to readdress the proposal in April.  

Impact for Ireland

Given the new rate will only impact large multinational groups with turnover in excess of €750m, Ireland’s 12.5% corporation tax rate will primarily remain intact. How the increased rate will affect Ireland’s FDI will be watched with interest. The government have stated projected figures of €2billion being the decrease in tax revenue arising from the increase tax rate. Ireland has been at the forefront of all recent international tax reforms introducing items such as interest limitation rules, anti-hybrid measures and increased transfer pricing focus. These items, along with Trump tax reforms in the US, had all led to anticipation of Ireland’s FDI being impacted which did not materialise to any significant level. Roberts Nathan’s Tax Partner, Brendan Murphy brendan.murphy@robertsnathan.com is available to discuss all aspects of Ireland’s position on international tax reform.    
April 5, 2022

Share Option Schemes

31 March is an important deadline for companies who have provided share option schemes to their employees. A Form RSS1 is required to be completed and filed with Revenue where share options are either granted, exercised or sold. The Form RSS1 must be sent to Revenue on or before 31 March in the following year of assessment i.e., for 2021 this would be due on the 31st of March 2022. This form is required to be returned to Revenue electronically by using their online system. Where the share option scheme is operated under the Key Employee Engagement Programme (“KEEP”) a KEEP 1 return is also required to be filed by the employer by 31 March for any KEEP options granted, exercised, assigned or released. As companies begin to see the light at the end of the Covid-19 tunnel we have seen an increased interest in looking at rewarding key management with an interest in the company. We have outlined below the reporting requirements for employees who obtain unapproved share options. As you will note, unapproved share options can often lead to a significant income tax bill for the employee and if not exercised at a point of sale can have cash flow implications.   Two common alternatives to unapproved share options which can have a more positive tax impact are both the KEEP mentioned above and growth shares which are popular to incentivise key staff to grow the business. We will look at the advantages of these share award options in our next article. In the meantime, below are the key considerations for employees obtaining unapproved share options from their employer.  

Grant of Share Option Scheme

The granting of share options would not be subject to tax in Ireland provided the share option is not capable of being exercised more than seven years after the date on which it is granted. If it is capable of being exercised more than seven years after the date of it being granted, you will only pay tax if the option price is less than the market value of the shares at the grant date. The tax is due on the difference between the:
  • market value of the shares on the grant date
  • amount you pay when you exercise the option.

Exercise of Share Option Scheme

Once share options are exercised, an individual will be subject to Income Tax, USC and PRSI at a rate of 52% on the gain arising on the exercise of the shares. The gain arising on the shares will be calculated as the difference between: (a) the market value of the shares at the date of exercise; and (b) the amount you paid for the shares at the time of exercise. Once a share option scheme is exercised, an individual is required to file an RTSO1 and remit the tax to Revenue within 30 days of exercising. You will also be required to register for income tax and a Form 11 will be required to be filed. If you exercise shares in 2021, you will be required to file a Form 11 by 31 October 2022.

Sale of Shares

If you exercise your share options and then subsequently dispose of the share you acquired you may be liable to Capital Gains Tax (CGT). You must report this disposal to Revenue, even if no tax is due. The CGT would be calculated as the difference between the sales proceeds and the base cost of the shares. The base cost would compromise the cost paid for the share options (if any), the price paid for the shares on the exercise of the share options and the gain arising on the exercise of the share option. The gain arising would then be subject to CGT at a rate of 33%. If the shares are disposed of between 1st of January and 30th of November, the CGT would be due on the 15th of December. If the shares are disposed of between 1st of December and 31st of December, the CGT would be due on the 31st of January. The disposal will be required to be reported in your income tax return for the year the shares were disposed. We have set out above a high-level overview of the compliance obligations for employers and employees on unapproved share schemes. As discussed, we will look in our next article at the benefits or alternative share option scheme such as KEEP and growth shares. If you are offering a share option scheme to your employees or have a share award you wish to exercise or sell you should
talk to our tax team at Roberts Nathan.
March 3, 2022

