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Budget 2020
Budget Briefing - 9 October 2019
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020
Budget 2020
© 2019 Deloitte Ireland LLP. All rights reserved.
Introduction Mike Sheehan © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 2
Budget 2020 Introduction Mike Sheehan Personal & Business Tax Jackie Coughlan Corporate & International Tax Caroline O’ Driscoll VAT Ted Holohan Brexit Donna Hemphill Panel Discussion Wrap- Up Mike Sheehan © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 3
Budget 2020 At a glance – doesn’t seem like a whole lot Devil is in the detail Amounts involved © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 4
Budget 2020
The Minister Giveth
Full Year
€m
Tax Credit Increases 43
SME Tax Reliefs 80
Housing – help to buy 40
CAT Relief 11
____
Tax Reliefs 174
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 5
Budget 2020
The Minister Takes Away
Full Year
€m
Carbon Taxes 157
CT Anti Avoidance 94
Tobacco 57
Stamp Duty – non residential property 141
Dividend withholding tax 80
____
Tax Increases 529
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 6
Personal & Business Tax Jackie Coughlan © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 7
Personal Tax Credits
Home Carer Credit Earned Income Credit
• Increased from €1,500 to €1,600 • Increased from €1,350 to €1,500
• Claimable where spouse/civil partner works in the home caring for: • Applies to those earning trading or professional income
− Child (under 16 / under 18 & in full time education) • Includes employed directors (>15% holding) who don’t qualify for
employee tax credit
− Individual over 65
• Aggregate of employee tax credit and earned income credit capped at
− Individual permanently incapacitated by reason of mental or €1,650
physical infirmity
• Carer can earn income of up to €7,200 without impacting on the credit
• Carer’s income does not take account of DSP carer benefit/allowance
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 8
Other Measures
Stamp Duty on non-residential PRSI - additional 0.1%
Inheritance/gift tax threshold
property increases from 6% to employer contribution to the
from parent to child increases
7.5% National Training Fund Levy
from €320k to €335k
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 9
Key Employee Engagement Programme (“KEEP”)
Share-based remuneration incentive for unquoted
SME companies to attract key employees.
Available for qualifying share options Gains arising to employees on the exercise of KEEP
granted between 1 January 2018 and 31 share options will be liable to Capital Gains Tax on
December 2023. disposal of the shares, in place of the current
liability to income tax, USC and PRSI on exercise.
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 10
© 2017 DeloitteKEEP
New Measures
Amendments to qualifying companies
& holding companies definitions to
allow group structures to qualify
Amendments to qualifying
employee definition to reflect
part-time and flexible working
arrangements and movement
within group structures
Existing shares to qualify?
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 11SARP & FED
Special Assignee Relief Programme (SARP) Foreign Earnings Deduction (FED)
Incentive to reduce the cost of bringing in skilled workforce to Irish Incentive to support Irish companies expanding into new markets
operations
Income tax relief up to €35k for travel to certain qualifying countries
30% of income over €75k threshold exempt from income tax where
certain conditions met
Must have 30 days in a relevant country in 12 month period
Income threshold of €1m
Qualifying days = 3 consecutive days
Schemes extended from 31 December 2020 to 31 December 2022
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 12R&D Tax Credit
Increase in credit from 25% to Credit can be claimed on Limit for third level educational New provisions are subject to
30% qualifying pre-trading institutes increased from 5% to State Aid approval
expenditure 15%
Applies to micro and small
companies
Available via offset against VAT
and payroll taxes
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 13Dividend Withholding Tax
From 1 January 2020 rate increases from 20% to 25%
Does not impact an individual’s ultimate tax liability – marginal tax rates apply
From 1 January 2021 a modified Dividend Withholding Tax regime will apply
Employment Tax Update 2019
© 2019 Deloitte. All rights reservedEmployment and Investment (“EII”) – Main changes
FULL INCOME TAX RELIEF (40%) TO BE
PROVIDED IN YEAR INVESTMENT IS MADE
ANNUAL INVESTMENT LIMIT INCREASED TO €500,000 PER
INCREASED FROM €150,000 TO ANNUM FOR MINIMUM INVESTMENT
€250,000 PER ANNUM PERIOD OF 10 YEARS
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 15Corporate & International Tax Caroline O’ Driscoll © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 16
International Tax Developments © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 17
“The whole world’s in a
terrible state o’ chassis”
Juno and the Paycock
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020International Tax….. © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 19
2019
Exit tax guidelines
CFC guidelines
EU notice 6 Aug/Interest limitation Technical
amendment
TP consultation to exit tax
ORIP regime UK
Jan April May July/Aug Sept Oct
CFC effective MLI effective
MLI deposited BEPS 2.0
Haven substance rules TP feedback statement
R&D review
Interest consultation
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 202020+
DAC 6 Reporting
Interest limitation?
