Taxation

Our tax department has a wealth of expertise and experience in all areas of Irish taxation including income tax, corporation tax, capital gains tax, capital acquisitions tax and VAT. Our tax professionals are highly skilled at devising tax efficient solutions that are specifically tailored to the needs and circumstances of our clients.

We are keenly aware that tax advice is not given in a vacuum and so we take the time to understand our clients and their business environment, whether they are entrepreneurs just starting out or large multinationals with complex business operations in many countries. The various services we offer are as follows;

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Corporate Tax Compliance

In recent years managing corporate tax compliance matters has become increasingly complex. However, the preparation and submission of compliance returns should not take members of senior management away from running their business. PKF O’ Connor, Leddy & Holmes offer a focused corporate tax compliance service. We provide timely Corporation Tax computations and submissions which allow clients to manage tax payments and minimise corporate tax liabilities.

As part of our compliance service we offer advice in the following areas:

  • Capital allowances
  • Intellectual property
  • Revenue audit assistance
  • Base erosion & profit shifting

Whatever the size of the company, our team of senior tax specialists guarantee a prompt, personal service that will help you solve tax issues fast, delivering accurate, authoritative advice and guidance on all tax-related matters.

M & A Service:

Businesses contemplating acquisitions, disposals or a reorganisation need advice that is timely, proactive, innovative, commercial and efficient. We provide an integrated M&A service which is aligned with your business strategy. The aim of our service is to minimise acquisitions taxes, minimise taxes on profits arising during the lifetime of the investment and minimise exit taxes.

We offer an in-depth tax due diligence service which focuses on identifying material exposure and advising on how risks identified can be addressed in order to ensure transaction success.

We work closely with our corporate finance specialists to provide an integrated advisory team before and during the transaction process.

Transfer Pricing

Transfer pricing is the most challenging tax-related issue facing multinational businesses today. Transfer pricing affects all aspects of intra-group pricing arrangements between related business organisations.

We offer a multi-disciplinary approach which means that we provide practical and fully integrated tax, valuation and economic solutions alongside specific sector experience to meet your commercial and operational needs.

How we can help:

  • Developing transfer pricing policies together with relevant documentation which align with your business model
  • Ongoing review of transfer pricing policies to ensure they are fit for purpose
  • Developing suitable advance pricing agreements
  • Providing health checks to identify risk and opportunities in your transfer pricing policies
  • Transfer pricing dispute resolution

VAT Services

VAT is levied on the supply of goods and services. VAT is a high risk and complex area for businesses and landlords. If VAT is not accounted for correctly it can give rise to significant VAT cost.

PKF O Connor, Leddy & Holmes have an experienced team of VAT specialists and can provide you with a comprehensive VAT service.

Our tax team can assist you with :

  1. VAT on Property Transactions
  2. Specific Business Transactions
  3. Revenue Audits
  4. VAT Reviews
  5. VAT compliance

 

VAT on Property transactions

When it comes to property transactions, VAT should not become a costly afterthought. It is important to seek VAT advice before you buy, sell, develop or lease a property to avoid any VAT pitfalls.

The concept of ‘one size fits all’ cannot be applied to VAT on Property transactions. The VAT treatment of a sale or letting of a property depends on the VAT history of the property. We work closely with our clients to provide comprehensive VAT advice that is specific to their particular property related transaction in order to minimise any associated VAT costs.

We provide VAT on property transaction advice not only to businesses and landlords but also to receivers, liquidators and other professional firms. The services we provide include:

  • Reviewing sales contracts and lease agreements from a VAT perspective and liaising with our client’s solicitors in respect of same.
  • Reviewing and preparing Pre-Contract VAT Enquiries and other VAT property documents that may be required on sale.
  • In connection with the sale of a property we ensure that VAT on the sale is accounted for correctly and provide advice so that no VAT clawbacks arise for the vendor.
  • If our client is acquiring property we ensure that VAT is only paid if correctly due.

 

Specific Business Transactions

We advise clients on how to correctly account for VAT on their business transactions. The services we provide include:

  • Advice on Irish and cross border business transactions.
  • Transfer of business.
  • Mergers and acquisitions.
  • Significant agreements with suppliers/customers.
  • Transactions between members of a group.

 

Revenue Audits

Our specialist team can assist you in connection with Revenue Audits by conducting a pre-audit review, submission of disclosure if necessary, representation at the audit and corresponding with Revenue.

 

VAT reviews

We can perform VAT health checks on your business to determine potential VAT exposures and savings. An error that is continuously repeated in your VAT returns can become very costly as the Revenue can review the previous 4 years.

