-  foreign executives assigned to work in the country.

-  firms involved in leasing and fund management

-  owners of intellectual property assets.

-  providers of Islamic finance products.

-  pensions providors

-  people selling land under compulsory purchase orders

However, there are – as one might expect – no shortages of ’stings in the budgetary tail.’

Tax exiles with an Irish domicile will have to pay a ‘domicile levy’ where their worldwide income exceeds €1m and there income tax liability here is less than €200,000

Of greater practical, as opposed to symbolic, significance is the decision to abolish the remittance basis of taxation in the case of Irish citizens who have lived abroad for a period and are returning home. Previously such individuals were only taxed on foreign income to the extent that it was brought back into Ireland. 

These individuals will now be taxed on their worldwide income from the first year of their residence back here. This move may discourage people who have worked abroad from returning home to live, hardly a positive for the property market.

By way of contrast, the Government has completed its reversal of its decision to remove the relief for non-domiciled, non-ordinarily resident individuals to avail of the remittance basis of taxation in respect of non Irish / UK income.

The abolition of this relief by then Finance Minister, Brian Cowen, in 2006, attracted considerable criticism. In 2008, this move was reversed in part.

It has now been relaxed and should assist businesses to attract skilled people from overseas, thereby giving the economy a boost.

In an effort to boost integration across the island, the cross border relief has been amended so that anyone who spends any part of the day in this country can claim the relief.

Previously, they had to be in the country at midnight at least once a week.

The Finance Act brings further encouragement to those owning intellectual property assets in recognition of the increased importance of IP to the economy.

Last year’s Act provided for a tax deduction for those acquiring qualifying IP assets for trade purposes. The list of qualifying assets has been extended while spending on certain forms of software will also now benefit.

By and large, business has benefited from the application of EU competition policy.

However, less welcome is the news that local authorities and public bodies will have to charge VAT on the provision of certain services such as car parking to bring them into line with the private providers and ensure that there is no distortion of competition.

As usual, the Act contains anti-avoidance measures. Of particular interest, is the move to close down schemes under which the value of a company prior to a sale was artificially reduced through the introduction of debt - the aim being to reduce the stamp duty payable by the purchaser.

( the seller would reduce the purchase price by requiring the purchaser to take on debts owed by the company in question )

One injustice appears to have been tackled : a person disposing of land subject to a CPO may have found themselves witha  CGT liability payable before any consideration ( payment ) was received from the acquiring body.

However, anyone making a killing from land rezoning will now be subject to a special 80% rate of tax, though with an exemption where the site has a market value less than €250,000

Another change to Capital Gains Tax law involves a broadening in the scope of the retirement relief aimed at encouraging inter generational transfers of businesses.

Proceeds of share disposals following a purchase by a family company of its own shares are brought within the relief.

The Capital Acquisitions Tax system is amended to remove the secondary liability of professional advisors, except where they are acting for non resident beneficiaries.

Only a person receiving the gift, or a future interest in it, become liable to the tax.

CAT is also removed as a charge on property for twelve years after the date of the gift / inheritance.

Pensions investors should benefit from the removal of the 1% levy on life insurance premiums ( introsduced in 2009 ) . However, this does not apply retrospectively.

Acknowledgements

KPMG.  PriceWaterHouse Cooper.

Written by Kyran Fitzgerald