Jan Likely 2020 2021+
TP rules OECD BEPS 2.0
Hybrid mismatch rules
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 21“Ireland has a competitive
corporation tax rate. It has
served us well and it will 12.5% rate
not be changing”
Budget 2020
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020Irish Transfer Pricing Rules © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 23
Transfer pricing is the
setting of the price for
goods and services sold
between related entities
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020New Transfer Pricing Rules 2020
Broadens the scope Adopts 2017 OECD Removes pre July Extends TP to SME’s
of TP guidelines (DEMPE) 2010 grandfathering
© 2019 Deloitte Ireland LLP. All rights reserved. Presentation title 25
[To edit, click View > Slide Master > Slide Master]New Transfer Pricing Rules 2020
Enhanced TP Extends to non Extends to capital
documentation trading income transactions > €25m
Master Exceptions
file between 2 Certain
€250m Irish exemptions
Local file resident
€50m companies
© 2019 Deloitte Ireland LLP. All rights reserved. Presentation title 26
[To edit, click View > Slide Master > Slide Master]Transfer Pricing for SME’s
Small = Exempt
HeadcountTransfer Pricing for Medium Enterprises
1 January 2020
HeadcountRelevant Arrangements?
Schedule D type transactions with a foreign counterparty
Consideration >€1m
Capital transactions with foreign counterparty >€25m
Reduced documentation requirements
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 29OECD and BEPS 2.0 © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 30
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 31
© 2019 Deloitte Ireland LLP. All rights reserved
32
BEPS 2.0 – Global Tax Rules in a Digital Age
• Taxing rights where user is based?
Pillar 1 • Taxing rights to market jurisdictions based
on marketing intangibles?
Allocation of taxing • Reconsider nexus concept/significant
rights economic presence?
• Income inclusion rule?
Pillar 2 • Global minimum tax?
• Tax on base eroding payments?
Global Anti Base Erosion
(GLoBE)
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 32© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 33
“The idea is if a company operates
abroad, and this activity is taxed in
a country with a rate below the
minimum, the country where the Global
firm is based could recover the minimum
difference.“
tax rate
Pascal Saint Amans, Head of
Tax Policy OECD
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020Future tax trends Transfer pricing interventions doubled MAP claims doubled DEMPE BEPS 2.0 Joint audits Europe Data analytics - €164m (33%) Robotics/automation © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020
VAT Ted Holohan © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 36
Budget 2020 changes Carbon Tax/VRT/Excise Carbon Tax • Increase in Carbon Tax €6 per tonne. • Carbon Tax change to auto fuel from midnight on the 8th October 2019. • Carbon Tax change to other fuels, i.e. home heating etc. from May 2020. • There will be additional relief through the Diesel Rebate Scheme for hauliers to compensate that sector for the increased cost of fuel. VAT/VRT • Reduction in qualifying CO2 thresholds for reliefs in respect of VAT reclaim on commercial vehicles. • New Nitrogen Oxide (NOx) emissions based surcharge replacing the 1% diesel surcharge on new passenger vehicles registered in the State from 1 Jan 2020. • Extension of VRT relief for hybrids and plug-in hybrid electric vehicles (subject to CO2 thresholds). Tobacco Products Tax • Increase of 50c on pack of 20 cigarettes with pro-rata increase on other tobacco products. © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 37