As part of our review we would ascertain whether:

  • VAT is accounted for correctly on goods and services received from outside of Ireland.
  • VAT is charged correctly.
  • All allowable purchase VAT is reclaimed
  • VAT is reclaimed only on allowable items
  • Appropriate reliefs are being claimed

 

VAT compliance

We can assist you with managing your VAT by providing VAT compliance services e.g. VAT returns, annual VAT Return of Trading Details, Intrastat returns, VIES returns, VAT registration etc.

 

Employment Taxes

People are often the most important asset of a business. Hiring the right people and retaining key employees is critical to remaining competitive and essential if you want to grow your business.

You will want to remunerate, incentivise and reward your employees’ as tax efficiently as possible. You may also want to take your business international or seeking to recruit key talent from abroad.

At PKF O’Connor, Leddy & Holmes our team comprises of tax advisory and compliance specialists that can assist you in relation to:

  • Employment taxes.
  • International employment taxes and global mobility.
  • Employee benefits and incentives.
  • Share based rewards.
  • PAYE health checks.
  • Revenue PAYE Audits.

The PAYE system, has been reformed by Revenue and significant changes have been made in respect of employer reporting obligations with effect from 1st January 2019. It is important to have accurate current data, so you can file the correct PAYE returns on time.

Our tax team can assist you with :

  1. Employment Taxes
  2. International Employment Taxes
  3. Share Based Reward Schemes

Employment Taxes

PKF O’ Connor, Leddy & Holmes provides a comprehensive range of advisory services tailored to meet the two principal objectives of employers:

  • Identifying potential savings from the costs of employment whilst motivating staff.
  • Managing risk in this area effectively.

We offer expertise in the following areas:

  • Design and implementation of tax effective remuneration policies.
  • Advice regarding the tax and policy issues arising in relation to termination payments.
  • PAYE and PRSI health checks.
  • Revenue intervention assistance.

With on-going changes in tax law and Revenue guidance, a business should undertake a PAYE review on an annual basis. An error that is repeated in monthly payroll submissions, can become a costly error, as the Revenue can review the prior 4 years.

International Employment Taxes

In today’s globalised economy mobile employees have become commonplace. With this comes a wide range of complex tax and social security issues. Through the PKF international network we can offer an all-encompassing approach towards international employment taxes. We can offer expert advice in the following areas:

  • Minimisation of the tax and social security implications of an international assignment.
  • Advising on global mobility tax reliefs that may be available.
  • Providing advice on Short Term Business Visitors coming to Ireland
  • Evaluating the employee benefits package to examine whether it is being delivered tax effectively.
  • Hypothetical tax and tax equalisation policy advice.
  • Calculation of employer and employee social security liabilities.
  • Guidance on withholding issues.

 

Share Based Reward Schemes

Share based reward schemes can be of valuable assistance to an employer. Such plans can provide tax efficient remuneration for employees and ensure to also incentivise employees in line with the business.

Some of the share reward schemes that we advise on include:

  • Unapproved share option schemes.
  • Flowering share schemes.
  • Forfeiture shares
  • Restricted stock units.
  • Clog schemes.

Our experienced team can help you design the most appropriate plan for your business objectives and prepare the company valuation. We can also provide all company secretarial requirements in respect of share schemes and liaise with employer’s legal team in connection with the shareholder’s agreement.

Estate & Succession Planning

At PKF O’Connor, Leddy & Holmes we have an experienced team of tax specialists who combine their tax expertise with the commercial experience to advise clients on  acquisitions, mergers, sales, restructuring and succession planning. We proactively engage with our clients to ascertain their goals and devise solutions to achieve them.

Every business owner should obtain retirement and succession planning in a timely manner to determine a tax efficient exit from their business. We have extensive experience in working with our clients to advise and assist them with their succession plan. This may involve passing on their business to the next generation, MBO’s or a combination both. By understanding our client, the business and the family dynamics we provide a tailored tax plan that embodies our clients’ wishes and to minimise capital taxes arising from the transaction.

There are a number of taxes and reliefs to consider in relation to succession tax planning. Most tax reliefs have time qualifying conditions. Therefore, timely planning is absolutely key for both personal and business assets so that the various tax reliefs can be utilised to minimise capital taxes.

The taxes applicable in relation to estate and succession planning include:

  • Capital Gains Tax for the transferor.
  • Capital Acquisition Tax for the beneficiary.
  • Stamp Duty for the beneficiary on a gift
  • VAT, in certain circumstances.

Our tax team can assist you with :

  1. Capital Gains Tax on Sale/Gift of Business Assets
  2. Business Relief
  3. Gifts of Non-Business Assets

 

Capital Gains Tax on Sale/Gift of Business Assets

Capital Gains Tax (CGT) may arise when you sell or gift an asset. The current rate of CGT is 33%.  However, the following reliefs if applicable can reduce your CGT liability.

