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  News

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 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 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 figures 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

Covid Restriction Support Scheme

As many businesses begin reopening their doors this week, the Revenue have confirmed those eligible for the Covid Restriction Support Scheme should be able to avail of two weeks double payment of the scheme in order to assist with restarting their businesses. See details of the Revenue press release here. As Revenue have reiterated in recent times, all reliefs such as the CRSS require up to date tax clearance certificates which mean the taxpayer must have all tax returns filed and payments made or debt arrangements agreed. At Roberts Nathan we continue to assist our clients both applying for and maintaining Covid reliefs. Feel free to contact us if you wish to discuss any Covid supports or any issues arising for your business as the economy reopens over the coming weeks.
May 12, 2021
  Business Advice

RN Podcast: 2021 – What is in store for the Irish tax landscape in the year ahead

Vivian Nathan, Managing Partner, welcomes Brendan Murphy, Tax Partner, to Roberts Nathan. Brendan joined the firm at the beginning of 2021 to continue the firms expansion and our commitment to providing our clients with dedicated specialist within specific sectors. On this podcast, Viv and Brendan discuss the opportunities Brendan sees for businesses from a tax perspective in the year ahead and what will be the key areas of focus for tax advisors. They also look at the impact to date of Brexit and how this will continue to effect trading between Ireland and the UK. Finally they will look at the cost Covid-19 is having on the Irish economy and what the future Irish tax landscape may look like.
We hope you enjoy listening to our podcast and if you have any questions regarding any of the points raised please let us know.
 
April 19, 2021
  Brexit

Cash flow benefit for companies importing stock from outside the EU (including UK/EU trade).

As a result of Brexit and the UK becoming a third country, postponed accounting for VAT can now be applied to all non-EU imports of goods for resale since 1 January 2021.  This treatment is now available to all VAT registered traders and applies to imports from all non-EU countries and not just the UK. Trading businesses who historically have had to pay VAT at point of entry for stock arriving from outside the EU can now save the cash flow of the VAT that would have applied on the landing of this stock (23%). This scheme benefits all traders in that:
  • provides for postponed accounting for VAT on imports from non-EU countries
  • enables you to account for import VAT on your VAT return
  • allows you to reclaim VAT at the same time as it is declared in a return. This is subject to normal rules on deductibility.
The Revenue Commissioners may exclude traders who do not fulfil certain conditions and requirements from using this scheme which will include compliance with tax and customs law. A business may also be required to satisfy Revenue of the viability of their business operations and their capacity to pay their VAT liabilities. To use postponed accounting, an importer should enter a code on the import declaration. This code will allow the VAT on import liability to be accounted for by the importer in their VAT Return. The VAT Return will contain new boxes (fields) to capture this information. Talk to us on your requirements in this area and how we can assist your business. We have advised a number of clients who are now saving on their working capital funding requirements and in particular on trade in goods between UK and Ireland.
April 13, 2021
  Business Advice

Are you a UK Based Director of an Irish Registered Company?

The (European Union) EU and the United Kingdom (UK) finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit.  However, this does not change the fact that the UK has left the EU and therefore is no longer part of the EU single market and customs union and is now regarded as a third country.  This creates a very real issue for a number of companies and their Directors in the UK and Ireland.

In this article, Roberts Nathan Partner Aidan Scollard reviews the potential significant changes for UK resident Directors of Irish registered companies as the UK now becomes a third country.  Although there are more than 60,000 Irish Directorships of UK registered companies there are also a significant number of UK based directors of Irish companies for which Brexit now creates significant changes.

EEA Resident Director Requirement

Companies Registration Office have previously alerted service providers to the fact that under Irish company law an Irish registered company must have at least one European Economic Area (EEA) resident Director on the board on an ongoing basis or a bond in place to cover filing liabilities.

Many Directors based in the UK who are either of Irish decent or UK based companies who have established Irish entities as part of their Brexit planning will need to consider this likely change.

Where an existing Irish company has fulfilled this Director requirement by appointing a UK resident director they should now consider replacing that director or adding an additional director who is an EEA-resident.

It should be noted that this requirement is based on residency, not nationality. Thus for example, a company director of Irish nationality who lives in the UK and has done so for a number of years is unlikely to satisfy the EEA requirement in the future which is a question a number of our clients have been considering.