2021 Exchequer Results

As we kick off 2022, our tax team review the 2021 exchequer figures recently published by the Department of Finance. Overall, the exchequer results are exceptionally strong given the continued impact of the Covid-19 pandemic on many businesses during 2021, with an overall reduction in the exchequer deficit of €5bn compared to 2020.  The exchequer results figures released by the Department of Finance show an increase in tax revenues across almost all tax heads, giving rise to a total increase in tax revenues of 19.7% compared to 2020. Corporation tax receipts have continued to increase at unexpected levels, which has led to corporation tax revenues coming within €100m of VAT revenues for the first time. However, recent comments from the Minister of Finance suggests corporation tax receipts are expected to decline from 2023 when the new 15% corporation tax rate for large multinationals takes effect.  Understandably, given the major impact of Brexit from a VAT and customs perspective, customs duties increased by over 90% in 2021 compared to 2020. However, it is worth noting that customs receipts would generally have been at a very low level prior to Brexit and therefore this level of increase is unsurprising.  Most notable from the exchequer results released is the significant increase in capital gains tax receipts. CGT receipts for 2021 increased by 72.6% in 2021 compared to 2020. Considering CGT is a well-established tax base, and no major legislative changes were made in 2021 compared to 2020, this increase in revenues is most likely attributed to rising property prices, along with the significant increase in activity and prices obtained in the merger and acquisition (“M&A”) sphere which has been evident over the past 12 months. Derek Dervan, Partner in Roberts Nathan, leads the firm’s corporate finance function and has observed this increase in M&A activity first-hand in 2021. Derek expects the transactions market to remain strong, with 2022 starting where 2021 left off.   If you are considering a sale of your business, the acquisition of a new business or a restructuring of your current operations, Derek and Roberts Nathan’s Tax Partner, Brendan Murphy, would be delighted to speak to you to ensure that your business is structured and transaction-ready, to ensure that the best results can be achieved. 
January 12, 2022
  Business Advice

5 Planning Steps To Take Before Preparing Your Business For Sale

If you want to make selling your business simple, consider this fundamental principle: You must work each day preparing your business for sale. It makes no difference whether you intend to sell your business or not. The point is that preparing your firm for sale long before you’re ready to sell can boost its health while also making it more appealing to potential purchasers. You will also be preparing your business for sale quickly. There are things you can do to increase your chances—and the sale price—whether you want to sell your firm now or later. To get a great price, follow these five steps.
  • Step 1: Learn to discover and recognise strategic buyers 
Using these are buyers who are interested in anything other than your bottom line—your income. For example, they might be interested in your intellectual property or require your essential clientele, but what sets them unique is that your company will be beneficial to their success. The most significant reason to discover these purchasers early while preparing your business for sale is that you may have to obtain preliminary copyrights on any applicable property rights, or you may need to lock down significant clients by entering into a contract with them.
  • Step 2: Instead of focusing on debt, concentrate on profitability 
Businesses are frequently valued based on profit multiples rather than debt. Thus increasing sales makes complete sense (and thereby increases your selling price). However, you must use caution in this situation: A sensible buyer would conduct due research and review your company’s history, so taking out a large loan to buy new equipment isn’t a good idea while preparing your business for sale, but instead of paying down your mortgage, you might wish to invest earnings in new equipment.  
  • Step 3: Resolve any pending legal actions or liens 
Buyers aren’t interested in companies that have great legal difficulties. Clear out all of these messes in advance, even if it means accepting less-than-ideal terms.  
  • Step 4: Reduce your business expenses 
The aim is to be as compact as feasible to demonstrate a rising revenue trend. Analyse all of your expenditures and eliminate the ones that aren’t required. Concentrate on reducing whatever business expenses you can’t stop. It would be best if you did everything you could to boost profits and efficiency in your company. Potential buyers aren’t only interested in looking at a static set of numbers; they’re also interested in watching how those numbers change over time to see if the business is improving or deteriorating.
  • Step 5: Be the one who is difficult to obtain 
You’ll need to nurture several customers and develop a demand for what you’re selling if you want to obtain top money for your firm. You’ll make a lot more money when preparing your business for sale if there’s lots of competition among buyers. Bottom line Your long-term goal could be to sell your firm to the highest bidder and generate a pile of cash to engage in your next creative idea or to pass it on to your children. Carefully applying this advice will guarantee your company’s health and worth when preparing your business for sale. If you have any questions or want to have a confidential chat about the subject above, please don't hesitate to contact our Senior Partner,
Peter Roberts. His contact details are below: Mobile:  +353 (0) 86 813 8813 E-mail:  peter.roberts@robertsnathan.com
October 20, 2021