Retirement Relief

Retirement Relief reduces the CGT payable on the gain arising from the sale or gift of qualifying assets of your business or farming trade. The qualifying assets can include business premises, business, or shares in your family trade company. This relief can in some circumstances reduce the liability to nil.

There are a number of conditions to be satisfied for the relief to apply. Therefore, an advance detailed review of the circumstances would be required to ascertain whether the relief is available. In brief some of the main conditions for Retirement Relief are:

  • The sales of shares in a family trading company (minimum shareholding tests)
  • Own the shares for a minimum period – normally 10 years
  • Be a director for 10 years including being a full time director for 5 years.

For shareholders between 55 and 66 years of age the Retirement Relief threshold is €750,000 and reduces to €500,000 after 66 years of age. These thresholds do not apply where the transfer is to your children.

This relief can be used efficiently when parents wish to retire from their trading company or farm and gift all or part of the company or farm to their children. There is no threshold limit for the sales proceeds to be tax exempt if gifted to children by a parent who is between 55 and 66 years of age. From 1st January 2014, where a parent disposes of the assets is 66 years or greater, a limit of €3,000,000 applies on the amount of consideration qualifying for the relief.

If your child disposes of the asset within six years, there are clawback provisions for the tax relief claimed.

 

Entrepreneur Relief

This relief can give rise to a CGT rate of 10% (normal rate is currently 33%) on gains from the disposal of qualifying business assets, e.g. which may include shares held by an individual in a trading company or assets owned by a sole trader and used in their trade. The relief applies to individuals only.

There is a lifetime limit of €1 million on the taxable gains that you can claim relief on. Only taxable gains on disposals made on or after 1 January 2016 are counted in the limit.

There are a number of conditions (including time related) to be satisfied for the relief to apply. Therefore, a timely detailed review of the circumstances would be required to ascertain whether the relief is available.

Business Relief

A CAT relief called ‘business property relief’ exists which, if all of the conditions of the relief are satisfied, will result in the taxable value of the gift being reduced to 10%.

In order for business property relief to apply, the business assets which are the subject of the gift must be business property which include:

  • Unquoted shares in certain family companies and,
  • Assets used for the purpose of the business carried out by a family company, but not owned by the company.

This relief can be used efficiently when parents wish to retire from the business and also gift the company to their children.

There are a number of conditions to be satisfied for the relief to apply and for the relief not to be clawed back. The conditions include a minimum period of ownership by the vendor and a minimum percentage ownership by the beneficiary, post the gift/inheritance. Therefore, a timely detailed review of the circumstances would be required to ascertain whether the relief is available.

Gift of Non-Business Assets

Capital Acquisition Tax applies on the gift or inheritance of assets over the CAT tax free threshold.

The Tax free thresholds for gifts or inheritances on or after 9 October 2019 are as follows:

Group Threshold
A son/daughter €335,000
B parent/brother/sister/lineal relation €32,500
C other €16,250

There is an annual gift exemption of €3,000 per annum from each individual. This €3,000 annual gift exemption is independent of the tax free threshold above.

Gifts and Inheritances taken by a Spouse or Civil Partner are exempt from Capital Acquisitions Tax.

Dwelling House Exemption

If you inherit a house and qualify for the Dwelling House Exemption you will not have to pay Capital Acquisitions Tax.

There are a number of conditions to be satisfied for the relief to apply and also for it not to be withdrawn by Revenue. Therefore a detailed review of the circumstances would be required to ascertain whether the relief is available.

 

Personal, Estate and Trust Tax Compliance

The different tax filing a payment dates and obligations for taxpayers can seem like a minefield. Whether you have an obligation to file an Income Tax return, Capital Gains Tax return or Capital Acquisition Tax return, we can help.

E.G. if you have any sources of non-PAYE income, sold/gifted or intend to sell/gift investments or other assets, have received a gift or an inheritance or have been appointed as an Executor of an Estate or Trustee of a Trust and we can determine and manage your tax filing and payment obligations.

At PKF O’Connor, Leddy & Holmes our tax compliance team can manage your personal tax compliance obligations by providing the following services:

  • Registering you with Revenue for Income Tax (self-assessment)/Capital Gains Tax/Capital Acquisitions Tax.
  • Advising you well in advance of when your tax return and any associated tax payment is due to Revenue.
  • When preparing your tax return, discussing your tax position with you to ensure all available tax reliefs and deductions are claimed

Our tax team can assist you with :

  1. Income Tax – Self-assessment
  2. Capital Gains Tax
  3. Capital Acquisitions Tax

 

Income Tax – Self-assessment

  1. Who must register for Income Tax self-assessment?

You are generally required to register for Income Tax self-assessment with Revenue if:

  • you are self-employed (sole trade or partnership)
  • your only or main source of income is one or more of the following:
    • rental income
    • investment income
    • foreign income including foreign pensions
    • maintenance payments
    • profit from share options or share incentives.
  • Trusts in connection with their Income
  • Estates may have to file tax returns depending on the particular circumstances
  1. What are the Income Tax – Self Assessment ‘Pay and File’ Dates?

