Finance Bill 2022 & Financial Services

On 20 October, the Department of Finance released the first draft of Finance Bill 2022. This Bill sets out the proposed legislative changes required in order to implement the Budget Day announcements of 27 September. In addition to what was announced in the Budget, the Bill also proposes to introduce a number of new measures.

The Finance Bill contains a number of proposed legislative changes that may be of interest to businesses operating in the Financial Services sector.


Banking Levy

This levy, which was originally due to expire in 2021, was extended in last year’s Budget to the end of 2022 (albeit applying to a reduced number of institutions as Ulster Bank and KBC were excluded on the basis that they were exiting the Irish market). On Budget Day, it was announced by the Minister for Finance that the banking levy would be extended until the end of 2023.

Finance Bill 2022 contains the necessary amendments to legislate for the extension.

It is expected that the amount of levy collected in 2023 will, similar to 2022, be in the region of €87m. The findings of the ongoing Retail Banking Review (due to report next month) are awaited as they are expected to inform consideration of this levy’s future.


Irish Unit Trusts

The Finance Bill provides clarification that an authorised unit trust, the general administration of which is carried on in Ireland, will not be treated as an offshore fund solely where its trustee is resident in another EU/EEA Member State and provides its trustee services through an Irish branch.

This change puts on a legislative footing a long-standing practice whereby such funds were considered “investment undertakings” and not “offshore funds”. This is a welcome clarification following some recent confusion on the matter.


Fund Reporting

The Finance Bill introduces a requirement for Exempt Unit Trusts, Common Contractual Funds (CCFs), and Investment Limited Partnerships (ILPs) to file an annual statement in relation to their assets and business activities. The Bill also proposes to introduce a fine of €3,000 for failure to submit the annual statement, or submission of an incomplete or incorrect statement by CCFs or ILPs.



Management of EU Funds

The Finance Bill proposes to extend the VAT exemption for management of Irish UCITS and AIF funds to include management services provided to their EU counterparts. This proposal could materially impact the level of VAT recovery available to Irish established fund managers.

Section 110 Companies holding Plant & Machinery

The Finance Bill proposes, with effect from 1 March 2023, to remove the VAT exemption for management services provided to Section 110 companies which hold plant and machinery (e.g. aircraft leasing section 110 companies). As such companies are likely to be engaged in fully VATable activities, we do not expect this change to have a significant impact for those companies, other than cash-flow implications. Furthermore, it is likely to result in an increase VAT recovery position for businesses providing such management services.

Agency Services

The Finance Bill proposes to remove the VAT exemption for agency services in respect of the management of certain financial undertakings (e.g. UCITS, ICAVs, CCFs, ILPs, pension funds and section 110 companies).  


Employment Related Changes


As announced on Budget Day, the Bill proposes to extend the Special Assignee Relief Programme (SARP) by 3 years until 31 December 2025. To qualify for the relief, an employee will be required to hold a PPS number and the employer must also confirm that it has complied with its PAYE commencement obligations as outlined in the Income Tax (Employments) Regulations 2018. In addition, a relevant employee who first arrives in Ireland on or after 1 January 2023 will require a minimum annual income of €100,000 to benefit from the relief. 


On Budget Day, it was announced that the Key Employee Engagement Programme (KEEP) would be extended to 31 December 2025. In addition, changes were to be made to existing tax law to facilitate the buy-back of KEEP shares by the issuing company, and an increase of the company limit to €6 million.

These changes were not included in the Finance Bill published on 20 October. However, the Department of Finance have indicated that they expect to include them at the Committee Stage of the Bill.

Employer Reporting Obligations

The Bill proposes to introduce new reporting requirements for certain payments made to employees which are exempt from tax, including:

  • Travel and subsistence payments
  • Allowances paid for remote working
  • Small benefits

Details of such payments will be required to be reported electronically on a monthly basis by employers. Precise details are awaited. However, the reporting of travel and subsistence payments in particular is likely to create significant additional work and complexity for employers, and will involve changes to their systems in order to facilitate this. Although these payments are exempt from PAYE, the intention of the proposed amendment would seem to be to give Revenue increased oversight of such payments and to manage any perceived tax risk. In order to allow for stakeholder engagement on the measure, it will be subject to a commencement order.


The Finance Bill also contains a number of other employment related changes, including:

  • Extension of the BIK exemption for employer provided bicycles and/or safety equipment to cargo bicycles and e-cargo bicycles, and provides for an increased threshold of €3,000 for same.
  • Introduction of a number of provisions to give effect to the EU regulations on the creation of Pan European Pensions Plans (PEPPs). The Bill provides for a new form of approved pension product (the PEPP) which will be very similar to existing Irish Personal Retirement Savings Accounts (PRSAs). The tax treatment of benefits and contributions to PEPPs will be the same as applies to other pension products currently available in Ireland.
  • Exemption of employer contributions to an employee’s PRSA or PEPP from BIK.
  • Extension of the Foreign Earnings Deduction to 31 December 2025, as announced on Budget Day.
  • Increase in the limit of the Small Benefit Exemption to €1,000 and an increase in the number of benefits in a year that an employer can give from one to two per year, as announced on Budget Day.

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

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