Budget 2022

Yesterday, Tuesday 12 October 2021, Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath announced Budget 2022, the first budget speech for two years.  There were some stark figures announced in the early parts of Mr Donohoe’s speech, including the €17.25bn spent on Covid supports, the €240bn of debt forecast for next year and current inflation of 3.7% in September 2021 being the highest since June 2008.  However, there was positivity highlighted in the recent exchequer performances, in particular VAT and income tax receipts, and this allowed the Ministers to announce a budget package of €4.7bn split between €4.2bn worth of spend and €0.5bn of tax measures.  We have set out below some of the key tax measures announced in the budget speech. The draft Finance Bill will be published later this month which will provide more detail on each of these measures.  

Personal Tax

Every worker will benefit from the income tax measures introduced, and these were marginal amendments primarily to account for inflation and the increase to the minimum wage from €10.20 to €10.50 per hour. The main impact on personal tax is as follows:
  • The income tax standard rate band has been increased by €1,500. The entry point to the 40% income tax rate now increases to €36,800 for single individuals and €45,800 for married couples (with one earner).
  • The PAYE credit, personal tax credit and earned income credit will all increase by €50 to €1,700 from the tax year 2022 onwards.
  • The ceiling of the 2% USC rate will be increased from €20,687 to €21,295 to ensure it remains the highest rate of USC paid by full-time minimum wage workers. The threshold for the highest rate of Employer PRSI will also increase by €12 to account for the increase to the minimum wage.
  • The income tax deduction in respect of light and heat expenses incurred by employees working from home has been increased from 10% to 30%.
In general, the changes to income tax rates will save a single middle-income earner €415 per annum. 

Corporate Tax

The announcement of the new 15% corporation tax rate for large multinationals last week led to the first budget for many years, where a commitment to our 12.5% corporation tax rate was not reinforced. However, our 12.5% corporation tax rate will be retained for groups with a turnover of less than €750m, so it will still be the prevailing rate for SMEs. International influence on our corporation tax code was also seen in the announcement of the introduction of the interest limitation rules, which are adopting the ATAD measures from the OECD BEPs programme. These measures will seek to cap interest deductions at 30% of EBITDA. However, there will be exemptions, including where the interest deductions are less than €3m and certain financial institutes. Another measure of the ATAD programme is the anti-reverse hybrid rules which are also being adopted by Ireland from 1 January 2022. These rules are aimed at preventing transparent entities from avoiding tax when controlled outside of Ireland in jurisdictions where the income will not be subject to tax.  Outside of the international changes, there were no significant changes to the corporation tax code. There had been anticipation of changes to both transfer pricing and the R&D tax credit regime, which are both awaiting ministerial orders from prior year announcements. There may be more focus on these items in the finance bill.  A new tax credit has been announced for the digital gaming industry, presumably to drive growth in this area within Ireland. The credit will be calculated at 32% of eligible expenditure from a minimum spend of €100k to a max spend of €25m in relation to the design, production or testing of a game. In respect of new companies, the corporation tax start-up relief has been extended to the end of 2026 and will now be available for the first five years of trading instead of the first three years. It was also announced that there would be a 3-year extension to the Employment Investment Incentive Scheme (“EIIS”) and some legislative amendments to make it more accessible. 

Covid Supports

One key talking point for tax practitioners in advance of the budget was around the current position, which does not entitle a proprietary director a tax credit for PAYE withheld on their employment income where the company paying their wage is availing of debt warehousing. However, it was announced that debt warehousing is now being extended to income tax liabilities for those proprietary directors caught in this position to combat such situations.  It was welcome news that there would be no cliff edge to the Employee Wage Subsidy Scheme (“EWSS”). The EWSS is to be extended to 30 April 2022 but will be changed gradually between now and then to phase it out. There will be no change to the scheme for October and November. For December, January and February, there will be two rates of €151.50 and €203, while for March and April 2022, there will be a flat rate subsidy of €100. From 1 January 2022, no new applicants can apply for the scheme. The hospitality and tourism sector will welcome the announcement that the 9% VAT has been extended to 31 August 2022 for their industry.


