20 October 2023
Ireland | Employment Tax | Finance (No.2) Bill 2023
The Irish government published Finance (No.2) Bill 2023 on 19 October 2023 which contains draft legislative provisions giving effect to the measures announced on Budget day (10 October 2023).
The Bill is subject to amendment and will not be passed into law until such time as the President signs the Bill.
For employers, the Bill contains some key legislative updates that were not specifically announced on Budget day.
PAYE requirement in respect of Share Option gains
● Currently tax due on share option gains is paid by individuals via self assessment within 30 days of exercise.
● The Bill proposes that from 1 January 2024 onwards, such gains will be subject to payroll withholding (PAYE). Therefore, the employer will need to operate PAYE, USC and employee PRSI on the gains.
● Exercise gains realised on or before 31 December 2023 will remain taxable under the self-assessment system.
● While on Budget day it was confirmed there would be a consultation on Share Schemes, this change was not signalled.
● While this is a welcome change overall which has been requested for many years, the late notice will place additional burden on employers who operate such schemes to review and update internal payroll processes at a time when they are also preparing for the introduction of Enhanced Reporting Requirements (ERR).
Time limits for PAYE assessments and repayments
Proposed amendments should provide greater certainty in relation to time limits that apply. The amendments provide that:
● Employers cannot make repayment claims where returns are made after 4 years commencing at the end of the year of assessment in which the income tax month falls e.g. an amendment for any 2020 PAYE (payroll) return could be raised up to 31 December 2024.
● Revenue cannot make or amend an assessment after 4 years commencing at the end of the year following the year of assessment in which the income tax month falls e.g. an assessment for any 2020 PAYE (payroll) return could be raised up to 31 December 2025.
● However, this time limit will not apply to Revenue in certain circumstances including fraud or neglect, giving effect to a settlement agreement, correcting an error to properly reflect facts disclosed by the employer etc.
● No time limit applies where an incomplete return has been filed or no return has been filed.
For more on Finance (No.2) Bill 2023 and what it means for you, reach out to your usual Vialto Partners contact or alternatively:
Keith Connaughton
Partner
keith.connaughton@vialto.com
Ian McCall
Partner
ian.mccall@vialto.com
Aoife Reid
Partner
aoife.reid@vialto.com
Clara Flynn
Director
Clara.flynn @vialto.com