By 31st October you must:

  • Pay your preliminary tax for that year (i.e. payment of income tax on account for the current year). This can be based on an estimate of your current year’s tax liability or 100% of your previous year’s tax liability or 105% of your tax liability for the pre-preceding year. This last option only applies if you pay your preliminary tax by direct debit and your tax-liability for the pre-preceding tax year was not ‘nil’.
  • File your tax return and self-assessment for the previous tax year.
  • Pay any balance of tax due for the previous year.

When you pay and file through the Revenue Online Service (ROS), the 31 October deadline is extended to mid-November (the date which is announced by Revenue each year)

To avoid interest charges and penalties, you must file your tax return by the correct due date.

Capital Gains Tax

  1. When can a Capital Gains Tax (CGT) liability arise?

A CGT liability could arise if you sell, gift or exchange gift an asset which include:

  • land (including development land)
  • buildings (houses, apartments, or commercial property)
  • shares in companies (Irish-resident or non-resident)
  • assets that have no physical form such as goodwill, patents and copyright
  • assets of a trade

 

  1. CGT ‘pay and file’ dates

The dates you pay and file CGT are based on the date you sold or gifted an asset.

Your payment for CGT is due before you file your tax return for the disposal. For disposals made between:

  • 1 January and 30 November (the initial period), you must pay CGT by 15 December of the same year.
  • 1 December and 31 December (the later period), you must pay CGT by 31 January of the next year.

For disposals made under a written contract, the time of disposal is usually the date of the contract, unless it is a conditional contract.

You must file the tax return reflecting the disposal by 31 October in the year after the date of disposal.

A late CGT payment will incur an interest charge. A late return will incur a penalty.

 

Capital Acquisitions Tax

  1. What is Capital Acquisitions Tax?

CAT is a tax on gifts and inheritances. You may receive gifts and inheritances up to a set value over your lifetime before having to pay CAT. Once due, it is charged at the current rate of 33% (valid from 6 December 2012).

Gifts become inheritances if the person dies within two years of giving the gift.

  1. When are you not liable to CAT?

You do not pay CAT on a gift or inheritance if:

  • it is given to you by your spouse or civil partner,
  • the total taxable gift/inheritance is below that group threshold amount (when it’s value is added to previous gifts and inheritances in the same group from 5th December 1991).
  • The inheritance qualifies for exemption from CAT, e.g. dwelling house exemption.

You do not pay CAT on a gift with a value of €3,000 or less from any one person in any one year.

  1. When must you file a self-assessment CAT return

You are required to make a Self-Assessment Capital Acquisitions Tax (CAT) return, where you receive benefits of at least 80% of the relevant group threshold.

You may also be obliged to file a CAT return when claiming certain CAT exemptions (e.g. Dwelling House exemption) or CAT reliefs (e.g. Business Property relief).

  1. How is CAT calculated?

You pay CAT on the market value of a gift or inheritance in excess of the relevant group tax-free threshold amount. You may reduce this taxable amount through relevant CAT reliefs exemptions and certain tax deductions.

The valuation date is the date when the market value of the property and assets is established for CAT purposes. The valuation date is determined by a review of the particular circumstances.

  1. What are the current CAT group thresholds?

The current CAT thresholds for inheritances or gifts are as follows:

Group A Group B Group C
On or after 9 October 2019 €335,000 €32,500 €16,250

Group A:         A son or daughter of the person giving the gift or inheritance (the disponer). Including certain foster children or a minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an absolute inheritance from a child.

Group B:         A parent, brother, sister, niece, nephew, grandparent, grandchild, lineal ancestor or a lineal descendant of the disponer.

Group C:          People with a relationship to the disponer not already covered in Groups A or B.

 

  1. CAT ‘Pay and File’ Date

All gifts and inheritances with a valuation date in the 12 month period ending on the previous 31 August, are required to be returned by 31 October of that year.

Example:

  • Valuation Date 21 February 2019: File return and pay tax by 31 October 2019.
  • Valuation Date 6 November 2019: File return and pay tax by 31 October 2020.

Returns may be filed before the due date of 31 October in a year. However, where a return is filed without payment, any payment due must be made by 31 October.

A late CAT payment will incur an interest charge. A late CAT return will incur a penalty.

Catherine McGovern

Partner
Taxation

Shane O’Donovan

Partner
Taxation
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