Much of the noise from opposition benches arose during the announcement of measures on property and housing. There was no inclusion of any form of a vacant home tax which had been raised in some pre-budget discussions and commentary. Instead, a new Zoned Land Tax will be introduced, which will be calculated as 3% of the market value of certain land suitable for residential units. This tax will have a two-to-three-year lead-in time and will replace the vacant site levy once brought into force.  The Help-to-Buy scheme has been extended to 31 December 2022 but will be reviewed during the year while relief for some specific pre-letting expenses incurred by landlords to be continued for a further three years to the end of 2024.

Indirect Taxes and Green Measures

Despite the pressures of climate change and having the Green Party as a coalition member, Budget 2022 was not as green-focused as some commentators may have predicted. Some of the measures for a Greener economy are set out below:
  • Carbon tax was increased by €7.50/tonne of CO2 from midnight for auto fuels and from 1 May 22 for other fuels. 
  • It was announced that the VRT rates will be increased from 1 January 2022, with a new rate table being brought into force.  
  • Tax relief was offered for income generated from selling self-generated electricity back to the grid. 
  • VRT relief on battery electric vehicles to be extended to the end of 2023. 
  • The Accelerated Capital Allowance Scheme for Energy Efficient Equipment has been extended for another three years to 31 December 2026. However, equipment operated by fossil fuels is no longer applicable for the scheme. Hydrogen-powered vehicles have now been included in the list of equipment that qualifies for the ACA scheme.
  • Smokers see an extra 50cent on a packet of 20 cigarettes. 
There was some good news for the farming industry, with Stamp Duty relief for Young Trained Farmers being extended to 31 December 2022 and stock relief to be extended to the end of 2024.


As has become normal practice, much of the headline items had already been leaked in advance of the budget announcement. Despite the commitment to continue the EWSS until Spring, there may rightly be some disappointment among both entrepreneurs and SMEs that there is not a greater focus on assisting them with any further tax incentives. However, given the backdrop of Covid and Brexit, it is a difficult period to control the finances, as some of the figures highlighted in our introduction suggest. We would hope the Covid supports and measures introduced can allow businesses to emerge from this difficult period, and perhaps future budgets can provide some much-needed tax incentives to our domestic SMEs and entrepreneurs. If you require expert assistance on this matter, please contact our Tax Partner, Brendan Murphy on brendan.murphy@robertsnathan.com or feel free to call on +353 (0) 87 9752896.
October 13, 2021

Artists Exemption (Income Tax and VAT Implications)