S137 Bond

It is possible for a company to put in place a Section 137 Revenue Bond which is an insurance policy that CRO approve in replacement of having an EEA resident individual on the board. This insurance policy covers against fines or penalties incurred to the value of €25,000 for non-compliance and covers the company for a period of two years at which point the company will either need to renew the bond or appoint a director who meets the requirement.

The bonds are relatively easy to put in place but will have a premium cost to maintain for the two year period and we have put these in place for a number of clients recently.

The Exception to the Rule – ‘Real and Continuous link’

It is possible for the Directors of an Irish Company who have no EEA-resident directors to apply to the Revenue Commissioners for a Statement under Section 140 of the Companies Act 2014 which, if granted, will relieve the company from the requirement to hold a Bond or to have an EEA-resident director.

This Statement is granted based on the company having a ‘real and continuous link to the State of Ireland’. The successful company will need to satisfy one or more of the following two conditions:

  1. The affairs of the company are managed by one or more persons from a place of business established in the State and that person or those persons is or are authorised by the company to act on its behalf.
  2. The company carries on a trade in the State.

Furthermore, a company may be granted this Statement based on either of the following two conditions:

  1. The company is a subsidiary or a holding company of a company or other body corporate that satisfies either or both of the conditions specified in 1 and 2.
  2. The company is a subsidiary of a company, another subsidiary of which satisfies either or both of the conditions specified in 1 and 2.

This Statement is granted based on retrospective activity and will generally not be granted to a company that intends to have a real and continuous link to the state.

Once the Statement is made by Revenue to the successful company, the Company Secretary can apply to the Registrar of Companies for a certificate that exempts the company from the Section 137 bond requirement or the need to have an EEA-resident director appointed to the board.

Application for this exemption to Companies registration office must be accompanied by this statement from the Revenue Commissioners made within two months of the date of the application of the Revenue Commissioners statement.

This is the common basis that we see UK parent company clients using for their Irish operating subsidiaries and we have helped a number of clients in this area where they can clearly prove that there is a real and continuous activity here in the Irish state.

Final Word

Company Directors need to consider the implications since the UK has left the EU and consider their options. As with any legal or accounting issue early advice is important.

Contact us if you wish to discuss the impacts of any of these changes to your company structures here in Ireland and any structure planning requirements or to obtain a bond.

January 21, 2021
  Brexit

Brexit deal done; What next?

