Finance Bill 2019

Earlier today, the Department of Finance released the first draft of Finance Bill 2019. This Bill sets out the proposed legislative changes required in order to implement the Budget Day announcements of 8 October. In addition to what was announced in the Budget, the Bill also proposes to introduce a number of new measures.

Measures Announced on Budget Day

The key measures included in the Finance Bill, which were announced on Budget Day, are:

• Implementation of carbon tax increases announced in the Budget, along with a suite of tax measures intended to shift the economy to a more environmentally friendly and sustainable model.
• Increases in the Home Carer and Earned Income tax credits.
• Extension of Foreign Earnings Deduction (FED) and Special Assignee Relief Programme (SARP) to the end of 2022.
• Changes to the Key Employee Engagement Programme (KEEP) to encourage take up of the incentive, including allowing companies operating within group structures to qualify, and extending the incentive to allow part-time/flexible workers to qualify.
• Extension of the Living City Initiative to the end of 2022.
• Changes to the Employment and Investment Incentive (EII), most notably to allow for full income tax relief (40%) in the year of investment, and an increase in the investment limit from €150k to €250k (or €500k for investments of 10 years or more).
• Extension of the CGT relief for farm restructuring to the end of 2022.
• Increase in the CAT Group A threshold, which broadly applies to transfers between parents and their children, from €320k to €335k (with effect from 9 October 2019).
• Significant expansion to Ireland’s transfer pricing regime. This includes formal documentation requirements, penalties for non-compliance, extending the scope to certain non-trading and capital transactions, and the future extension to cover significant SME transactions (subject to a Commencement order). 
• The introduction of ATAD Anti-Hybrid Rules. 
• Improvements to the R&D tax credit regime, including an increase in the R&D tax credit from 25% to 30% and other enhanced supports for micro and small companies, and an increase in the amount that can be outsourced to third level institutions from 5% to 15% available to all claimant companies.
• Changes to the tax regimes for Irish Real Estate Funds (IREFs) and Real Estate Investment Trusts (REITs).
• Increase in the Bank Levy, Stamp Duty rate applicable to non-residential property, and Stamp Duty where a “cancellation scheme” is used for company acquisitions.
• Extension of the Help-to-Buy scheme to 2021.

Measures Not Announced on Budget Day

Some of the additional measures in the Finance Bill, not announced on Budget Day, include:

• The Bill includes a number of measures which aim to retain the status quo for certain tax measures in the event that the UK leave the EU.
• Exemption from Income Tax for the reimbursement of expenses by the HSE for living donors who donate the lobe of a liver.
• Exemption from Income Tax on payments made under the Magdalen Laundry ex-gratia scheme.
• Exemption from Income Tax for certain foster care related payments, training allowances and student support payments.
• Amendment to allow for regulations to facilitate the development of an eProbate system.
• Amendment to the conditions of the Dwelling House Exemption following the decision in a High Court case last year.
• Transposition of EU Directive DAC6 introducing a mandatory disclosure regime for certain cross-border transactions.
• Changes to the s.110 regime for securitisation companies.
• Application of 13.5% VAT rate to certain food supplements from 1 January 2020, excluding foods for specific groups, vitamins and minerals such as folic acid licensed as medicines by the HPRA, and fortified foods.
• Reduction in the CO2 emissions level limit for a “qualifying vehicle” (i.e. a passenger vehicle qualifying for partial VAT recovery when used in a business) for vehicles first registered after 1 January 2021.

For further information on the above, and other measures contained in the Finance Bill, please read our Guide to the Finance Bill:

BDO GUIDE TO FINANCE BILL 2019

If you have any questions on what the Finance Bill means for you or your business, please contact a member of the BDO Tax Team.

Finance Bill Stages

The Department of Finance have also released the expected timetable for the various stages of the Finance Bill. Key dates are as follows:

It is expected that Finance Act 2019 will be signed into law before the end of 2019.

Department of Finance Documents

• Finance Bill 2019
• Finance Bill 2019 – Explanatory memo