Ireland: Finance Bill 2013 published – detailsFebruary 21, 2013
On 13 February 2013, the Government published the Finance Bill 2013. Some of the main measures included in the bill, which were not announced in the Budget of 5 December 2012, are as follows.
Universal social charge (USC)
Credit will be given for foreign tax paid against the USC on foreign income.
The bill provides that income or gains subject to the remittance basis will remain so subject where transferred to a spouse or civil partner of the individual who had claimed the remittance basis in the first place.
Capital acquisitions tax (CAT)
There will be an exemption from CAT for capital redemption policies where neither the disponer nor the beneficiary is resident or domiciled in Ireland.
Intangible asset regime
Under the current rules, there is a clawback of capital allowances if the eligible IP assets are disposed of, or cease to be used in a trade, within 10 years of acquisition. The bill includes measures to shorten this period to five years.
Research and development (R&D)
Under the current rules, qualifying companies may surrender a portion of their R&D credit to reward key employees who have played a role in developing the R&D.
One of the relevant conditions is that employees must spend at least 75% of their time working on R&D. The bill includes measures to reduce this to 50%.
Investment limited partnerships (ILP)
Technical amendments are being proposed in consequence of the forthcoming implementation across the European Union (in July 2013) of the Alternative Investment Fund Managers Directive (AIFMD).
Foreign rental losses
The bill will ensure that losses arising on foreign rental income cannot be offset against other sources of income under Schedule D Case III. Nevertheless, such losses may continue to be offset against foreign rental profits.
An additional foreign tax credit will be available for certain foreign dividend income received from EU and European Economic Area (EEA) treaty-partner resident companies. This will be calculated by reference to a nominal rate of taxation in the jurisdiction where the payer is resident.
The Taxes Consolidation Act 1997 is amended to facilitate the exchange of information between the Revenue Commissioners and the tax authorities of other Parties to the
Joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters.
Regarding FATCA, the bill will contain measures essential for the ratification of the Agreement between Ireland and the United States.
Value added tax
Fund management services
The bill contains measures to ensure that businesses supplying fund management services (including related agency services) outside the EU may no longer deduct input VAT. This measure is being taken after consultation with the European Commission.
For vouchers supplied to businesses outside Ireland for resale, these will become taxable when the voucher is redeemed, and no longer on the supply of the voucher, as is currently the case.
Ratification of treaties
The bill will contain measures for the ratification of the following:
- The double taxation agreements with Egypt, Qatar and Uzbekistan, and the protocol to the double taxation agreement with Switzerland
- The tax information exchange agreement with San Marino
- The OECD Convention on Mutual Administrative Assistance in Tax Matters
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