The four quick fixes The transition to a single EU VAT area • The EU countries have asked for short-term measures to improve the functioning of the EU VAT system. This has resulted in the following: 1. Harmonized rules for EU cross border call-off stock supplies; 2. Harmonized rules for EU cross border chain transactions; 3. Harmonized rules for documenting the EU cross border movement of goods; 4. Mandatory VAT ID number verification for EU cross border supplies. • The new rules will be effective as of 1 January 2020 and applicable until the implementation of the definitive VAT regime (if adopted, foreseen for 1 July 2022). • The 2020 changes will affect different areas of your businesses, e.g.: the ERP system, the Tax Control Framework and policy, the order processes between suppliers and customers, the VAT compliance, the billing processes, the contracts, etc. © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 38
The four quick fixes
The transition to a single EU VAT area
• The four quick fixes of the EU VAT system aim to harmonize and simplify of the VAT rules across the EU. This can also mean stricter rules
and less flexibility for the business. The exact impact for a trader depends on the business specifics of each trader and the strategic choices
made.
• However, in any case the changes impact people, process and technology & data. The changes ask for a holistic approach involving various
stakeholders such as Sales, Procurement, IT, Tax, Legal, etc.
• The four quick fixes can also be seen as an opportunity for standardization and enhancement of internal controls across the EU.
• Some changes only require small changes for people, process, technology & data whereas others can have a bigger impact.
The approach we suggest:
1. Determine which quick fixes will impact the current supply chains (‘must do’s’);
2. Determine which benefits can be derived from the quick fixes (‘nice to haves’);
3. Determine the actions and priorities for the stakeholders including Sales, Procurement, IT, Tax,
Legal, etc.;
IT Tax
4. Initiate the process of change.
4 quick Example of a small change with a high financial impact
fixes
The new rules require businesses to validate the VAT ID number of a customer in the case of
an EU cross border supply. Not doing this creates a risk of an additional VAT liability if the
VAT ID number turns out invalid at the time of the supply. This risk eats out your profit
Legal Sales
margin (average standard rate in the EU is 20%). Generally businesses only validate VAT ID
numbers as part of the Master Data set up in the ERP system.
Procurement A new process for continuous VAT ID number verification is recommended. IT can automate
this process or you can outsource this task. Sales and Legal may want to take risk restricting
measures in the contracts.
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 39Quick fix call-off stock supplies
Current situation 2019
1 2
INVOICE
Trader Customer (B2B)
GOODS
Storage
• As a standard VAT registration and reporting obligations for the supplier in the EU country of dispatch and in the other EU country of
storage.
• 18 EU countries currently have a call-off stock regime in place that relieves the supplier from registration and reporting obligation in
the EU country of storage.
• The various EU countries apply different sets of rules creating difficulties in daily practice.
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 40Quick fix call-off stock supplies
Situation 2020
1 2
INVOICE
Trader Customer (B2B)
GOODS
Storage
• A harmonized set of rules across all EU countries (maximum storage period is 12 months).
• The new rules are mandatory to apply (not optional).
• The supplier will perform a “standard” EU cross border supply in the country of dispatch and has no registration and reporting
obligations in the country of storage (if and as long as all conditions are met).
• The supplier and the customer will face additional administrative requirements (double EU Sales Listing and stock registers).
• As a supplier and as a customers you need to have in place new controls to ensure that the call of stock rules are applied if the
conditions are met and a default scenario is known and in place once no longer met.
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 41Quick fix chain transactions
Current situation 2019 – standard rule
1 2 3
INVOICE INVOICE
Supplier 1 Supplier 2 Customer (B2B)
GOODS
• Chain transactions concern subsequent supplies of goods involving 3 parties (or more), whereby only one cross border movement
occurs in the course of the subsequent supplies.