Background - Income Tax Income earned by writers, composers, visual artists and sculptors from the publication, production or sale of their works is exempt from income tax in Ireland in certain circumstances. For the year 2015 and subsequent years the maximum amount of income which is exempt is €50,000 per annum. The exemption applies to certain artistic works which are original and creative and generally recognised as having cultural or artistic merit. Earnings derived from such works are exempt from income tax from the year in which the application was made. The exemption does not apply to PRSI and USC. In addition to income from the sale of works, the following payments also qualify as exempt income, subject to the overall maximum relief figure: 
  • Arts Council Bursaries when paid directly to individuals by the Arts Council. 
  • Residencies when paid directly to the individual by the Arts Council for the purposes of producing a qualifying work. (Income from residencies which relate to teaching art or facilitating other individuals to create works of art or similar type practices do not qualify for exemption.) 
  • Cnuas payments under the Aosdana Scheme.
  • Payments from the sale of qualifying works abroad, which fall within the guidelines. 
  • Advance royalties.
Advanced Royalties Where an individual receives advanced royalties, which are attributed to the subsequent publication of a book or other writing, an application must be submitted to Revenue in the tax year in which the royalties are paid, if the advance royalties are to be exempt. Confirmation from the publisher that the book will be published must accompany the application. Where an application is received in the tax year in which the advance royalty is received, but where a determination has not yet been granted, any tax liability arising on the advance royalty must be paid. If a determination is subsequently granted by Revenue, the individual’s tax liability will be reviewed, and any overpayment of tax will be repaid. Advance royalties paid before the year of the application are not exempt. How to Apply for Artists Exemption Writers, composers, visual artists and sculptors seeking Artists Exemption should submit an application form to the Revenue Commissioners together with samples of their work and any supporting documentation in the form of testimonials etc. which they consider appropriate. Practical Application If you receive income greater than €50,000 during the tax year, you will not be taxed on the first €50,000 but USC and PRSI will still apply. Anything over €50,000 will be subject to Income Tax, USC and PRSI.  An analysis will need to be carried out to determine the income that is exempt under the Artists Exemption and income that is not exempt. If you have a mixture of income that is exempt and not exempt, this will need to be separated.  Example; Artists Exempt Income of €40,000 and non-Artist Exempt income of €10,000. The Artists exempt income is exempt from Income Tax but it is still subject to USC and PRSI. The non-Artist Exempt income is subject to tax at the Author’s marginal income tax rate.    Background - VAT Authors are deemed to provide a good if the books are printed and a supply of a service if they are in the form of an e-book.  In cases where the Artist Tax Exemption has been granted it is important to note that this applies to income tax only. The exemption does not extend to VAT.  For example – if an author who was granted an Artist Exemption sells a book, it would not be subject to income tax provided the sales were not greater than €50,000 but it would still be VATable. Sale of books in Ireland The sale of books in Ireland would be considered a sale of a good. Therefore, if an author supplies goods and their sales of books and other printed matter are greater that the goods threshold of €75,000, they must register for VAT in Ireland. The VAT rate applicable to the sale of books in Ireland is zero. Supply of Services in Ireland If an author supplies a service in Ireland e.g. an appearance, talk, interview, reviews etc. and are paid for this service, they will have to register for VAT in Ireland if they reach the service threshold of €37,500. They would be liable to VAT at the standard rate of VAT of 23% on any income earned from the services. VAT on e-books All digitised publications regardless of their VAT rate when printed (e.g. a book liable at zero rate) are treated as a supply of services rather than goods and are classified at the Standard Rate i.e. 23%. Place of Supply for Sales Outside of Ireland If Authors sell work to private customers (B2C) outside of Ireland then they apply VAT as normal until they reach a certain threshold. Each EU country has a different sales threshold. Once the threshold has been reached, VAT is charged in the country to which they sell e.g. France’s threshold is €35,000. Therefore, if the author supplies goods to France and their sales are below €35,000, they can continue to apply Irish VAT as normal but once they reach sales of €35,000 in France, they will be required to register for VAT in France. From July 2021, B2C sellers dispatching their goods from a single country will no longer be required to register for foreign VAT and complete multiple VAT filings in countries where they are selling. Instead, they may opt to simply complete and file a new OSS filing alongside their regular domestic VAT return that will list all their EU sales. The seller then remits the VAT due to their home VAT authority, which then forwards the taxes to the appropriate countries. This effectively removes the distance selling provisions.  If they sell to a VAT registered company (B2B) in another EU state, the supply can be zero rated and Irish VAT does not apply. Any sales made to countries outside of the EU, whether dispatched from Ireland or sold from within the non-EU country, is outside the scope of VAT. This means that there is no need to charge VAT, Irish or other, on any sales made to or taking place outside of the EU. VAT on Royalties VAT on Royalties received from Ireland, is applied at the standard rate of 23%. No Irish VAT applies if the royalties are received from outside Ireland.  Supply of both Goods and Services If an author has income from both the supply of goods and the supply of services (e.g. an appearance), it is important to understand when the author will be required to register for VAT in Ireland. This is because there are two different thresholds in respect of both goods and services. In general, authors whose total turnover from the supply of goods and services does not exceed the goods threshold of €75,000, are not accountable unless they elect to register for VAT. For the provision to apply, at least 90% of that turnover must be derived from the supply of taxable goods. Example 1: If an author has total turnover of €76,000 from the supply of both goods and services, and if €68,400 of those sales were derived from the supply of goods, the author would be required to register for VAT in Ireland. (i.e. €68,400/€76,000 = 90%).  Example 2: If the author had a total turnover of €76,000 and the supply of goods did not exceed €68,400, they would not have to register for VAT, but they can elect to. However, if the services provided reach €37,500, they would have to register for VAT To learn more and to discuss your situation in detail, please contact Brendan Murphy here
https://www.robertsnathan.com/member/brendan-murphy/ or Amy Hartnett 021-4217940 who would both be happy to hear from you.
October 6, 2021