Aidan Scollard, Partner at Roberts Nathan, provides his view on what Irish businesses dealing in cross-border trade with the UK need to consider following the recent Brexit agreement between the European Union and United Kingdom of the Free Trade and Cooperation Agreement.   The Deal The (European Union) EU and the United Kingdom (UK) finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit and the risks of duties and tariffs under WTO rules. However, this does not change the fact that the UK has left the EU and therefore is no longer part of the EU single market and customs union and is now regarded as a third country. This status has significant consequences for businesses in different areas such as cross border trade, the imposition of VAT on transactions and the free movement of people. At 1,246 pages and affecting over $900 billion worth of goods and services, the TCA is the most ambitious and far-reaching trade agreement ever concluded by the EU. Irish businesses will need to fully comprehend the effect of the TCA on cross-border trade between the EU and UK. A new Partnership Council, co-chaired by the European Commission and the UK government, will oversee the agreement’s implementation and management. A large number of committees and working groups will be established to oversee the details of new arrangements at a more-granular level, including resolving any technical issues arising from the agreement or ensuring proper functioning of new rules. The new UK-EU relationship is fluid, and these bodies will be making judgments and issuing guidance that will have the potential to change market access and frameworks. In short, things are likely to change and there will be an extended period of adjustment. Highlights Further review of particular aspects of the TCA will be required in the coming months, but in the meantime we set out some highlights of the main initial impacts of the TCA:  TARIFF AND QUOTA FREE TRADE OF GOODS
  • The TCA establishes zero tariffs or quotas on trade between the UK and the EU, where goods comply with rules of origin requirements.
  • Notwithstanding the tariff and quota free trade enshrined in the TCA, certain technical barriers to trade continue to apply and address issues related to technical regulation, conformity assessment, standardisation, accreditation, market surveillance and marketing and labelling.
  • While Brexit ends the EU ease and simplicity of moving goods freely, the TCA adds administrative burdens and no duty or tariff taxes.
TRADE IN SERVICES
  • The TCA includes well-established provisions on cross-border trade in services that will secure continued market access across a broad range of sectors, including professional and business services, financial services and transport services, and will support new and continued foreign direct investment.
  • In relation to financial services, although the TCA provides for “continued market access” the details have been left for later. The EU and the UK are yet to discuss “specific equivalence determinations” which will eventually be codified in a Memorandum of Understanding.
  • The UK and the EU have agreed a framework for the recognition of professional qualifications which is based on the EU’s recent free trade agreements.
  • The effect of Brexit and the TCA on cross-border trade in services differs from sector-to-sector. For example, UK resident financial services firms previously possessed “passporting rights” which allowed them to sell financial services into the EU. The TCA has not granted equivalent rights meaning that on 1 January 2021 UK resident financial firms will (as expected) lose their right to sell financial services in the EU.
SUBSIDIES AND STATE AID
  • One of the key issues of concern of the EU was ensuring that the UK could not grant subsidies (tax or otherwise) to UK businesses which would effectively allow them to undercut similar businesses in the EU.
  • The EU and UK are free to determine their own rules relating to the granting of subsidies but are bound by broad principles which must inform the contents of the rules which must ensure that the granting of a subsidy does not have detrimental effects on the trade between the EU and UK.
  • The EU and UK shall each establish independent bodies which will design and oversee these rules and which are subject to the review of their respective domestic courts.
  • The EU and UK have agreed on a reciprocal dispute resolution mechanism (an accelerated arbitration procedure) where a party is of the opinion that a subsidy is causing, or is at risk of causing, significant harm to its industries.
  • Whilst part of the EU, the UK was bound by EU laws related to state aid and government subsidies and was subject to oversight by the European Court of Justice (EUCJ), a sore point for the UK public. Brexit effectively removes the applicability of these laws and jurisdiction of the EUCJ.
  • There is also a ‘most-favoured nation’ clause, which ensures that, if either the UK or the EU gives more-favourable terms to another country in future, those terms will automatically extend to the UK/EU deal.
  • However, these provisions are subject to a long list of exceptions, which vary from one member state to another.
PEOPLE AND MOBILITY
  • Residence rights in existing cases in the UK and EU will continue to be respected as long as the residence situation remains unchanged. New residency applications after the transition period will likely be subject to the same procedures as for third countries.
  • Existing (frontier) workers will have the right not to be discriminated against on grounds of nationality as regards employment, remuneration and other conditions of work and employment. In addition, they will have the right to take up and pursue activities and assistance by employment offices in the same way as offered to own nationals as well as rights to tax, social advantages, housing benefits and access to education for their children.
  • Prior to Brexit, UK citizens (like all other EU citizens) were granted unrestricted rights to live and work in the EU, and vice versa. Post Brexit, closer consideration will be required for non-EU workers and transfers, however the UK / Ireland Common Travel Area provisions allow for continuation of citizens of each of those countries to live, work and retire to each other’s jurisdiction.
Conclusion While many potential immediate difficulties have been avoided the devil will be in the detail. The implementation of the trade and cooperation agreement (TCA) in the coming months will require ongoing review by Irish companies trading with the UK (and vice versa) as practical issues arise on the movement of goods and supplies of services.  Particular changes around taxation and accounting treatments will likely arise as the UK changes its relationship to having a third country status with the EU. We will provide ongoing updates and can assist your business as circumstances change. If you require any assistance on these matters please contact your usual contact Partner in Roberts Nathan.   Document References:
EU-UK_Trade_and_Cooperation_Agreement_24.12.2020 (1) Brexit agreement summary
January 8, 2021
  Audit

RN Podcast: 2020 – The Year that was, and 2021 potential for business growth

As we close out on 2020, we have produced a podcast where we take a look at the year that was, and provide our view on what businesses might expect in 2021. Aidan ScollardBrendan Kean and Derek Dervan, partners with Roberts Nathan discuss three main areas likely to impact Irish businesses as well as some tips when planning for 2021:
1. The implications of the Covid vaccine on Irish businesses. Cashflow and succession planning have become very important for business owners, however some good has come from Covid in terms of the opportunities it has created for doing business in a new way. It may also bring about potential M&A and real estate activity, and possible increased consumer spending in the year ahead.
2. Brexit and planning around UK businesses setting up operations in Ireland.
3. Budget 2021 Capital Acquisition and Gains taxes, Entrepreneurial Relief, Pensions and Retirement Relief.
Roberts Nathan podcast discussing 2020 the year that was, and why 2021 has potential for business growth for Irish SME businesses
We hope you enjoy listening to our podcast and if you have any questions regarding any of the points raised please let us know.
 
December 17, 2020