• As a general concept only one leg in the chain can be considered the cross border supply for VAT. Hence, Supplier 2 has VAT
registration and reporting obligations in the dispatch or arrival country, possibly also triggering VAT cash flow in these countries.
• Currently the rules for allocating the cross-border movement to a leg in the chain can result in mismatches between countries and
create uncertainty about applying the 0% VAT rate (or VAT exemption) or not. The average standard VAT rate is 20% in the EU.
• The simplified triangulation rules may reduce the administrative burden in the case of a 3 party supply chain. Applying the simplified
triangulation is mandatory (not optional).
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 42Quick fix chain transactions
Situation 2020
1 2 3
INVOICE INVOICE
Supplier 1 Supplier 2 Customer (B2B)
GOODS
• A harmonized set of rules across all EU countries with new criteria to determine the leg in which the cross-border supply takes place.
• The rules are strict and leave less room for flexibility. This increases certainty for apply the 0% VAT rate (or VAT exemption).
• The party arranging the transport and the VAT ID numbers used will be decisive factors.
• The simplified triangulation rules as such do not changed and will still reduce the administrative burden if applicable. However, with
more certainty on the VAT qualification of the supplies it will be easier to apply the simplified triangulation regime.
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 43Quick fix proof of transport
Situation 1 January 2020
A
documents related to
Two items from A transport, e.g.:
Supplier indicates • Signed CMR
goods have been document
transported by him or • Bill of lading
on his behalf
Supplier ships One item from A + • Airfreight invoice
one item from B • Carrier invoice
Harmonization of proof of
transport & rebuttable
presumption B
Two items from A supportive documents
Supplier is in related to transport,
Buyer ships possession of written e.g.:
statement of buyer • Insurance policy
that goods have been
transported • Bank payment doc
One item from A +
one item from B
• Doc issued by public
authority, e.g. notary
• Receipt warehouse
keeper
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 44Quick fix VAT identification number
Situation 1 January 2020
1 2
INVOICE
Trader Customer (B2B)
GOODS
• A supply of goods from one EU country to another to a taxable person is subject to 0% VAT (VAT exempt) if the supplier can prove the
cross border movement (documentation) of the goods and if the customer provides its valid VAT number to the supplier.
• The 0% VAT rate (VAT exemption) shall not apply if the supplier cannot file a correct EU Sales Listing.
• The published examples of justified shortcomings to the EU Sales Listing do not include an invalid VAT ID number of the customer.
• Hence you need to have in place VAT ID number verification procedures or tools that allow continuous verification.
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 45
45Brexit Donna Hemphill © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 46
Brexit considerations
1 Supply chain
2 People
Financial environment
3
4 Regulatory, legal and data
5 Market access and trade
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 47Revenue guidance – preparing for Brexit
• Register for Customs – obtain Economic Operator Registration and Identification (EORI)
number
• Decide who will submit your customs declarations – customs agent/in-house
• Know the key data required for a customs declaration
Commodity code
Customs value
Origin
• Customs documentation
Commercial invoice
Packing list
Licences?
• Making payments of duty and VAT
Cash TAN
Deferred payment
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 48Supply chain review
Do you rely on UK-based suppliers?
• Can goods be sourced directly from the EU
• What are the incoterms – who arranges transport?
• What tariffs are applied to your goods?
Do you have customers in the UK?
• Who will take on responsibility for the completion of customs formalities?
• Lead times / shelf life
• Are contracts in place?
Do your goods move through the UK on the way to or from Europe?
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 49Customs declaration
A OFFICE OF DISPATCH/EXPORT
EUROPEAN UNION 1 D EC L A R A T IO N
2 Consignor/Exporter No
1
• Supplier name / address 3 Forms
5 Items
4 Loading lists
6 Total pac kages 7 Referenc e number
• Importer EORI
C o p y fo r th e c o u n tr y o f d is p a tc h /e x p o r t
8 Consignee No 9 Person responsible for financ ial settlement No
• Pieces 10 Country first
destin.
11 Trading
c ountry
13 C.A.P.
Weight
14 Dec larant/Representative No 15 Country of dispatc h/export 15 C. disp./exp. Code 17 Country destin. Code
• 16 Country of origin
a b
17 Country of destination
a b
• Declarant
18 Identity and nationality of means of transport at departure 19 Ctr. 20 Delivery terms
21 Identity and nationality of ac tive means of transport c rossing the border 22 Currenc y and total amount invoic ed 23 Exc hange rate 24 Nature of
transac tion
• Deferment account
25 Mode of transport 26 Inland mode 27 Plac e of loading 28 Financ ial and banking data
at the border of transport
29 Offic e of exit 30 Loc ation of goods
1
• Customs currency and value
31 Pac kages Marks and numbers - Container No(s) - Number and kind 32 Item 33 Commodity Code
and
desc ription No
of goods
34 Country origin Code 35 Gross mass (kg)
• Valuation statement
a b
37 P R O C E D U R E 38 Net mass (kg) 39 Quota
40 Summary dec laration/Previous doc ument
• Country of origin 44 Additional
information/
Doc uments
41 Supplementary units
A.I. Code
• Country of dispatch
produc ed/
Certific ates
and authori-
zations 46 Statistic al value
47 Calc ulation Type Tax base Rate Amount MP 48 Deferred payment 49 Identific ation of warehouse
• Customs procedure code
of taxes
B ACCOUNTING DETAILS
• Commodity code
• Transport details 50 Princ ipal
Total:
No Signature: C OFFICE OF DEPARTURE
• Freight charges 51 Intended
offic es
represented by
Preference
of transit Plac e and date:
•
(and
c ountry)
52 Guarantee Code 53 Offic e of destination (and c ountry)
• And many more…..
not valid for
D CONT ROL BY OFFICE OF DEPART URE Stamp: 54 Plac e and date:
Result:
Seals af f ixed: Number: Signature and name of dec larant/representative:
identity:
T ime limit (date):
Signature:
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 50NI/ROI Border
No customs tariffs on goods moving from Ireland to Northern
Ireland
No requirement to complete declarations or other formalities for
import or export of most goods (Exceptions for - dangerous
chemicals, ozone depleting substances and F-gases, endangered
species, rough diamonds and dual-use or torture goods)
No corresponding UK Government checks or inspections on
imports or exports at or near the border
Only apply a small number of measures on certain goods:
• VAT
• Excise
• Licences
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 51Panel Discussion © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 52
Panellists: Dan Hogan Brexit Finance Manager Dairygold J.J Kett CEO Voicesage Conor Mowlds Chief Commercial Officer Port of Cork © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 53
Wrap Up Mike Sheehan © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 54
Budget 2020 €3000 - Gift from each parent to each child €1270 - CGT exemption €500 – Tax free vouchers Rollover – CGT losses EIIS – Investments Maximise pension contributions © 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 55
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 56
Thank
You
© 2019 Deloitte Ireland LLP. All rights reserved. Budget 2020 57At Deloitte, we make an impact that matters for our clients, our people, our profession, and in the wider society by delivering the solutions and insights they need to address their most complex business challenges. As the largest global professional services and consulting network, with approximately 286,000 professionals in more than 150 countries, we bring world-class capabilities and high-quality services to our clients. In Ireland, Deloitte has nearly 3,000 people providing audit, tax, consulting, and corporate finance services to public and private clients spanning multiple industries. Our people have the leadership capabilities, experience and insight to collaborate with clients so they can move forward with confidence. This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte Ireland LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication. Deloitte Ireland LLP is a limited liability partnership registered in Northern Ireland with registered number NC1499 and its registered office at 19 Bedford Street, Belfast BT2 7EJ, Northern Ireland. Deloitte Ireland LLP is the Ireland affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms. © 2019 Deloitte Ireland LLP. All rights reserved.
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